Appraisal vs AVMs
I just saw an article titled “Realor.com now providing third-party home valuations” about Realtor.com now using a ‘new’ service to provide a home value.
Just for grins, I thought I’d do this essay using one of my recent assignments for the case study, which was in Bellingham, WA.
The home was undergoing renovations by a ‘flipper’, and it had a signed contract for a high $$ amount. The report was written ‘subject to’ completion of the repairs/renovations. During the initial inspection, the ‘flipper’ was present and doing some of the work.
After doing necessary comparable research multiple times to be sure I had not missed any relevant sales, I did the report and concluded the value at $25,000 LESS than the contract price, which also was the list price.
Yesterday, I did the 1004D Completion for this property. The ‘flipper’ was also present. Not a word from the ‘flipper’ or the client has been said about my concluded value!
Today, I decided to jump onto Realtor.com to see what it shows for that home. Their figure is 2%, or $9,300, higher than my concluded value.
Apparently the ‘flipper’ realized that the list and contract price was way too high!
Then I decided to check the Big Z, Zillow, to see what their magical figure is. Their ‘Zestimate’ is $4.00 higher (yes, 4 dollars) than the list price which I didn’t support! But their range starts $1,000 higher than my appraisal value, and goes up to $49K higher. Gee, how convenient… as the Zmate is right in the middle of that.
I also checked my home with Zillow, which does not show the bath count correctly, but claims the home is worth just a bit north of $400K. But sales they use to justify the value are screwy.
Going back to Realtor.com for my house, they show widely divergent values ranging from $342,450 at the low end to $471,800 at the high end.
I guess this proves that AVMs are highly reliable in determining home values… NOT!!
By the way, after getting the home renovated and sold, the ‘flipper’ will make about $65,000 on the transaction. Not too shabby! (And no, it was not a featured property on HGTV!)