Why is the property value estimation wrong?
The Home Junction Home Value plugin (and API) provide your website users with the ability to generate a predicted market value estimate for the value of their home. The predicted market value is automatically generated and is based on several factors using data from our Slipstream API. Some of the factors include (but are not limited to)...
- The value of similar properties in the same area.
- The number of recently sold homes nearby.
- The dates, home size, amenities and average price of nearby recent sales.
- The historical prices of the property are compared to the recent sales of similar properties nearby.
Results are a non-specific, system generated valuation, which is for broad estimation purposes only. The consumer should request a custom market analysis (CMA), for an accurate valuation, as the conclusions may vary drastically.
Comparisons to a CMA
Generating an estimated value is similar to a Comparative Market Analysis (CMA) that agents do when pricing a house before it goes on the market. A lot of what goes into a CMA is local knowledge and a visual assessment of whether a recently sold property is really comparable or not. A computer has neither of these. It's all just numbers:
- Number of bedrooms
- Number of full / half baths
- Home size
- Lot size
- Year built / age
- Sale date
- Sale price
- Distance from the subject property
As such, an automated EoV is a lot like having an agent generate a CMA for a property they have never seen in an area they have never visited. The agent can probably give a reasonable estimate based on the available information, but that estimate will only be as good as the available data.
Ok, So Why is X Valuation so Wrong?
We do our best to come up with the best valuation possible. This does NOT mean that this is what the property should be listed for. If there are upgrades and improvements, we have no way to know about them and, even if we did, we have no way to create an updated valuation. The AVM is a baseline, and is not a substitute for a local valuation performed by an expert.