How Online Appraisal Tools Are Saving Investors Time and Money
It’s easy to look at a home’s online valuation and write it off as “algorithm-driven” since aggregators like Zillow and Redfin cannot know everything about a home as they calculate the value. However, you might be surprised by how accurate many of these tools are, at least for on-market dwellings, with all their current stats in the MLS listing. Investors who want to buy a home themselves and those who want to use real estate for rentals and long-term value growth are wise not to write off the online home value websites because they offer such a helpful starting place. If you know you want to buy a home at some point soon, consider these factors.
Online Appraisal Tools Can Get it Right Within a Couple Percentage Points.
An online appraisal can be a little iffy, of course, in off-market homes – Zestimates, for instance, has about a 7% median error rate for off-market homes. It makes sense: think about whether this home’s data still relies on an old roof, a non-updated kitchen, and doesn’t even include a recently added wrap-around deck.
For on-market homes, it’s easier for them to use all the comparative data they have on recent sales and the information the agent uploaded to MLS, a complete snapshot of what the sellers are offering with this home right now. Here, the error rate drops to only slightly above 2% for sites like Zillow and Redfin. While markets constantly change, so the house you’re looking at might be valued differently, this close of an estimate is a fundamental tool for you.
These Tools Help You Identify Potential Bargains Through Alerts
When you know you want to buy at some point but don’t know exactly where or what you’re looking for, setting up customizable alerts can save you time while helping you find that needle-in-a-haystack deal that checks your boxes. Using tools like Zillow, you can draw boundaries on the areas you want to live in, set up saved searches that ping you when something new pops up, and generally “set it and forget it” until new options come along. Since many of us are on email all the time, setting up one set of finely-honed filters can mean you’re looking at a particular kind of home that fits your goals, and you’ll know how to use the appraisal to determine if the deal will be advantageous.
Appraisal Tools Help You Come to a Real Estate Agent With Background Knowledge
We’re not suggesting that you buy a house wholly based on these tools but rather that they help you gain ground as you start to talk to agents. As a proficient user of online appraisal tools, you’ll be able to tell in initial meetings with agents how much they are bringing to the table: are they saying all the numbers you’ve seen on the sites, or do they have comps that paint a picture of what you can expect in a given corner of a neighborhood? When you come with this background, you can also ask better questions that help you get to the heart of your agent’s bidding strategy and find the right fit for you – much better than going in without context and maybe working with someone who isn’t the kind of advocate you want.