There’s recently been a lot made out of online services for homeowners and those wanting to sell their own home. A new web service from Zoocasa now offers an opportunity to calculate your home’s value through a simple calculator. But, depending on what you are looking for, it could be too simple. If your goal is general value – say, within $75,000 or $100,000 range – this will work. But for current market value, more often than not it will be wrong.
Why will it be incorrect, you ask? First off, as indicated in the article below, the valuations are based on comparative values as determined by financial services companies. These companies evaluate based on lending value of a home, not market or resale value. How much a home is worth to give you a mortgage can be very different from what you can sell it for. Often the lending value is lower than resale value by quite a margin. And lenders are evaluating risk based on a homeowner’s finances and world market conditions, but not on the local real estate market.
Online evaluations also depend on assessed value which, again, differs from market value. Assessed value is based on evaluation for the purposes of taxes and is determined from afar by a government agency. These valuations are also static for one year, as they are based on a home’s value from the most recent July 1st. Accurate on July 2, yes, but a lot less so by that fall and certainly the next spring.
Home valuations by a REALTOR or some other licensed appraiser are going to give you the most accurate assessment. Not only do they limit comparables to a proper time period of recent sales, they also consider current market conditions (demand), number of current comparable listings (supply), updates and renos, time of year, etc.
But this online service can be valuable as a starting point. I tested it with three listings in Richmond that I have seen and toured. I know the asking price and I know comparable sales. What Zoopraisal gave me was an average of $81,000 higher than the current asking prices. Sound good to you? Maybe, but if you listed at an inflated price you would probably would see your home sitting on the market a lot longer than you would hope.
Article below from the Globe and Mail
Real estate appraisers decry Zoocasa calculator
The country’s professional real estate appraisers are sounding the alarm over a service that allows Internet users to receive instant estimates of a house’s worth using past appraisal data.
Zoocasa.com recently unveiled its Zoopraisal service, which allows anyone with a web connection to punch in an address and receive a valuation estimate. The estimate is generated using data provided by Centract Settlement Services, a property valuation company that has appraised millions of homes across the country on behalf of financial services companies.
But the Appraisal Institute of Canada says anyone who let Centract into their home wasn’t doing it so the data could be used by snoopy Internet surfers curious about property values along their street.
“Our organization has significant concerns relative to the confidentiality and custody of the data being used to populate the site,” said Keith Lancastle, the organization’s chief executive officer.
Zoocasa president Butch Langlois said the service isn’t intended to replace the services of professional appraisers or real estate agents, and the estimates are based on similar properties in a neighbourhood and not on any specific report on a specific property.
“We are not actually pulling any data on specific houses,” he said. “It’s based on sales and appraisals in the area around the home.”
Traditionally, the best way to get an estimate of a house’s value was to call a real estate agent. But as data become more available, web services such as Zoocasa are stepping in to make the process less cumbersome for consumers.
Appraisals are typically carried out when someone is
looking to borrow money against a property. The Appraisal Institute of Canada has about 5,000 members who are certified to do the work. Mr. Lancastle said he was “concerned” that services such as Zoocasa’s could undermine his organization’s reputation.
“Much as a retail store blood pressure test is not a substitute for regular medical care, a web-based calculator is no substitute for a real property appraisal,” he said. “A proper appraisal comprises a number of stages – including research, analysis and interpretation – needed to provide an accurate estimate of the market value of a property.”
While some real estate agents have also expressed concern about the service, others such as George O’Neill of O’Neil Real Estate Ltd. in Toronto have welcomed it as a one more tool for consumers to use before they approach a professional for help.
“I would prefer that someone do all this research before contacting me so I can provide more value-added services rather than just provide numbers,” he said. “That may put me in the minority amongst my peers. But I’d rather spend my time getting someone the best price, because that can never be automated.”