When you start searching for a new property, you’ll inevitably run into home value tools that promise to give an accurate valuation of your current property. However, you shouldn’t put too much faith in these tools. While they can provide a vague home value estimate, they can’t account for a variety of factors involved every time a property is bought and sold.
The Mechanics of Automated Valuation Models
When using an automated valuation model to price your current property, you’ll be asked to input data about the home, ranging from location to the number of bedrooms. After the data has been entered, the program will use complex algorithms to compare the user entered data to existing data points. These data points may include property tax assessments and recent sales, then the automated valuation model spits out an estimated value. While this value can be a helpful starting point, don’t give it too much importance.
Understanding the Margin of Error
When it comes to automated valuation models, there is always a sizeable margin of error. Their valuations are only as good as the available data. For example, when looking to evaluate a property in a sparsely populated area, the tools may not have sufficient data to calculate an accurate estimate. Some areas don’t make the prices of completed home sales available for public use, which can also contribute to inaccurate estimates. People living in heavily populated areas with plenty of sales documentation may receive relatively accurate estimates. However, everyone else should treat these estimates with a healthy dose of skepticism.
Every Property Is Different
Online valuation tools ask you to enter specific data about your property. While this information can offer basic insight into a property, it doesn’t offer insight into the unknown. A two-bedroom downtown San Diego condo with a newly renovated kitchen may have a quantifiable price. However, these tools can’t evaluate the style of the newly renovated kitchen. A room that appeals to lovers of mid-century modern won’t appeal to someone who loves farmhouse style kitchens. Computers also can’t account for wall-to-wall carpet in a bold color or patterned wallpaper in the powder room. Matters of taste impact home valuations, and computers simply can’t account for taste.
Factoring in the Human Element
Sales of condos, lofts, and penthouses in 92101 are driven by individual wants and needs. The sale price of a property is a unique interplay of timing, budget, and whim. If five different people want to buy one property, they’ll each have a different amount of money they’re willing to spend. However, there are countless intangible elements involved that might inspire potential buyers to put in a bid or keep searching. Automated tools can’t factor in the intangible, which makes them unable to provide fully accurate valuations.
If you’re looking to purchase real estate for sale in 92101 or are thinking about selling your home, don’t rely solely on online tools. Instead, reach out to a trusted real estate agent from 92101 Urban Living. Give us a call at 619-649-0368 today.