Several AVM websites have been in the news recently. Zillow, probably the most recognized and talked about, was recently named in a lawsuit. A question was raised about it's accuracy as well as its intentional as well as unintentional uses. A new AVM website also made its debut recently. Cyberhomes.com is Fidelity's entry into the field.
With these two sites making news, I thought it might be helpful to critique the free AVM websites. By free I mean sites that allow anyone to enter their address and have a valuation given to them without having to pay or divulge personal information. There are many commercial AVM websites that are used by banks and mortgage companies. There are also lead capture sites that pretend to be AVM websites. I have not included these in my analysis.
I have chosen to use my own home as the subject property. It is a very easy house to determine value due to the fact that it is the same builder and model as every interior townhouse in my neighborhood. The sizes are the same, the lots are similar and the differences from one house to the next is minimal. Also, there have been many comparable sales on the two streets that make up the neighborhood. There have been two sales in the last 60 days, and there are several currently for sale. As a real estate agent in the area I have been in no less than 20 of the homes that have sold in the neighborhood in the last 2 years and I am fairly confident of its value.
The 5 AVM sites I will use for this analysis are zillow.com, eppraisal.com, houseamerica.com, cyberhomes.com and realestateabc.com. The subject property is a 2200 square foot townhouse that is 5 years old, backs to trees, has 3 bedrooms and 2 full and 2 half baths. If I had to sell the home today I would list it for $425,000 or $430,000 and would expect to get somewhere near $410,000 to $415,000. This is very near the median price in the two zip codes that make up my geographic area.
Now lets see what the AVM sites say my house is worth.
This would be a great number if it were true. No interior unit has sold for that much since November of last year and that was the peak of the market here in Loudoun County Virginia. Zillow is cool because it shows you all the values of homes on your street and the nearby streets. Unfortunately all the homes on my street are overvalued by 16%. In my case that is over $65,000.
Eppraisal.com $382,751 - $517,840
Why not just say between $1 and $1,000,000? It would be just as helpful. I can't think of any reason to give such a large range unless you weren't confident in your analysis or you were just trying to generate further inquiries (leads). The midpoint of the range is $477,295. This is 15% over my estimate. I can't see anyone being satisfied with the results from this site.
The interesting thing about this website is it provides you with a lot of information on comparables that were used to come up with the value. It also allows you to customize your valuation by changing the comps used and also apply a market conditions factor to the valuation process. I think this is the most flexible site and has the best concept. The problem is the information is bad.
Every single comp for my townhouse was a single family home. Even though there have been hundreds of townhouses sold in the last several months none were used to determine the value of my townhouse. Therefore the estimate was 14% too high.
This estimate is so completely out in left field it makes me wonder how they came up with it. Did they just randomly pick a number? I have tried to figure out what computation they could possible make and come up with their estimate but I couldn't. I trully think it is just a median number pulled for my zipcode. Absolutely no analysis whatsoever. This estimate is by far the worst at over 36%
By far the best analysis of my property. It gives a list of comparable that are townhouses not single families. It gave a range between $412,042 and $449,771, much more useful than the one given by eppraisal.com. And it was extremely accurate. I think they have a better system of gathering the correct data to analyze.
To be fair, this is just one property in one market. If you have a good idea of what your house is worth or you know of a home that has sold recently, run it through each site and tell me what you find.