Have you ever gone online somewhere to get a Computerized Home Valuation? Many people do, because it’s easy and there’s no commitment made to anyone, except a computer. And after all, everyone always wants to know what their home is worth. But is a Computerized Home Valuation accurate?
How It Works
First we need to understand exactly how a Computerized Home Valuation determines the value of a home. Based upon the density of housing in relation to the target property, the computer’s algorithm chooses a radius to work from. Next, the computer searches the databases to locate the properties that sold in a given time period, typically three or six months. It adds the total sales value of all properties within the radius, then divides by the number of properties. Whatever the result, is the computer’s valuation of the target property.
Sounds simple, huh?
Here’s The Issue with Computerized Home Valuation
If the radius selected contains homes which are all of similar size, condition and the lots are very similar, this could be an accurate valuation. However, in New Jersey, will you find properties like that? Not likely.
Most parts of Monmouth County have small starter homes, condo complexes and McMansions located very close to each other. And by lumping all those homes together, the Computerized Home Valuation gives results which are distorted.
Here’s an example. We recently listed a home in an older neighborhood, 50 years old, 5 bedrooms, pool 5/8 acres lot. Within a half mile, there’s a townhouse complex. The home actually sold for $460,000, which was right for the neighborhood. However, the townhouses typically sold for $250,000 to $275,000. By using a computer valuation, the home had a value in the upper $300,000s.
Another example – the CEO of a major computer valuation website, recently sold his own home. His company (which shall remain nameless, we’ll refer to it as “Z”) placed a Computerized Home Valuation on the property at $1.6 Million. What did the home sell for? $1.1 Million.
A computer cannot give an accurate valuation of a home. There are too many variables involved such as size, condition, upgrades, location and more. The human touch is required to arrive at an accurate valuation. In addition, a thorough knowledge of the area and other homes recently sold or available is necessary. And the definition of this person is a Realtor.
So, if you want to get an idea of your home’s value call a Realtor. Call one who knows the market and knows the area.
Hey – here’s a great idea!
Call us – Bunny and Art Reiman – Realtors. We moved to Freehold in 1982, we have three generations living in Freehold, Howell and Farmingdale. We’ve sold hundreds of homes in the past 16 years and we can help you too.
Would you like to search for homes in other Monmouth County towns?