Is an Online "Free Appraisal" Or Automated Valuation form Really Free?
The internet is amazing isn’t it? It has put Joe Consumer in the driver’s seat when purchasing products or sets. We can easily find information about almost any company in the world online; getting an idea whether our hard earned money will be well spent with that company or not.
comparatively new is the service of providing home value estimates in just a few seconds. The websites that offer this use an automated valuation form, where recent closed sales in a home’s neighborhood are entered into a program that quickly spits out a number that hopefully is close to what the true value of the home is.
Naturally this free service has attracted a lot of traffic to the websites that offer it; after all who can resist free? It’s important to understand that the real purpose of the online moment home value service is simply to allow the websites to offer other sets that offer real value and get the the company paid. Examples of paid sets offered are leads for mortgage brokers, advertising for home sellers, in addition as the paid advertising located on the sidebars of the website.
AVMs or free valuations online can be fun. Some already find it addicting to check these sites frequently to get an idea how their home value is doing but the information certainly cannot be relied upon for a serious measurement of a home’s worth. Most of the sites use homes for comparison taken from within a mile radius of the character in question but unfortunately the search doesn’t take into account the varying values of the tracts in the neighborhood, the views or without of views of the homes within the radius, the closeness of the homes to lakes or oceans, the designs of the structures or the year the “comparable” sold homes were built. It also doesn’t take into account that some of the transactions were short sales (where the similarities were sold for less than what was owed on the loan(s) for them) or that some of the sales were “quick sales”.
Additionally, it’s important to observe that whether home values are going up or down, in a rapidly changing real estate market, appraisers and real estate agents must pay important attention to similar similarities that are or have been listed for sale in the area of the home being evaluated. With home values declining in most areas, it matters not how much similar homes in the neighborhood sold for 3-6 months ago if similar homes in the area that are priced already lower are currently not selling in a reasonable amount of time. The free online systems of valuation do not provide a comprehensive record of the listings in the area and don’t give these listings adequate consideration. Generally the consequence will be a valuation that is much higher than it should be.
The trend toward cheap, quick home valuations is troubling because lenders have already begun using low cost or already no cost AVMs for evaluating homes for mortgage loans. This practice must not be allowed to continue. The following article at http://www.appraisercentral.com/AVMS1.htm does a great job of explaining why edges use AVMs (contrary to what many believe, it’s not because it’s cheaper,) and if you want to cut to the chase, go about a third of the way down the page to read some of the horror stories of thousand of dollars lost by edges and homeowners because of the use of AVMs.
For an objective opinion of value, nothing beats the viewpoint developed by an educated, experienced appraiser. Does what is likely the biggest financial transaction you’ll ever make deserve any less? Insist on a credible real estate appraisal.