Thursday

Internet Home Pricing Models: Are They Good Yet

Not really. An article on MSN Money brings out a few good points about the Zillows and the Realytrac's, the new digital attempts to evaluate your home.

How They Work

1. They gather all the same info as an appraiser from public sources: Location, square footage, age etc.

2. They use advanced math (algorithms) to try to compare two similar properties and add or subtract value to arrive at a useful comparison between like properties. These are the comps we use to help us choose one property over another.

3. Finally, a value for the property is derived and this is the real function of Zillow or Realtytrac

Are They Accurate

First its important to understand what they do not measure: According to Marilyn Lewis who wrote the MSN Money piece, "view, landscaping, remodeling, condition and wear, curb appeal, fine fixtures and materials, floor plan, room sizes, neighbors and the appeal of neighboring properties, access, noise, odors, design, the owners' taste and all the other human factors that comprise a good chunk of a home's value."

The online sites are not yet very accurate from a purely data driven view because they do not yet include remodel, room size neighborhood. The reason is that the public records dont include a lot of the changes made over the years to any property.

It seems to us me that most decisions to act are really emotional not data driven. If thats true then the online pricing sites are not yet giving the most most essential data. How the property feels, do we like it, is a view more important than noisy neighbors. They will never be able to create a formula that replicates all the soft issues involved in a sale.

Whats the Point Then

They will get better as information is updated by owners that use the site and even though they arent accurate they do create curiosity and after all, dont we want to know how much equity we have, even if it isnt accurate. And as a property sells, the info is accuarate as of that date and so they do get better.

Thanks for Reading

Howard Bell
www.yourpropertypath.com







courtesy of yourpropertypath.com via yourminis.com

No comments: