This is me from today’s Arizona Republic (permanent link):
Use full appraisal to correctly assess house’s true value
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 Read more