Tales From School      

As I mentioned in other Blogs I teach the First Time Home Buyers Class for Douglas County. Anytime you teach you find that you also learn, it helps to keep you at the top of your game. While most questions are routine, from time-to-time you either get a stickler or one that provides insights to the audience. Lately I have listed two properties that are both short sale, what this means to the seller is that they can’t sell their home for what they owe on it and if they’re no longer able to meet the mortgage the property will eventually go into foreclosure. This is not what home ownership is all about and a point that raises my passions when I’m in front of a first time home buyer class.

While most of the class was working with Realtors® to find their home a few were still just shopping on the internet. As part of this Q&A the question came up about some of the on-line services touting the ability to accurately price a property. Interestingly the class perception is that these services are fool proof, while my experience has been they can off by as much as plus or minus 10%-15%. On a $200,000 property this equates to $20,000 - $30,000, so my advice was yes they can be used for a quick and dirty approximation, but do you want to base a purchase decision on the information?

That’s how I use these sites, simply as a sanity check and I generally cross reference two or more sites. I do find them helpful in cross checking comparable sales, but there are simply too many variables to trust an algorithm to get it right. Now that previous sentence may sound a little geeky, but in my previous life I wrote software for everything from real time control systems to database data extraction. So I have a pretty good idea of what you can and can’t do with a program. The problem is the data is presented in a very glitzy format with maps and aerial views giving it a gospel appeal, but I believe there should be an additional disclaimer about accuracy. In the computer world it’s know as GIGO – Garbage In / Garbage Out. The data presented is no more accurate than what was fed from the county records, which were fed from the MLS, which were provided by the real estate agents. Along the way stuff happens and without a set of experienced eyes looking at the information you can make some very bad decisions on your sale or purchase.