Computerized Home Valuations Are Skewed By Premium Homesites And Amenities

Any evaluation that's "performed" by a cpu, yes. I've completed thousands of online evaluations for consumers. But I'm a Realtor and not some piece of inaccurate software like ZILLOW.

Joe, this is one of the fallacies of computerized home valuations when comparing properties where local demographics are not taken into consideration.

Hi Joe,

Great article on your analysis of a particular subdivision market.  I tell people all the time that you can't go by general statistics, you have to analyze a particular market area and or subdivision.  Regarding Zillow, I was reviewing the comps they had listed for a country club property, what I have seen is that they use a radius and they could be lumping $200,000 sales together with 700k and $1 million sales (country clubs usually have a range of styles and prices), my zestimate went down $100,000 over a period of time and there weren't any comparable sales in my higher price range during that time period, all the sales were in the the lower price ranges.  You can go into zillow now and choose comparables and make adjustments to the zestimate to  come up with your own zestimate, and add comments to explain things to potential buyers, so it might be worthwhile to review your listings. 

Great post....you must know Gene Rivers

Our MLS system wants to sell our information to a company that provides computer-generated market valuations.  Those in my company agree with you--the info such systems provide is unreliable and a disservice to the public.

Joe - We were just out with customers this week who while showing houses to them, was constantly on his Zillow app for his Iphone checking statistics and comparing prices.... I can't tell you how many of these "statistics" were completely wrong... But the buyers thought they were empowered with knowledge so I let them go along with their "expertise" until it came time to straighten them out with the true facts about these homes I was showing... Just saying....Sorry to hear about the Golden Eagle areas. 

They are also very skewed due to the fact that not all information on the county sites is accurate. Anyone putting much faith in a valuation that is not prepared by a competent professional is heading down a very dark path. Sure, they might get where they want to go, but more likely they will not. Remember, even a broken clock is right twice every day. But the rest of the time, its information is off-base.

Joe, we had this situation exactly on a short sale -

"Sites such as zillow or trulia might use a home on a lake as a comparable property to one on the interior,.."

We had a navigable waterfront property and the AVM valued it at less than the price of the lot alone. Of course, they were valuing homes across the street and in other areas in the neighborhood not on the water. It was the buyer's lender doing it, so we switched lenders and a real appraisal straightened it out. But it is a real up and coming problem for premium homes and homesites.

Sharon

Joe:

I'm a bit confused by your article and graph.  To appraisers, value is an opinion (whether from a human or created by a computer program) whereas price is a fact.

I agree with you that price per square foot is usually a poor indicator of a property's value, as this metric cannot take into account the many market determinant factors.