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Cookie cutter subdivisions & online "value" guess-timates

A buyer client was wandering around the Internet the other day
and called me asking about a home for sale that he saw on one of
those real estate sites that also provide online value estimates.

He was excited because one of the homes we are viewing this afternoon
with a listed price of $125,000 is in a neighborhood that this real estate
site has valued at between $135,000 and $172,000.

We had a quick chat about online values and how the data is gathered
and then had a more intense chat about how value is really determined
and more importantly, that local opinions are the opinions that matter.

Today I am bringing him the facts so that I can educate him about this
subdivision and others that we will be viewing homes in.

Fact: House at 123 Main sold for $128,000 in January.
Fact: House at 126 Main sold for $124,580 in January.
Fact: House at 132 North sold for $122,700 in December.
Fact: House at 155 North sold for $127,400 in November.

I will also point out that all of these homes are similar in construction,
square footage and year built. They are truly “cookie cutter” homes built
in mass by one developer/builder during a one year time period.

Will the home that we are viewing today be a good buy for this man?
Quite possibly. But it will NOT have what he thought would be instant
equity based upon what he read on that website.

One other thing I should mention : There are 2 other homes for sale in this
subdivision that are priced in the mid to high $130s. The sellers must have
visited the same real estate website and believed the “value” that this site placed
upon their home.

If you are purchasing a home in Macomb County MI please have a buyers agent
working with you on your behalf. As a buyers agent I do all of the background
work for you, so that you are fully informed about the real value on local homes.

Previewing homes via the Internet is a wonderful way to start your search but
a buyers agent will be invaluable to you when it comes time to seriously narrow
down your search, determine value and negotiate for you.

© Kris Wales RE/MAX Advantage 1, Inc. Macomb County MI

Contact Kris Wales - A partner for your real estate needs in Macomb County MI

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Posted by Kris Wales - Macomb County MI real estate blog & homes for sale search site on 04/05/2008 05:45 AM

Comments (16)

real estate, macomb county, mi, buyers agent

This post has been included in Michigan Information Macomb County, MI Information Chesterfield Township, MI Information

16 Comments on Cookie cutter subdivisions & online "value" guess-timates

APR

2008

we get this often as well

These sites offer so much inaccurate information. The professionals in the industry are not the ones contributing to this information. It is journalists and researchers. The same is true for medical information sites and legal sites etc... You really need to be careful what you read. Be sure to get your information from the horses mouth.

Way to provide the correct information to the buyer. At least you got a buyer out of it. May he close with you. How many other blogs and internet sites are you on Kris?

Kris, there is simply no replacement for an experiences and knowledgeable Realtor. Pricing or establishing value is truly an art as we have to consider so much more than the comps. Great example!

Chip: I had a feeling it wasn't a local issue :-)

Nanette: Or they gather their information without looking at sellers concessions, or merely looking at active listings. Who knows. I agree with you - it should all be taken with a grain of salt, whether it is real estate related or medical information..

Russ: He was already my buyer client, but was surfing around and found that site and called me about it. I hated to burst his bubble about "instant equity" but goodness the value estimate was so far fetched! I have my own website for real estate information and home searches, I blog here, and I'm working on another local blog that I hope to have launched within 2-3 weeks.

Diane: We all need to prove our "worth" and the value that we bring to our clients. Simply finding the information online isn't enough - and more often than not it isn't accurate. Thank you.

Kris - Sometime people believe what they read without doing any research, sorry you had to burst his bubble, but you showed him the value of having a realtor.

We always want to feel like we are getting a good deal. Folks also need to realize the equity (real or imagined) can vanish!

That's why we need buyer agents, no site can truly determine the true value, they use to show a low value in MI based on the listing price, now it shows the home could be more. The reason is because they have not changed the taxable values and that is where they get the data.

Kris, I saw one of "those sites" that guesstimated the value of my home....and it was no where close to what was realistic. I know the Internet might be a good place to start a search but you definitely need a buyers agent who knows the facts and market.

The other problem with those sites is that the market has changed dramatically just in the last three months. However, those sites can get info from as far back as a year ago. I try to keep my price point homes within the last three months.

APR

2008

Pam: At least now he understand that the values are "guesses" and at least in my area, completely off track. Thanks.

Gary: Just as it does with stocks or any other instrument of investment, you're correct Gary.

Missy: I didn't know until you mentioned it that they are using taxable values for their estimates. No wonder not only buyers but sellers are confused!

Carole: For "fun" I did the same thing yesterday. It appears that now is a fabulous time to sell my home. /sarcasm.

Marlene: The 3-6 month rule is what I use, but if I have enough information for 3 months it is what I prefer. You're absolutely right.

APR

2008

Kris - Some of these sites show actual sales, and can be pulling some value from that. BUT often the sales reported lag by about 6 months, so there can be some big discrepancies! Other times I have no idea where the values come from. Great post.

This is a great post Kris! I am passing this on to all my buyers agents on my team! Thanks! Steve

I often find myself explaining to buyers or sellers the pitfalls of online valuation sites. They definitely have their problems.

Penny: There is a big discrepancy between what sold 6 months ago and what sold within the last 60 days, at least in our area. Missy Caulk stated that the values are coming from taxable value at the assessors offices. That make sense and explains why they are so overinflated.

Steve: You are very welcome.

Diane: They sure do...I feel like a broken record sometimes but I can surely understand a consumers confusion.

Hi Kris - great post showing just where some of the faults are with those on-line value sites. Clearly those who live and work in the areas have far more experience and knowledge about that local area, as you showed your client with those comps. No way on earth any online valuation could ever come close to what local professionals know about local values.

Ann

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