Which is the Most Accurate Online Home Valuation Website and How To Price Your Own Home
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Which is the Most Accurate Online Home Valuation Website and How To Price Your Own Home

Hey guys, Paul Argueta here!
Today I’m going to cover with you which home valuation sites are the most
accurate and I’m gonna tell you how to price your home. Thank you for visiting
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schedule. Visit them at collegeofrealestate.net Let’s talk about online home
valuation sites. I’m going to give you the pros and cons of each of these sites
and in my opinion which is the most accurate, so let’s start with the big
four. The big four or what I call RITZ; Realtor, Redfin, Trulia, and Zillow. No, not
Ritz crackers. Please Nabisco don’t send me anymore cease and desist letters. RITZ;
Realtor, Redfin, Trulia, and Zillow. Now the pros of using these sites for
your instant valuations are: Number one, that it’s free and most valuation sites
are free anyway. Number two, there’s no real registration required to use
these sites. Number three, they’re very easy and simple to use and they look
great. They are seamless, it’s very fast, quick, I mean there it isn’t that
difficult to figure out. We’re gonna about a few other sites that make it a little bit more difficult but the Big Four it’s very simple and easy to
use, so those are the pros of using those sites. Now let’s talk about the cons. The
first con of using these sites is that these instant valuation sites will rely
their algorithms will rely on distance and time, and normal appraisal techniques
require that we use comparables within a 1 mile radius if you really want to get
an accurate depiction of what your property is worth then you really want
to try to keep it within a quarter mile radius. Now if we’re talking about condos
townhomes or planned urban development communities if it’s a condo you want
your most recent comparable sale or most recent active listing to come from the
same building that you reside in. Those are always going to be the best
comparables. The Big Four; RITZ will use a distance you know to
determine which is the best comparable. Now somebody can argue that hey you know because they’re using distance you’re still gonna get those
comps that are within the same building or same gated community, and that’s true,
but because they can go as far as a mile you know you’ll also see some
comps that might skew the value’s higher or it might skew the values lower you never
really know. So when you’re looking for comparable listings, comparable active
sale listings, or comparable sold listings you tend to want to stay within
a quarter mile radius and because they’re using a distance search to
find other recent sales what will happen is you can actually get comparables that
are in a completely different neighborhood even though they fall
within the quarter mile radius. Another thing that you want to avoid when
valuing your home and we’ll talk about this a little bit later is you want to
avoid any natural or man-made barriers if you will, so, major streets, freeways,
bridges, mountains, livers, livers… rivers, streams. I some how have gotten lost here. I’m just thinking about walking by a stream.
Anyway, so you have to avoid any of those things and when you’re searching within
a quarter-mile radius depending on where you live there is a good chance that you
will come across those major arteries or freeways that you shouldn’t cross and
and there’s that whole north and south thing which we’ll talk about a little
bit later on. Another con of using the Big Four or as I call it Ritz is that
when you’re trying to get the value of multifamily properties, and when I say
multifamily I’m referring to four units or less. Five units or more would be
considered multifamily commercial, right? So they are definitely the Big Four are
definitely not going to be able to get you an evaluation for five units or more
and it’s still challenging for them to accurately get values on four units or
less and here’s why, the Big Four cannot take things into account like rent
control and there are certain cities that have rent control including Los
Angeles where your value is strongly going to be based on the rents that
you’re currently collecting from the tenants that reside in those
properties, so the Big Four cannot take those things into account without
knowing that information so you know that’s one of the other cons of using
the Ritz; Realtor, Red Fin, Trulia, and Zillow to get your instant valuation
when we’re talking about multifamily. I don’t know if this is a con per se but
I’m going to share it with you anyway. One of the things that we’ve noticed in the
industry is that when we place a property up for sale and the listing is
shared through all the syndication online, so it goes through Zillow,
it goes through Realtor, it goes to any other online portal that uses idx or internet data exchange
information is that when we place a property up for sale these portals will
then make their values initially very close to what the original list price
was. In fact this could be urban legend but I am a part of quite a few chat
boards and message boards on social media and there was a time where one
agent placed a property up for sale and rumor has it that he hit a couple zeros
too many, couple of mistaken keystrokes and it priced the property up to a
billion dollars. It went up in through syndication and was promoted on all
these sites and there was a couple sites I’m not going to say which ones that
then place their online valuation of that property for close to a billion
dollars so clearly it wasn’t worth a billion dollars, it was just a mistake,
but what I’ve noticed and forget you know properties that we’re talking
millions or billions what I’m noticing is that these properties once they
hit those portals there valuations from when their active listings tends to
be skewed or leaned towards what the original list price was. The other thing
that we’ve noticed is that when these properties sit on the market the longer
they sit on the market the more those valuations start to decline,
right? Now it’s common sense that if it hasn’t sold within 45 to 60 days right
there’s a good chance that the property is not worth that price, right? We all
understand that, but you know they’ve adjusted those algorithms to reflect
that so those values for those active listings tend to steadily decline the
longer the property sits on the market and again I don’t know if that’s a con
or a negative thing per se I just know that that’s something that we see on a
regular basis on our end. Portal number two, ForSaleByOwner.com,
now if you don’t know ForSaleByOwner.com was recently acquired by Rocket
Homes back then it was known as In-House Realty but Rocket Homes is acquired for
sale by owner they are definitely making headway as a competitor for RedFin and
Zillow and they really want to have their own standalone platform and I will tell
you that I’ve gone on the site and I’ve tried to find the evaluation. When you
initially go to ForSaleByOwner.com because it is a site where you can post
your property up for sale it seems or it feels as if initially
all they really want you to do is advertise your property for sale on that portal, so
it can be a little challenging finding the valuation button on that site to get
the value, but I did try it, I did use it and once you plug in your address it’s a
little clunky but it takes a little bit longer so the process isn’t quite as
seamless as the Big Four but it does give you the value instantly and when
you get your value from ForSaleByOwner.com the same cons that we
talked about earlier from the Big Four or RITZ is exactly what you’re going
to experience when you search it on ForSaleByOwner.com you’re gonna realize
that you know their algorithm is based on radius and time and the same
cons that I talked about earlier are gonna apply here as well. So after the Big Four
and then ForSaleByOwner you’re gonna start looking at other online portals
that are provided by major lenders, banks like Chase, Wells Fargo, Bank of America,
Citibank, and these lenders do have online valuation sites as well. What my
experience has been using them has been that they’re very slow and they’re very
clunky and all of the stuff that I talked about from the Big Four all of
those cons will still apply to this site. Most of these sites for the banks are
providing you this information clearly because they want you to use them for
financing purposes and so it’s not very user friendly and it’s not
necessarily designed to get you to register for your valuation in as much
as they want you to use them for your home loan. So far we’ve gone through
the Big Four, RITZ, Realtor, Red Fin, Trulia, Zillow, and then following the Big Four we then talked about ForSaleByOwner.com right we talked about
their evaluation and then after that we talked about the banks. Most Bank portals
do have instant valuations they’re slow they’re clunky they’re just as accurate
but again they don’t take into account things like condition and sometimes the
distance which may cross into a whole different neighborhood, all right?
So after the banks we’ll then talk about the franchise sites. So there are certain
sites now I will say that I did look for these valuation sites that provided
instant values and the only one that I could find presently was Remax. The vast
majority of the other franchise sites like Century 21, ColdWell Banker, Sotheby’s,
and any of the other ones that you can think of, and Keller Williams. If
I’m forgetting any of them please forgive me that doesn’t mean that
they’re not any less valuable all I’m saying is that the vast majority of
those evaluation sites tend to be sites that are designed to capture information
and i use the same concept on my own website so I’m not knocking it, okay? Remax was the only site that I found where you could punch in your address and get
an instant valuation. The vast majority of the others again including my own was
really designed to capture information so that they could go back and provide
you with a more accurate valuation that they could either email to you or text
you a little bit later on. The last and final valuation sites that I’m going to
recommend are rehrealestate.com and talktopaul.com. Now if you don’t
know talktopaul.com is me and REH Real Estate is the brokerage that I
founded with my partner, so yes if I didn’t give them a plug right what would that say about me. So again our sites do offer online
valuation models you will need to go in there, you will need to register we will
provide you with an accurate CMA which is a comparable market analysis and it will take into account all of the stuff that I’m going to cover with you next as
I go into how to price and value your home and some of the little things that
you should take into account, so just to recap the online valuation model is very
simple, it’s easy, there’s no registration required but there are some cons in that model because of the distance search because they do cross
into other neighborhoods even though it might be completely different zip codes
because it does fall within a quarter-mile radius you might start to
see comparables that don’t make sense. In addition to that I talked a little bit
earlier about how the values are skewed once we put properties on the market. How
does that affect their algorithm? How does that affect how they will value
your home in comparison to the active properties that are up for sale?
Taking into account that they’re valuing them very close to what we’re originally
listing them for and in some cases there are some listings on the market that
will be overpriced you can’t avoid that there are some some sellers that are
just testing the market to see if they can get their price and again I use that
example of how one agent made a keystroke error and priced the home at a
billion dollars and the online portals lean towards that billion dollar
valuation as well. How would that impact your evaluation as well? I’m not knocking
the online values I think they’re a great tool I think they’re simple and
easy to use I use them quite often as a matter of fact to compare what their
valuation would be versus what my valuation would be but I will say that
the ones where you do go in and you do register and you do provide them with
the information is going to be a little bit more accurate just because you’ve
got somebody that’s personally you know analyzing it themselves so it’s
kind of like comparing it to off the rack and bespoke, right? Online instant
valuation I personally would compare it to an off-the-rack type of valuation and
an valuation where you’re going to register and provide information you’re
going to get something that’s bespoke that’s a little bit more custom to you
especially if we’re talking about multifamily. Okay so let’s talk about
pricing your home yourself. Now so you’ve gone onto one of these portals
let’s say you’ve gone on to the instant online valuation site you’ve used one of
the Big Four if you will you saw your value and you still want to make sure
that it’s accurate okay here’s a few things that you want to take into
account when pricing your home Number one you can compare your property to
properties that are 20% larger or 20% smaller than yours based on your square
footage. Now I know that there’s gonna be some properties and there gonna be some
homeowners are gonna say “Well Paul you know what I have an extra four or five
hundred square feet worth of space it’s just not permitted,” and while I
appreciate that and I could see the value in that and I’m sure that there’s other
buyers that will see the value in that if it hasn’t been permitted and it
doesn’t show up on county records you’re not going to be able to count that
towards the value of the property, so 20% up and 20% down you can compare home
sales and active listings that are 20% larger and 20% smaller than yours. How do
you adjust for bedroom and bathroom count? So if you have a four-bedroom
two-bathroom home right and you’re looking at a house that’s a
three-bedroom two-bathroom home and they sold for a particular price then what you
would do is because your property has one bedroom more you would adjust up
$10,000 for that bedroom, okay? Now this does not work across the board this is
just simple techniques that we in the industry will use okay but typically
it’s about a ten thousand dollar increase in value of per bedroom and a
five thousand dollar increase in value per bathroom right that also works the other way around so if you have a two-bedroom
one-bathroom home and you see a three-bedroom one-bathroom home that
sold for a specific price well then when you’re making adjustments you would
reduce what they sold for or what they’re selling for by $10,000 to
reflect that your house is only a two-bedroom one-bath versus a 3-bedroom
1-bath. I hope that makes sense. Now that’s simple valuation, going back to
what I said earlier in this in this video you don’t want to cross major
streets now you know what a major street is and you don’t want to cross a freeway
and you don’t want to cross a bridge and you don’t want to cross a hill so these
are all things that you don’t want to compare properties to if you live in an
area where there’s rivers and lakes and streams and they divide property
territories I’m not necessarily saying your personal property but they do
divide parcels of land then you don’t want to compare properties that are on
the other side of that parcel. Now you you may be forced to in rare
circumstances when there aren’t any comparables available and I get it but
when there’s a ton of other comparables right that are nearby that don’t cross a
major boundary then there’s no reason to go seek out that comparable property
that’s for sale or that sold just to try to justify your price, right, and what
will happen is if you do that you may run into appraisal issues later on
if you do decide to sell the property or refinance the property. Whatever it is
that you’re investigating the value for. It may also be for insurance
purposes but whatever the reason is you want to try to make sure that you tend
to find the properties that are closest to yours without crossing any of those
boundaries. So let’s talk about timeframes now typically you can use comparables right if you’re going to be looking at the properties that have sold you can use
comparables that have sold within a six-month time-frame, all right? Personally I prefer to look at properties that have sold within a 30 to
45 day timeframe because those give me a more accurate depiction of what is going
on in the market, right, but again depending on how unique your property is
you may have to go six months back. In some rare cases you may have to go as
far back as a year I’m gonna recommend though that you try to stick within
about thirty to forty five timeframe so you’re going to go back about a month to
maybe a month and a half to see what has sold so that you can use those as
comparables, right? Now as far as active listings again you’re gonna try to find
the three closest active listings that are for sale near you all right and then
you’re gonna make adjustments for a bedroom and bathroom count and then you
might have to adjust for the square footage right but remember you can only
go up twenty percent up and twenty percent down, “But Paul my house is nicer
than my neighbors, my house is better than my neighbors, I put a gold toilet in
my property,” look I get it right everybody has an emotional attachment to
their home and I appreciate that and I appreciate that you may have invested
hundreds of thousands potentially millions of dollars into your home and
look online valuations and even valuations that I perform personally
without having seen the home don’t always reflect all of the amazing things
that you may have done to your home those are things that we can take into
account a little bit later on but what I’m giving you is the bare minimum that
you need to know so that you can price out what your home really is in
comparison to everybody else once you’ve done that online valuation and then it
will give you a pretty good idea of what your property is worth. “Okay Paul so what
do I do if I have a multi-family dwelling and I need to know how much
this property is going to be worth?” Well in that scenario what I would suggest is
you reach out to your local real estate agent, your local real estate broker and
what you can do is you can request a valuation for that property. Again,
if it’s a multi-family property that is located in a rent-controlled area then
the rents are going to have a huge impact on the value of the property so
you’re gonna have to be prepared to provide the rental information so that
we know. If you live in a multi-family dwelling yourself and you’re gonna be
vacating that property then you know that the rents clearly won’t have
as much of an impact on if it’s just income property, all right, so keep that
in mind as well but the online valuations is probably not the way to go
if you’re trying to value your multifamily properties, okay? All the
other rules will probably apply for four units or less so if it’s four units or
less you’re gonna use the same type of techniques that I talked about earlier
the 20% up or down the $10,000 per bedroom and the $5,000 per bathroom. I
just armed and made you dangerous. Use the information that I shared with you at
parties go and impress people show them that you can get the values of their
home just by looking at it 20% up 20% down you’re gonna be the rave of the
party. Look you know I know it’s boring but at some point you’re gonna want to
know the valuation of your property right you might be doing the refinance
you might need it for insurance purposes or you might be thinking about selling
hopefully I’ve given you enough information to where you can compare
what the values are going to be like based on what is out there on the
internet and based on what you can see within your neighborhood, all right? I
appreciate you watching this video feel free to comment below if you have
anything positive, negative you want to make fun of me that’s okay I’m pretty
thick-skinned, go ahead and comment below. I look and review and respond to all of
those comments. Please start a dialogue let’s help each other out in
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