Sep 08, 2011
Making Sense of Trulia’s Entry to the Home Valuation Market
08 Sep 2011
Posted by VAR
With one more entry into the (automated) home valuation arena, how does one make sense of all the methods of valuing a home in this market?
There are at least six methods of home valuation out there right now; I know that my customers and clients are going to use the ones that they find; my challenge in advising them is to put these valuations in context and either demonstrate their respective accuracies or most likely, prove just how wrong they are. And why.
- Trulia’s Estimates – (automated) – “Trulia has jumped into the home value game.” Now that they’re here, so what? While the Trulia Estimates are only in San Francisco right now, presumably they’ll be making their way nation-wide.
After years of watching competitors’ failures and successes in providing automated home values to consumers, Trulia is now launching Trulia Estimates into open beta, claiming consumer demand drove them to add this feature. After quietly tweaking the site to make way for the Trulia Estimates (like changing the location and size of the large map for search results), the company is now offering home value estimates in the San Francisco Bay area which just happens to be their back yard.
Over one million off-market addresses are now available for public viewing in the city. Trulia Estimates pulls only from public record data rather than a third party source and the site allows homeowners to claim their home and update features which ultimately will have an impact on the Trulia Estimate for that address in real time, Trulia told AGBeat.
- Zillow’s Zestimates – (automated) – Most people know about these and recognize that (at least in Charlottesville) zestimates just aren’t accurate.
- Realtor.com – (automated) – offers valuations, but you have to register first. And likely be contacted by a local Realtor. And there’s no way to request the information via your Realtor. (that I can see)
- The National Association of Realtors’ Realtor Property Resource (RPR) – (automated) – - used only by Realtors; its Automated Valuations are improving; presumably as more Realtors who use this potentially valuable tool, its AVMS will improve.
- County/City Assessments – (human) This is the value tax assessors use, no more, no less. These values look backwards rather than forwards and as such (IMHO) do not necessarily correlate to market value.
- Appraised Values – (human) the value determined by an appraiser (most often hired by the bank). This is often fairly accurate, but often is not due to the shifting market, competencies of the various appraisers and where the appraiser is coming from (non-local appraisers generally don’t provide very accurate appraisals; they don’t know our market)
… Fannie Mae and Freddie Mac began collecting appraisal information for any property for which they own the mortgage. Because F&F buy more than 90% of the mortgages on the market, the Uniform Appraisal Dataset will essentially become a nationwide database of property appraisals.
- Market Value – (human) as determined by a ready, willing and able buyer and a ready, willing and able (non-distressed) seller in an arms-length transaction. This can be the toughest, mainly because it’s emotional, fluid, made with often-sparse data and has a variable the others don’t really have – people.
Right now? Pricing a home in any market can be an impossible task that rattles and confounds experts who possess most of the appropriate and relevant human intelligence; I don’t see yet how AVMs are going to be any better.
Prime example: I called my mortgage holder and their automated valuation for my home was 20% higher than its likely true market value.
Jim Duncan is a Charlottesville REALTOR® and guest author on VARbuzz.