List Headline Image
Updated by mattmetcalfe-sdh2015 on Jul 04, 2019
 REPORT
6 items   1 followers   0 votes   0 views

The Limitations of Computer Valuations for Real Estate

Websites like Zillow and Trulia have grown in large part from their delivery of information directly to individuals in the form of automated home valuations for Denver luxury homes and beyond. They use widely available information on home sales and make it user-friendly to view the “estimated value” of your or even your neighbor’s homes. Curiosity really does kill the cat, and human nature drives us to these sites to see if our home is worth more than the next guy’s.

The Limitations of Computer Valuations for Real Estate

However, limitations of computer valuations for real estate abound, and they can give a misleading picture about your home's value.

2

Subjective Versus Objective

Real estate valuations are subjective in nature. Computer valuations (much like appraisals) attempt to use objective measures to value something for which we simply just don’t have all the variables in order to accurately appraise. This is the biggest problem we run into with real estate valuations. What a property is “worth” ultimately transcends into what someone is willing to pay for it relative to the other available options.

3

Subtle Differences

Similar-looking and functionality identical properties should have similar valuation levels on paper. In practice, however, they each have unique quirks brought about by their owners that can drastically alter their valuation.

4

Location

Virtually identical homes can have surprisingly wide gaps in their valuation depending on where they are situated and the kind of neighborhood they are in.

5

Style

Different home styles command different levels of value from appraisers. This is however not set in stone, and a particularly famous-styled home that is poorly maintained may suffer a serious drop in value.

6

Accuracy

Valuation rates online often come with a disclaimer stating that their numbers have a uniform margin of error. This can confuse a potential buyer when he or she finds a gap between the stated value online and the actual value.