By Brian C. Coester
CEO
Coester Appraisal Group
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Online home-valuation tools can be good resources if you balance the information
So, you don’t like Zillow. What about the other free home-valu- ation services available online?
When it comes to obtaining rough estimates of a home’s worth, there’s no
lack of online options.
But the truth is, no one really knows
what a property is worth. This much,
however, we do know: A home is worth
whatever someone is willing to pay for it.
That axiom doesn’t help much, at
least not when you’re trying to estimate
borrowers’ home values as they determine whether to refinance.
Many people use online valuation estimates, including Zillow, as their No. 1
source. That can be OK — at times. Then
again, online estimates can lead you seriously astray.
That’s not to say this information isn’t
valuable. In fact, any resource that lets
you obtain a reasonable estimate of a
home’s value should be viewed as a
good one. It also should never be used
to make financial decisions.
Keeping this balance in mind, here
are some tips for using online tools to
estimate property values.
Get property basics
A few well-known valuation sites offer
generally reliable information about
items such as houses’ square footage,
number of bedrooms and number of
bathrooms. They also often offer reports on county assessments.
These sites are a good place to start,
and the best-known providers offer
Web pages that are easy to navigate
and user-friendly. The less you have to
probe the depths of a website to get the
information you seek, the more time
you could be spending on other important tasks.
The fact is, you’ll often be seeking what can be described as basic
information. Stick to the property
descriptors noted above and avoid
the temptation to rely on proprietary
valuation estimates.
Explore the area
One of the best ways to get an idea of
the area around a property is to view
online satellite and street-view images.
Look carefully at the neighborhood, the
property and nearby houses.
Try to determine the property’s telling attributes. Is it waterfront? Does it
have curb appeal? How does the landscaping look?
But try not to overanalyze. You
want to make basic observations, not
assumptions.
Listen to listings
When you don’t have access to reliable sources such as the area’s multiple listing service, you must find other
ways to find nearby sales similar to the
subject property.
Focus on listings comparable to the
property you’re investigating. These
should help tell you a story about property values in the area. Seek online
listings that have the same number of
bedrooms and bathrooms and that are
close to the same square footage.
Using houses with the same bedroom count is critical. You’ll also want
to stay within about 10 percent of the
square footage. Although appraisers
don’t always use houses with the same
bedroom count, a lot more goes into
an official appraisal than your online
investigations.
“Any resource that
lets you obtain a
reasonable estimate
of a home’s value
should be viewed as
Past Articles
by Brian C. Coester
“How to Promote Smooth Appraisal
Transfers,” October 2010
“Appraising the Valuation Process,”
November 2009
View these articles and more at
scotsmanguide.com.
By being conservative, you’re being realistic. If you’re not realistic,
you’re likely wasting everyone’s time.
Ultimately, the property value will be
what it will be regardless of your pre-appraisal estimates.
Use the assessment
It may sound weird, but tax assessments often are more accurate than
you might think. Not only that, but relying on an official assessment could
yield much better results than relying
on your interpretation of possibly inaccurate online information.
Tax assessors’ offices usually have
websites and will provide you with
free information. Sometimes, they also
have a record of the home’s past sales
and photos.
Generally speaking, the assessment
office is the only resource of all those
mentioned here that has physically inspected the property. Because of this,
you should take tax assessments seriously. Also, because they usually come
in below market value, tax assessments can help you stay on the conservative side of a value estimate.
• • •
Using online resources to estimate
home values can help you and your
company close more deals. But the
same tools also can lead to inaccuracies
that place you in a poor light. Remem-
ber, when something is free, there’s usu-
ally a reason. There’s no replacement for
a professional appraisal. •
Also, don’t drift too far geographi-
cally. If you can find a handful of list-
ings in the same price range, you
should be well on your way. If there are
a lot of inconsistencies with the list-
ings, you’re probably missing some-
thing and should try to figure out what.
Be conservative
A home in today’s market is almost
never worth what someone thinks it’s
worth. It’s probably worth a lot less.
Brian C. Coester is a certified and field-experienced appraiser who has personally
completed more than 5,000 appraisals and
appraisal reviews. Since becoming Coester
Appraisal Group’s CEO in 2004, he has grown
the company from a small, local company into
a high-volume national valuation-services
provider. A recognized industry expert, Coester is often quoted in trade and consumer
media and is a respected speaker, presenter
and trainer. Reach Coester at (240) 667-7694
or bcoester@coesterappraisals.com.
