For anyone looking to find the value of a home, there are lots of places online to turn to these days. But how precise are these tools?
McEnearney Associates Realtors, a Washington area real estate brokerage, recently looked at some of the more popular home value estimators that are proliferating on the Web. Zillow has its Zestimate. Eppraisal, Trulia and Chase have their own versions of the tool.
To get an idea of just how accurate these estimates are, the firm examined 300 properties — condos, townhomes and single-family detached homes — in the Washington metro area that went to settlement in the first two weeks of September. McEnearney compared the properties’ actual sales prices to the predicted values of three of the more prominent tools — Zillow, Eppraisal and Chase — and the properties’ current tax assessment by the relevant jurisdiction. New homes were excluded because few of these Web sites have details on recently completed homes.
What David Howell, McEnearney executive vice president and chief information officer, said he found is that most of these “automated valuation models” are “wildly inaccurate and inconsistent.”
“We call this the ‘horseshoes and hand grenades’ home valuation model,” Howell wrote in the report. “You know the old cliche that close only counts in horseshoes and hand grenades. Well, close isn’t nearly good enough when it comes to valuing a home.”
But those who offer AVMs say their tools are just part of the process and that it in no way precludes the importance of real estate professionals.
Katie Curnutte, director of communications at Zillow, argued that her firm’s Zestimate is intended to be just a starting point for consumers. She also noted that because the data available varies by location so does the Zestimate’s accuracy.
“We’ve never been in the home so it’s not an appraisal,” Curnutte said. “It’s not going to tell you exactly what your home will sell for because the only way to ever know that is to put your home on the market. But it will give you an idea.”
Zillow also publishes its own accuracy table on its Web site.
Jim Manelis, senior vice president of mortgage products at Chase who oversees the Chase Home Valuator, pointed out that what makes predicting a home’s value challenging is that it is impossible to measure a buyer’s or seller’s psychology. There are too many psychological factors that go into home buying and selling that affect a home’s price .
“We are helping our customers plan ahead by providing accurate estimates. We try to incorporate many of the factors that affect a home’s sales price. Of course, a price also can be affected by both the seller’s desire to sell and the buyer’s interest in a particular house,” Manelis said in an e-mail.
Judge for yourself: Below are McEnearney’s findings for the District, Northern Virginia and Montgomery County.
For the 60 homes evaluated in the District, Zillow proved to be the best at estimating a home’s value, getting within 5 percent of the actual value 41 percent of the time, according to the study. The taxed assessed value was within 20 percent of the value only half the time.
The chart below shows the results for the District. The average is the overall average of all the estimates for that model. For example, the average tax value was 89.2 percent of the actual sales price. Highest is the highest predicted value compared to actual sales price. For example, a condo that sold for $80,000 had a Zestimate of $219,318. Lowest is the lowest predicted value compared to actual sales price. For example, a row house that sold for $411,000 had a Zestimate of $283,318.
|Within 20% sales price||87%||57%||75%||50%|
|Within 10% sales price||54%||34%||56%||18%|
|Within 5% sales price||41%||17%||36%||8%|
|More than 5% high||26%||20%||31%||17%|
|More than 5% low||33%||63%||33%||75%|
The chart below shows the results for Northern Virginia. Chase proved to be the best at estimating a home’s value, getting within 5 percent of the actual value 75 percent of the time, according to the study.
|No. Virginia||Zillow||Eppraisal||Chase||Tax value|
|Within 20% sales price||96%||88%||99%||84%|
|Within 10% sales price||80%||49%||90%||38%|
|Within 5% sales price||51%||21%||60%||15%|
|More than 5% high||25%||24%||16%||8%|
|More than 5% low||24%||54%||24%||77%|
The chart below shows the results for Montgomery County. Chase again proved to be the best at estimating a home’s value, getting within 5 percent of the actual value 54 percent of the time.
|Within 20% sales price||93%||71%||91%||69%|
|Within 10% sales price||71%||39%||81%||46%|
|Within 5% sales price||47%||24%||54%||29%|
|More than 5% high||30%||20%||12%||49%|
|More than 5% low||23%||56%||34%||22%|