Beware of Free Home Guessimates

Would you trust a computer program to tell you what your property is worth? Having seen how inaccurate some of those tools are, I know I wouldn't. The Wall Street Journal published an article OK, Computer: How Much Is My House Worth? which suggests Federal regulators may loosen real-estate appraisal requirements in the future by not requiring appraisals for some properties. If this happens, some people may save a few bucks. Hopefully they won't think online appraisals are going to be a proper substitute though, because they aren't. All home valuations are not created equal. I'm not just talking about the appraisal process after a purchase agreement, but even in establishing a sales price. Several websites already offer free property valuations (most people have heard of a Zestimate for example), but what many people don't realize is how erroneous data can be when forming computer-generated home value figures without thoughtfulness. For example:

• When property sales are based on a radius of another property, the properties taken into account can be apples and oranges. For example, homes along a lake might be mansions, but down the hill and away from the water there might be smaller homes without lakefront or even mobile homes placed in a high risk flood zone.

• Construction materials of a home matter. Two homes may be the same size, shape and age, but if one has a brick exterior and another has vinyl siding, home buyers will place more value on the exterior that doesn't require replacement.

• A low-ball sales price is sometimes due to an intangible trade-off that a computer program wouldn't understand. For example, a cash offer often results in a lower sales price because there are fewer requirements to close. Likewise, a buyer who is flexible with when they take possession can result in a lower sales price in return for the seller having time to find a new place. On the flip side, a home that served as a litter box will not sell to most buyers unless they want to buy low and flip it.

• In addition, some real estate sites don't distinguish between full baths and half baths in the algorithm, so a three-bedroom home with one full bath and two half baths will be seen as and valued as a 3-bed/3-bath home.

It's funny how we are convinced a free home value is right when it estimates our home is worth more than what we bought it for, and wrong when it estimates our home has lost value. It's important to understand the potential weaknesses of these online tools and not make decisions based on them. If you want to know what your property might be worth on the current market, ask a local Realtor to give you a free home market comparison. It won't cost you anything and you'll get a much better idea of how your home compares to other similar homes that have recently sold. If you're in the Knoxville area (Knox county, Blount county, Loudon county, Roane county, or Anderson counties ...) I have access to those area figures and will gladly run some numbers for you ... but it may cost you a cup of coffee, though, since I do claim to be a"really social real estate agent." ha ha