Which is the Most Accurate Online Home Valuation Website and How To Price Your Own Home
Portal(s) Number One: “The Big Four” – RRTZ
Let’s start talking about the “Big Four”, as I like to call them, are RRTZ:
Now, the pros of using these sites for your instant valuations is for
- It’s free
- There is no real registration required to use these sites
- They’re very easy and simple to use. A plus to these sites, is they look great. They’re seamless, it’s very fast, it’s quick, and it is not difficult for anyone to figure out.
Keep in mind, there are more sites that are like the ones I’ve listed, however some might find the others sites to be a little more difficult and less accurate in my opinion.
1. A Distance Radius Search Is Not Accurate
Normal appraisal techniques require that we use comparables within a one radius. Therefore, if you want an accurate depiction of what your property is worth then you really want to keep it within a quarter mile radius.
Now, if we’re talking about condos, townhomes, or plant urban development communities, if it’s a condo and you want your most recent comparable sale or most recent active listing to come from the same building that you reside in. Those are always going to be the best comparables. The “Big Four” – RRTZ – will use a distance to determine which is the best comp.
Although someone can argue that because their using distance their still going to get those comps that are within the same building or same gated community. That is true, but because it can go as far as a mile, you might also see some comps that stream the values higher or might skew the values lower. You never really know.
So, if you’re looking for active listing or active comparable sold listings, you tend to want to stay within a quarter mile radius, and because their using a distance search to find other recent sales, what will happen is you can actually get comparables that are in a completely different neighborhood, even when they fall within the quarter mile radius.
Another thing that you want to avoid when evaluation your home. You want to avoid any natural or man made barriers. This includes major streets, bridges, mountians, rivers, and streams. You will have to avoid any of those barriers. If you’re searching within a quarter mile radius. Depending on where you live there is a chance you will come across those major arteries that you should not cross.
2. They Can’t Estimate Multi-Family Without Rents
When you’re trying to get the value of a multi family property. What I mean by multi property, it means four units or less. Five units or more would be considered multi family commercial.
The “Big Four” will definitely not get a valuation for five or more multi family units. However, it is still challenging for them to accurately get home values on four units or less. The “Big Four” cannot take things into account things like rent control.
There are certain cities that have rent control, including Los Angeles , where your value is going to be strongly based on the rents that you’re currently collecting from the tenants that reside in those properties. The “Big Four” will not take that into account without knowing that information.
3. Valuations of Active Listings Are Biased
I don’t know if this is a con per say, but what I’ve noticed, is that when I place a property up for sale and the listing is shared through all the syndication online. It goes through Zillow, it goes through Trulia, and it goes to any other online portal that uses IDX or Internet Data Exchanging Information.
When we place a property up for sale, these portals will then make their values initially very close to what their original list price was. In fact, this may be urban legend, but I am apart of many chat boards and messaging board on social media. There was a time where one agent put a property up for sale and rumor has it he hit a couple zeros too many.
It priced the property to a billion dollars. It went up through syndication and it was promoted on all these sites, I’m not going to say which ones, that then placed their evaluations of that property for close to a billion dollars. The property was not worth a billion dollars, it was indeed a mistake, but what I’ve noticed is that these properties, once they hit those portals, their valuations from when their active listings tends to be skewed or leaned towards what the original list price was.
Another thing we have noticed is that when the properties sit longer on the market, the more these values to decline. Now it’s common sense that if it hasn’t sold within 45 to 60 days, there is a good chance that the property is not worth the asking price. They have adjusted those algorithms that reflect that, so those values for those active listings tend to steadily decline the longer the property sits on the market. Again, some may not see this as a con, but it is definitely something we see on a regular basis.
Portal Number Two: For Sale By Owner
Now, if you don’t know, For Sale By Owner.com was recently acquired by RocketHomes. Back then it was known as In-House Realty. They are definitely making headway as a competitor for Redfin and Zillow. I have browsed the site, and tried to find the evaluation. When you initially go to ForSaleByOwner.com, because it is a site where you can post your property up for sale, it seems as if they initially want you to only advertise your property for sale on that portal.
It is a little clunky, it’s a little difficult finding the evaluation, but I did try it. However, all the cons that I had discussed earlier from RRTZ is exactly what you’re going to experience when you search it on ForSaleByOwner.com.
Portal Number Three: Major Lenders (Banks)
After “The Big Four” and For Sale By Owner, you are going to start looking at other online portals that are provided by major lenders. Banks like Chase, Wells Fargo, BOfA, etc. These lenders do have evaluation sites as well. My experience using them has come to the conclusion that the sites are very slow and clunky. In addition, all the same cons from “The Big Four” do apply to these sites as well.
The reason why these major lenders do give you this option, is because they want you to use them for financing purposes. Therefore, it is not user friendly and it’s not necessarily designed to get you to register for your valuation in as much as they want you to use them for your home loan.
Portal Number Four: Franchise Sites
After the banks, we will now talk about the franchise sites. There are certain sites, though I will say I did look for these valuation sites that provided instant values. The only one that I could find presently is Remax. The vast majority of of the other franchise sites like Century 21, Coldwell Banker, Sotheby’s, etc.
Many of these franchise sites who do have the evaluation sites tend to be sites that are designed to capture information, and I do use the same techniques on my sites. Out of all sites, Remax was the only site that I found where you could punch in your address and get an valuation. The vast majority of the others, again including my own, was really designed to capture information so they can go back and provide you with a more accurate valuation that they could either email to you or text you.
Portal Number Five: My Sites
The last and final valuation sites that I’m going to recommend are, REH Real Estate and TalkToPaul. Yes, TTP is me and REH is the brokerage that I own. What would that say about me if I did not give them a plug? No our model isn’t going to spit you an instant valuation. Yes. It is going to ask you for your address, email, and mobile phone so that I can text you a link to your report. It will take a little longer than an instant valuation yes, but it will also be more accurate and it will take into account all of the points I’m will discuss below, as well as how to price and value your home. Remember, it takes Toyota about 18 hours to build a car start to finish. In contrast, a Rolls Royce takes 6-8 months to finish. I’ll make sure you get the attention you deserve.
How Much is Your House Worth?
Enter the property address and we’ll do the rest!
How to Price and Value Your Home:
1) 20% Up or Down
You can compare your property to properties that are 20% larger or 20% smaller than yours, based on square footage. Now, I know that there’s going to be some properties and homeowners that will say “well Paul, I have an extra four or five hundred square feet worth of space. It’s just not permitted”. While I appreciate that and I see the value, if it hasn’t been permitted and it doesn’t show up on county records, you’re not going to be able to count that towards the value of the property.
2) Bedrooms adjust up or down $10,000
You may ask: How do I adjust for bedroom and bathroom count? For example, if you have a four bedroom, two bathroom home and you’re looking at a house thats a three bedroom, two bathroom home, and they sold for a particular price, then what you would do is because your property has one bedroom more you would adjust up 10,000 dollars for that bedroom.
3) Bathrooms adjust up or down $5,000
Now, this does not work across the board. This is simple techniques that we in the industry would do. It’s about a ten thousand dollar increase in value of per bedroom and 5 thousand increase per bathroom.
This does work vise versa, if you have a two-bedroom, one-bathroom home, and you see a three-bedroom, one-bathroom homes that sold for a specific price, when you make adjustments you would reduce what they sold/selling for by 10,000 dollars.
When there are a lot of comparables nearby that don’t cross a major boundary, then there is no reason to go seek out comparable property that’s for sale or that sold just to try to justify your price. If you run into this, you may run into appraisal issues.
Whatever the reason being, make sure that you tend to find the properties that are closest to yours without crossing any of the boundaries I discussed earlier.
4) Use The Most Recent Sales (45 Days >)
Now, let’s talk about time frames. Typically you can use comparables in a sold within a six month time frame. I prefer to look at properties that have sold within a 30 to 45 day time frame, because those give me a more accurate depiction of what is going on in the market.
Again, depending on how unique your property is, you may have to go six months back. In some rare cases, you may have to go as far back as a year. I recommend the 30 to 45 day time frame.
You’re going to have to go back a month/month and a half to see what has sold, so that you can use those as comparables.
As for active listings, again, you’re going to have to find the three closest active listings for sale near you.
Look, I know this is boring, but at some point you’re going to want to know the valuation of your home.