Dec. 1, 2006: The best estimate of the value of a home comes from an appraiser

Who can best judge what a piece of real property will sell for?

We all know the answer to that. The best estimate of the value of real estate will come from an experienced real estate appraiser.

After that, a Broker's Price Opinion will come second. In certain very homogenous neighborhoods, a Price Opinion may be just as accurate as a full appraisal.

Third place belongs to an experienced agent's Comparative Market Analysis. This can be very accurate in homogenous neighborhoods, substantially less so where homes or lots differ significantly.

Last place goes to the results produced by an Automated Valuation Method, such as Zillow.com or Eppraisal.com. An AVM does not evaluate houses, but rather provides statistics and records about houses. It cannot, for an extreme example, tell you whether the house is still there at the time of the evaluation.

It is fairly common to hear people say that AVMs will get more accurate in time. In fact, there is a finite limit to how much they can be improved.

A CMA is essentially an all-paper calculation. But a CMA is produced by an agent who has a great deal of on-the-ground experience, most of which will never be encoded into an AVM's software. Amenities such as landscaping, decor, orientation or views cannot be accounted for by an AVM.

But the other end of this question is need vs. costs. If you want to know what your supervisor's house is worth, use Zillow.com. It costs nothing, and close enough is good enough.

If you need to know what to offer on a house you want to buy, you need a CMA at the least. The good news is, your agent will probably provide it free.

The same is probably true for a Broker's Price Opinion, which you will want if you are planning to sell a home.

But if you need to know the value of a piece of real property to a very high degree of accuracy -- for instance, to qualify for a mortgage -- you're going to pay $300 or more for a full appraisal.


Greg Swann is the designated broker for BloodhoundRealty.com, a full-service Metropolitan Phoenix real estate brokerage. This article originally appeared in the West Valley regional sections of the Arizona Republic.

Spread the word: Click here for a printer-ready version of this column.

Or: Steal this book: I've written over 200 of these real estate columns. They are consistently one of the most popular features on our blogs. Many of them are dated and/or entirely Phoenixocentric. But many others are timeless and generic. If you want to use any of my columns on your weblog or web site, feel free. Three rules: Don't change my text, credit me as the author and give me a link back to http://www.bloodhoundrealty.com/ with appropriate anchor text. Something like this, perhaps:

<a href="http://www.bloodhoundrealty.com/" target="_blank">
Phoenix Realtor Greg Swann</a> suggested I share this with you:
Am I link-baiting? You bet. The quid pro quo is free content for your site that pulls eyeballs and excites interest.

 
About BloodhoundRealty.com: Who we are and how we work