In the property world, online valuation websites have been a game-changer for information-starved buyers and sellers. But while these sites contain lots of useful property info, their estimates are still just one piece of the fair-market-value puzzle.
Here are some key points to consider with online valuations…
No one has physically looked at the property.
Most of the Chicagoland area is comprised of several types of real estate that can throw off some of the AI algorithm. It could be risky to let a computer algorithm determine how much you should pay for the biggest asset you will ever buy. Especially when no one from that valuation website has visited the property in person.
You can learn local real estate values better than any computer program by undertaking your own market research.
There are some things computers can’t measure.
Algorithms can’t take into account the condition of the property and other critical factors that influence value like ease-of-access, sun aspect or the general feel of the home. Some houses you walk into and fall in love with and it can be hard to explain exactly why.
No two houses are the same.
If you are comparing apartments or terraced houses with other similar properties, then values may be easy to estimate. But in an area with standalone properties of varying ages, that have had extensive renovations over the years, it’s harder to compare apples with apples.
Once you go further and add in micro-location variables like school zones and sun aspect, the result is a wide possible value range for each and every property.
The market moves quickly.
In our information age, markets move fast. Online property valuations however are based on settled sales that happened months ago.
That doesn’t mean you shouldn’t pay attention to what they say, it just means you should keep your eyes on what’s happening right now.
Follow up with salespeople and ask what properties you recently visited ended up selling for. Go along to property auctions when you can, even if you aren’t bidding to see what properties are actually selling for today.
Properties are worth different amounts to different people.
Are you going to live in the home or are you an investor? Do you have family living close by? Is it in a school zone you want to get your kids into? Do you have a deadline to move by?
These are all factors that can lead to one buyer being prepared to pay a lot more than another for the same home.
If you follow the estimate, you might end up paying too much.
We have seen online valuations which grossly over-estimated the selling price of a property, too.
The best way to work out what a home is really worth is to find out what similar houses have sold for nearby and decide how they compare to the property you are considering.
The more information you have, the better. Online property valuations are a useful tool, but they are just one part of the bigger picture. It’s important to be aware of the shortcomings and remember that they aren’t perfect.
If your gut tells you the property is worth more or less than the online estimates, then trust your instinct and back it up with your own market research.