Most home searches begin online. In fact, According to the National Association of Realtors 93% of home buyers visit websites when searching for homes. The sellers begin calculating the sale price of their home by visiting Home Estimation Websites online. While such sites may offer knowledge or facts on some properties, they are hardly accurate in determining home value. In fact, there are numerous sites that you can visit where you can plug in your home address and a few facts about your home and you would get a different value for each one.
There really is value in utilizing the knowledge of a Realtor or a Pricing Strategy Advisor (PSA). We as Realtors and PSA's use specific techniques to calculate the list price (when working with sellers) or offer price (when working with buyers) of a home through the process of conducting a CMA (comparative market analysis) based on a mixture of data, experience, and local market knowledge.
To determine the current market value of a home, a Realtor will visit the property first. This step is crucial because this is where we will see the home's condition, it's unique features, amenities, and then to analyze the area around the property, which all influences the home's value. We will determine the type and style of the home, how many bedrooms, bathrooms, the square footage, the age, the size of the lot, water features, hardscapes, landscape, garage, sheds, workshops, pool etc, etc, etc
Once we have all this information figured out, we will begin looking for comps through the MLS. The key is to find comps that are most similar to the subject property. We will do our very best to stay within a certain area to find comps and we really don't like going back more than 6 months when analyzing comps. We will look at homes currently listed, under contract, and homes that recently sold. We will even look at homes that were removed or withdrawn from the market in order to determine the price.
Now that we have all of this material together we can now add or subtract value for certain things such as garages, number of bedrooms, flooring type, countertops, updated/upgraded items, etc, etc, etc.
It's very important to get the numbers as accurate as possible so that a seller and a buyer can come to an agreement on the value of the home. Not only that, the home must go through an appraisal in order for the bank to lend the buyer money to purchase a home.
So why did your Realtor tell you one price, but the estimates you had seen online offered on the Home Valuation websites differ drastically? This is partly because these sites gather their data from different sources. Then they use an automated valuation model (AVM) and each site's model is pulling different comps and different calculations in order to come up with their figures.
I believe Zillow is one of the most popular Home Estimation websites and if you visit their questions page at zillow.com/zestimate, they will tell you how they come up with their figures. Zillow's price is also affected by information that homeowners go in and manually change themselves through the site. Sometimes people will change their information so much until they get the figures they want, to the point where it isn't accurate information anymore. So keep that in mind.
Zillow has even shared that they are just a "starting point in figuring out the true value of a house". One reason is that these sites have no way of knowing the condition of the home, if it is in poor condition or if it has been recently remodeled. They also don't take into consideration things like architectural styles, layout of home, area amenities and other custom features.
So in the end, the only way to really know what your home is worth is to allow a Realtor or a PSA to conduct a personalized CMA by inspecting your property, and going through their steps and suggestions to customize a price specific to your home.
I'm Lisa Longest with Realty Navigator. I am a full time Realtor® and PSA® in Anne Arundel and Queen Anne Counties. I am here for all your real estate needs. If you are looking to buy, sell or question me about the market in your area, feel free to contact me. My email is LisaLongest.RE@Gmail.com and cell is 443-786-4200.