Trying to make sense of property values today can be incredibly confusing. You know what you paid for your home or what homes like you rent used to cost a few years ago, the news talks about 10% or $20,000 drops in value across the country but you have heard of foreclosures selling for a fraction of what they were once worth. So how do you figure out how much your home is worth or figure out accurate property values for homes you are interested in buying?
Of course Zillow and similar online home value tools are often the first step in most people’s hunt for property values. While these neat little tools can be fun to play with they are also unfortunately notoriously inaccurate. They are often based on unreliable or out dated information which creates for endless frustration between buyers and sellers. How much they are off varies widely between different parts of the country but 30-50% is not uncommon!
Getting a referral to a Realtor who has a deeper knowledge of the local market and individual sales can be better. However, you must take into account most real estate agent’s lack of real knowledge about how official appraisals are calculated and factor in their motivations. They may just tell you what you want to hear.
Of course the most accurate way to determine property values is to turn to a state licensed real estate appraiser. However, the one draw back here is price. For sellers it means paying several hundred dollars for some paper and a figure that will have no further use. Any potential buyers will need to obtain and pay for their own appraisal. For buyers it is clearly far too expensive to have a full blown appraisal done on every property you may be interested in.
For real estate investors who need to screen many homes, quickly often the best option is an AVM which is an automated property value based upon comparable homes without a physical inspection. These are normally very inexpensive and pretty accurate and can offer the best of all worlds.