Zillow has made their “Zestimate” Â synonymous with home value. Often home owners use this figure as a guide to whether their home has increased or decreased in value or simply as a tool for prospective buyers.
Zillow’s Zestimate is what appraisers call an AVM Automated valuation model. These are essentially models that can provide real estate property valuations using mathematical modelling combined with a database. Several AVMs calculate a property’s value at a specific point in time by analyzing values of comparable properties. Accuracy can vary. Read more about Zillow’s approach.
So why have an appraisal if an AVM can do it all? Depending on where you are living, you may laugh at the value given by an AVM or completely agree with the value given. It widely ranges due to the limited data certain regions are able to feed those models. That argument is tenuous as an appraiser’s value can also vary depending on the appraiser completing the assignment. So why do we need appraisers?
There is a great deal of statistical significance in AVM’s so they are not to simply just be discarded. Appraisers may even approach value by similar means. Whether it be by regression analysis, match-paired, comp selection, the process can be very similar. Appraisers however speak more towards the qualitative value of a home. Condition and quality tend to be an oversight to AVM’s. As appraisers visit the home and comparables, he or she can attest to the quality and condition and affirm whether certain adjustments are merited. Many times, AVM data is valuating on incorrect data or outdated information. That is why banks, lenders and others require an appraiser for the job. No one is accountable for the figure given in an AVM and that is a comforting reason to hire an appraiser.
Appraisers are highly qualified professionals that go beyond an AVM. In today’s market, financing relies on there being accountability for valuation. Real estate appraisal assignments can vary. Depending on the scope of work needed, the depth of the report will vary. Although these are all variables that come into play, an appraiser is hired to take all these factors and approach a value for a property.
Remember, an appraisal is an opinion of value by a professional individual given on a certain date in time. Values can change often and opinions from different professionals will vary. That is why it is important to work with a company that is familiar with your market area and can offer professional data analysis. Speak with us today to see how we can assist you.
