So, you’ve decided you might want to sell your house. Instead of picking up the phone and calling a REALTOR®, a friend recommends going online to find the value of your home. Sounds so easy, right? In this day and age, we are a busy, busy society. Anything we can do online, while we pay our bills, check our Facebook and e-mail is great. Unfortunately, this isn’t always the case. There are very popular websites around that will give you a value of your home. It pulls any information it can to give you an estimate of your home’s worth. The problem is that these websites don’t have access to the comps, or what has sold in the area. The websites are all computer generated. They don’t know what your house looks like on the inside. Let’s see if an example will make this a little easier to explain.
John Smith lives at 123 Main Street. He and his wife, Jane, decided they are ready to pull up stakes and move to the country. John hops online to an online real estate website and finds that his home is worth $250,000. John and Jane get so excited because they bought the house 5 years ago for $175,000. They immediately call a REALTOR® to get their house on the market! They are ready to make $75,000. The REALTOR® reviews the house, looks at what has SOLD in the neighborhood, and tells the Smiths that the value of their home is $225,000. She tells them that there are houses listed in their neighborhood upwards of $250,000. She also tells them that those particular houses have been on the market for 2 years. She then mentions that there was one sale in the neighborhood that would be a comparable to theirs. Same square footage, same lot size, same floor plan. The only problem was this buyer was a cash buyer and bought the house completely furnished. That is why the sale price is so high. So, any appraiser is going to throw that sale out when trying to find comparable home for John and Jane’s sale. John and Jane drive home in silence and are frustrated because they had made big plans for the $75,000 they were going to make.
The computer generated valuation can work against buyers as well. Have you ever made the big decision to move? You put your house on the market and found the perfect little neighborhood with a great walking trail, swimming pool and playground. What happens next? You start doing your research as a buyer. This research includes asking your friends if they know anyone that lives in the neighborhood. You will probably post something on Facebook about wanting feedback on this particular area. You might even do a search online for homes for sale in your dream community. Guess what is going to pop up…that’s right, the online real estate websites. Well, that sure makes it easy. You click on one of the many links and you are immediately transported into real estate heaven. You see a few houses for sale, not only in your favorite neighborhood, but on the exact street you love. And lookey here, it says that the houses on that street are worth $199,000. You can definitely afford that! Your next step is to contact a REALTOR® to go see the house. Of course, you fall in love with it and want to make an offer right on the spot. Your offer is going to be $195,000 because the online real estate website said it’s worth $199,000. The REALTOR® gives you a strange look and tells you that the market value on the house is somewhere in the $250,000 range and he would encourage you to make an offer much closer to market value. The only problem is that you can’t afford the market value that the REALTOR® is suggesting. You request that he make the offer for $195,000 because $250,000 is way over priced. Several days pass. Your current home is now under contract and you really have to make a decision about your future home. The REALTOR® calls back to tell you that the sellers of your dream home are countering your offer with the list price of $250,000. Now, you have to give up the dream and find another neighborhood to fall in love with. Such a sad, sad story!
The online real estate websites don’t know the facts of any deal, including the sale price. The crazy thing about the estimation feature on each site is that the website themselves actually give you a disclaimer regarding their valuations. The Texas Association of REALTORS® published a great article this month about this exact topic. Check it out:
The real estate market in Texas is hot, especially in the Houston area. Yes, it’s easier to go online and get a value for your home. But, don’t you want that value to be correct. The last thing you want to do during this emotional, sometimes stressful time, is hang your hopes and dreams on an online valuation. Don’t trust the sale or purchase of your home to a computer generated estimate. Austin County Real Estate would love to talk to you about the true value of your home! Call a licensed REALTOR® to see what your home is worth.