Online home value estimators such as Redfin, Realtor.com, and RealAVM are using “big data” to estimate the value of our homes every second. Zillow alone reported in 2018 there were over 188 million monthly visitors to their website in August. Today, the answer to how much is my house worth it can be found in less than a minute. We actually had a guy last summer call us and say the value on the internet was wrong, he wanted to hire us to do a full interior appraisal to change it! After fifteen minutes on the phone explaining how we had no control over what Zillow was reporting, he soon realized what he was asking and we both got a few laughs out of it. (true story) I currently recommend Redfin and Realtor.com to people who require a free “rough estimate” or a “ballpark figure” which is typically enough to satisfy curiosity.
As real estate data becomes more accurate and available, these types of alternative valuation products will become more reliable. But, for now, a human is needed to accurately interpret the information given to deliver a more precise valuation. The main drawback with Automated Valuation Models are that they can’t see inside your house. The upgrades, romodeling, wear and tear, view, quality of construction, internal obsolescence, or painted kitchen cabinets can all affect the value estimate. If you are planning on buying or selling, going through probate or divorce, or need it for taxes, you need a much more accurate value. This is where a human comes in and a real estate professional like a Realtor or appraiser is necessary to determine value.
A step above an automated value estimator is what Realtors produce which is called a Brokers’ Price Opinion or BPO. These can be extremely accurate; I have met many Realtors who know more about particular subdivisions than most appraisers. However, Realtors have an inherent tendency to be slightly higher than market value. They are not bound by the Universal Standards of Professional Appraisal Practice (USPAP) and appraisers are obligated to complete credible, ethical, competent, and unbiased appraisal reports. After years of apprenticeship and course work in appraisal theory and practice, the appraiser uses their skill to analyze the market data to deliver a more reliable appraisal report.
Another step up is what appraisers call a desktop appraisal. The appraiser uses online photos and Realtor comments to ascertain the condition, quality, upgrades and amenities to develop a full appraisal. The same analysis and development are used as in a desktop appraisal as an interior appraisal. There are, however, limitations with desktop appraisals in which the appraiser will not be able to competently or ethically complete. For example, when the assessor’s data is inaccurate, it compromises the final value conclusion. When a Realtor only takes MLS photos of the good characteristics of the property and doesn’t show the water damage, the value will be inaccurate. If the property is complex, has extensive deferred maintenance, is located in a rural area, has unobstructed strip views, or the appraiser deems there is not enough data, a desktop appraisal is not appropriate and a full appraisal must be ordered.
So how much do desktop appraisals cost? Due to the current restrictions on appraisers posting their fees openly and antitrust law we can’t say on our website. We can however say they are approximately half as much as an interior appraisal, we can usually get them done within 24 hours.