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Nearly 6 million people logged on last month to home valuation site Zillow, up more than 60 percent from a year ago.
“People are, more than ever, curious about what's happening in their neighborhoods and how the housing downturn is affecting them,” said Amy Bohutinsky, a spokeswoman for the site that's almost 3 years old.
For decades, you could usually count on your home to gain value. Now prices are falling, a scary scenario for what is often a person's biggest investment. Charlotte area values have so far been spared the severe plunges of some markets. Still, there are many “price reduced” signs on homes for sale and tales abound of people unable to sell.
Online valuation sites are helpful to a degree, whether you're buying or selling or just wonder about your house's potential value. Most sites provide a range of value estimates, some too great to be meaningful. Whatever numbers you find, don't celebrate or turn suicidal.
“It's useful to get a ballpark idea,” said Walter Molony, spokesman for the National Association of Realtors, which started a valuation site last year. However, he cautioned, “It's no substitute for having a property appraised.”
Ultimately, the value of your house is what someone is willing to pay for it. A professional appraisal is a thorough valuation, taking into account many aspects of the house, neighborhood and surrounding area. Realtors, drawing on their experience in a given market, also help assess home values.
There are a variety of valuation sites, some regional, most national. They're almost all free to use. Many have links to real estate agents or related information, such as area homes for sales and remodeling tips to boost value.
There are standalone sites, those linked to services such as Yahoo and some popping up on lenders' sites. Last year, for example, Bank of America launched a valuation tool powered by Cyberhomes. The Charlotte bank says customers applying for mortgages or home equity loans have said they like the service.
The sites use public records, such as sales data and building permits, to generate values. Some apply fancy computerized formulas or other proprietary data to better hone values. The sites tend to be most accurate for houses that are part of a similar group, such as a subdivision. Custom homes, unique features, remote locations and older houses are harder to value. Recent sales of similar nearby houses also improve the accuracy. Foreclosures, a key factor in the downturn, can skew values.
Other problems affecting accuracy include out-of-date data, local laws prohibiting disclosure of real estate transaction information and errors. Some sites allow users to modify listings or calculate how improvements might affect value.
Molony, with the Realtors group, said a valuation for his Virginia house was missing two additions totaling 900 square feet.
Gauging the sites' accuracy is difficult, and that's one of the biggest criticisms.
“My experience is they can be anywhere from slightly inaccurate to grossly inaccurate,” said Lauren O'Connor Farlow, who is with Coldwell Banker United in Charlotte.
The longtime Realtor has “so little confidence” in the sites that she's never looked up the value of her Myers Park home. She says it's worth between $575,000 and $600,000. The range of values last week on six sites was $447,400 for the low end of Homepricecheck's range to $677,308 for the high end at Eppraisal. All the sites listed her three-bedroom house as having four.
Farlow has a large corner lot, which she says boosts the resale value because it allows for additions or the building of a larger home. That type of information wouldn't be part of the online valuations.
“There's so many factors in valuing real estate,” she said. “You can't just rely on a computer program.”
Agreed, said Bob Driscoll, a Charlotte home appraiser for about 30 years. “Everybody is curious,” he says of the sites. But, “you can't … say a neighborhood is doing this and that without actually being out there.”
Site operators acknowledge the potential for error. For example, HomeGain valuations prominently display this message: If you are planning to sell your home, you should contact a professional real estate agent to get a true value assessment. The site started in 1999, closed in 2001 and relaunched late in 2006.
“We found that the real estate agents were annoyed by kind of usurping their authority in order to tell consumers what the homes prices were,” said Louis Cammarosano, general manager of the site, which is part of a company whose ownership includes Observer owner The McClatchy Co.
The sites are constantly tweaking their formulas, trying to improve accuracy.
Zillow has begun comparing its “Zestimate” valuations to prices for homes that later sell, and listing the results on its Web site. Nationwide as of June 30, valuations were within 5 percent of the sales price only about one-fourth of the time and within 20 percent about two-thirds of the time. Results were better in Mecklenburg County, with more than one-third off by less than 5 percent and three-fourths in the 20 percent range.
“It's a starting point,” Zillow's Bohutinsky said of the values. “It's not take this number as the Bible.”
And she added: “A Web site like Zillow will never replace the professional experience of a Realtor.”
