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Appraisals are As Much Art as Science

The number of home valuation websites continues to grow.

A simple Google search for "How much is my home worth?" shows 118,000 results and seems to get larger month after month.

For home sellers, these programs can give a false sense of security (or insecurity!) about at what price a home should be listed for sale.

Computer programs can never replace the role of licensed home appraisers and that's because valuing a home is not as simple as providing some inputs (traits) in order to get some output (value). There is a "fuzzy logic" that computer programs just can't produce in the same way that appraisers and real estate agents can.

Even with tax records, recent sales data, and a full description of a property, valuing a home is as much "art" as "science".

There are "human" considerations that include neighborhood quality and curb appeal that a computer can't measure. Nor can a program take into account how a kitchen may require $20,000 worth of work to bring it "up-to-date" or inline with neighbors' homes.

Besides, the real value of a home is what somebody is willing to pay for it. Therefore, you can never truly know what a home is worth until it has sold.

So, while automated valuation tools are a good start to finding a home's value, they're not equipped to finish the job.

Posted by Ilyce N. Powell, CMPS™ - Certified Mortgage Planning Specialist on 10/25/2007 06:26 AM

Comments (7)

appraisals, consumer education, homebuying process, real estate, neighborhoods

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7 Comments on Appraisals are As Much Art as Science

YOU said when you talked about real value. Unless the appraiser, your banker, or your insurance agent are going to buy your house their opinions are not the real value

10/25/2007 06:34 AM

by Charlie Ragonesi Big Canoe homes, Jasper ,Ball Ground,Benttree,Dahlonega (All Mountain Realty)

Ilyce,

It is getting much more difficult to get the values to appariase out to the purchase price and refi estimate. We are doing computer values to be sure investors are going to buy yhte loans. Many mortgage companies are going out of business not because they are slow, but that they can't sell the loans they closed becuase banks and large buyers of loans are cuttting programs. We all better have real good appraisers going forward.

Have a great day!
Keith Hoffman
www.LoansAreFree.com

10/25/2007 06:52 AM

by Keith Hoffman - 1st Advantage Mortgage Residential Mortgage Specialist (1st Advantage Mortgage)

The popular one around here is Zillow, with its "Zestimate." It's wrong quite often.

10/25/2007 07:19 AM

by Danielle V. Lewis - DDR Realty (DDR Realty)

How come the media can give out negatives about realtors, mortgages and real estate, but they won't give out the positive info. We have to spend so much time educating the consumers, which I don't mind. But, what I do mind is having to undo all the negatives that the media spreads.

10/28/2007 08:38 PM

by Adele Irving - Easton Area Homes (Prudential Patt, White Real Estate)

Amen, sister.

What you've said here is so very true and I appreciate your efforts to get the word out to the public. The fine print on those sites is very, very fine and the average Jane just sees the many-times-inaccurate "estimate".

11/01/2007 09:10 AM

by Lanette Branch, Bel Air, MD REALTOR (RE/MAX 1st Advantage Realty, Inc.)

Ilyce, No kidding. I'm battling owners that believe they own the golden palace and should receive its weight in gold. I keep trying to tell them that if no one has the money to buy gold it won't sell! Deb

12/04/2007 10:13 PM

by Deb at Brooks Prime Properties

As an appraiser, your post is appreciated. I have been battling this issue for several years. Many lenders feel content with closing loans based on AVM's which, although have improved over the years, still lack the personal touch an appraiser or real estate professional can provide. I have seen the problems this causes, especially in areas experiencing gentrafication. Certain parts of Atlanta, value can vary by more than 100-200k from the house next door just by the condition and extent of renovations.

12/06/2007 02:31 PM

by Benjamin Smith - Atlanta Area Appraiser (Apex Appraisals & Consulting)

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