Why automated home valuations are so inaccurate
Online real estate portals such as Trulia built huge web traffic by offering automated home valuations.
The problem is, “AVMs” are the McDonald’s hamburgers of real estate home assessment. Fast, but lacking substance.
In the fine print, you can find margins of error that they report, sometimes by city or even ZIP Code. And they can be as high as 10 percent to 20 percent! On a $500,000 home, that’s a giant error!
An automated valuation is generated by a computer algorithm that takes into account property size, location and recent market and economic data. But it can’t distinguish between average and upgraded, a turnkey home and a fixer, a house in the middle of a tract and one that backs up to railroad tracks.
You need the human element and experience to truly differentiate between homes that, on paper, would appear to be similar.
That’s the problem with automated valuations. And it’s the reason smart home sellers choose seasoned real estate agents to help them get the highest possible price on their home sale.
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What’s My Home Worth? | The Problem with Zillow and Trulia | Automated Home Valuations Inaccurate | Riverside Home Values | Brian Bean and Tim Hardin