When you decide to sell your home, you may start online to see what your house is worth. To your surprise, you see your home value $50,000 above your expectations. But when you talk with a Realtor®, you’re disappointed to hear your house may not be worth what you saw.
You insist your house is worth more because you saw it online. You convince your Realtor® to list at the price you saw. And your Realtor® reluctantly agrees to list at your price. After a few months of watching your neighbors’ homes sell quickly, you agree to drop the price to the amount your Realtor® originally recommended. You wonder what happened? Why was there such a difference between the online value and what your Realtor® recommended?
Online home values are known as Automated Valuation Models or AVM’s. AVM’s are mathematically generated values that pull information from many public sources to arrive at an estimated amount for your home. The public sources used for AVM’s include the assessor’s site, tax records, and sometimes other sources such as the multiple listing service.
But the estimate is only as accurate as the data entered. Data entry errors and delays in updating sales and public recordings create inaccurate estimates. The AVM also lacks the professional expertise and market analysis. Physical observation by a Realtor® or appraiser, construction material, home conditions and improvements, and motivation of the buyer or seller are lacking in the AVM estimate.
While an AVM is a good starting point, it is not an accurate picture of what your home is worth. A Realtor® will assess your home and use reliable data from the multiple listing service to pull comparable home sales within a specific distance and time period. Factors such as style, age, square footage, number of rooms, and improvements are used in the comparable market analysis (CMA). While you may have a desired sale price in mind, in the end, your home is really worth what the market will pay.
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