Recently I was asked by a client to evaluate an on on-line real estate valuation tool. I have a second home in Highlands Ranch, Colorado. I picked it to run through this program because it’s been less than a year since it was last appraised. The tool indicated the following:
Minimum: $287,244
Maximum: $306,060
Average: $294,912
It also mapped automatically the other properties it was using for comparison so I could see where the homes were to mine.
My home is not the norm for ‘”The Villages”, subdivision in Highlands Ranch. It appraised last December $285,000 (full blown appraisal), for the purpose of refinance. It also has received over $70k in improvements and has features, that add value such as finished basement, granite counter tops, imported tile in the entry ways and bathrooms, lighting fixtures etc… The point I am trying to make in all of this is my home is “not the average home”. Yet you would not know that unless I told you. $23k of the $70k improvement was for landscape. Unfortuantaly, landscaping does not add to the value of a property, only it’s marketabi.ity and appeal to a buyer. Most people would not know that and try to include it in determining value. The real estate market in Denver is , has been and continues to be on the decline. I doubt my home is still worth $285k on today’s market. In fact in 2006 not one home in the Villages subdivision SOLD for more than $ 255,500. Which also happens to be the same “model of home I have”.
What this tool is only capable of doing is measuring the past, but from a limited perspective. For example; it is not able to track weather or not a particular home is in a market that is on the upswing or decline. Improvements and things that impact and influence the value. Allow me to explain further.
The tool indicates a minimum price then what we know the home appraised for. My home is a Patio Home. It has what is considered to be a zero lot line. The program includes homes in close proximity to mine, taking only into consideration similar sq/ft, but does not know the real estate it is comparing to is really not “like kind”. The other homes are not patio homes. They have average size yards. The on-line home value tool and others like it are designed to give people an idea of what their home is worth! You can see they are not even close. The bottom line is. There is just no way I could market my home for what the program suggests.
The unfortunate thing is people who are not familiar with appraisal standards and what is considered “like kind” and what is not. People see a tool like this on the internet and take it as gospel. There is a whole list of things that can effect property values that the tool also does not take into consideration such as the impact of being located at or near busy streets or highways, which could effect the value as much as 10-50k. One home may have an incredible view of the mountains, lake, or stream, or even open space. Which can add 10k-30k to the price. A Home in Breckenridge for example that offers an unobstructed view of the ski slopes out a big beautiful picture window is going to add considerable value then one that does not. It is also going to effect it’s marketability.
My point is as more and more of these types of tools become available on the internet. The general public is at risk to becoming being misinformed. If you really want to know what your home is worth. Hire a licensed appraiser. If you really want to know the marketability of your home, hire a realtor who’s main focus is listing properties, not one who works primarily with buyers.
This tool looks cool. But is simply not accurate
