Online home value estimators such as Redfin, Realtor.com, and RealAVM are using “big data” to estimate the value of our homes every second. Zillow alone reported in 2018 there were over 188 million monthly visitors to their website in August. Today, the answer to ‘How much is my house worth?’ can be found in less than a minute.

A funny true story: We actually had a guy last summer call us and say the value on the internet was wrong. He wanted to hire us to do a full interior appraisal to change it! After fifteen minutes on the phone explaining how we had no control over what Zillow was reporting, he realized what he was asking, and we both got a few laughs out of it.

I currently recommend Redfin and Realtor.com to people who require a free “rough estimate” or a “ballpark figure” which is typically enough to satisfy curiosity. The main drawback of Automated Valuation Models, however, is that they can’t see inside your house. The upgrades, remodeling, wear and tear, view, quality of construction, internal obsolescence, or painted kitchen cabinets can all affect the value estimate. As real estate data becomes more accurate and available, these types of alternative valuation products will become more reliable. But, for now, a human must accurately interpret the information to deliver a more precise valuation.

If you are planning on buying or selling, are going through probate or divorce, or need a valuation for taxes, you need a much more accurate value. This is where a human comes in – a real estate professional like a Realtor or appraiser is necessary to determine an accurate value.

A step above an automated value estimator is a Brokers’ Price Opinion (BPO) produced by a Realtor. These can be extremely accurate when produced by a Realtor who knows more about a particular subdivision than an appraiser. The downside is that Realtors have an inherent tendency to value a property slightly higher than the market value. This is because they are not bound by the Universal Standards of Professional Appraisal Practice (USPAP) like appraisers are.

Due to the USPAP, appraisers are obligated to complete credible, ethical, competent, and unbiased appraisal reports. After years of apprenticeship and course work in appraisal theory and practice, the appraiser uses their skill to analyze the market data to deliver a more reliable appraisal report.

Another step up is what appraisers call a desktop appraisal. The appraiser uses online photos and Realtor comments to ascertain the condition, quality, upgrades, and amenities to develop a full appraisal. The same analysis and development are used as in a desktop appraisal as an interior appraisal. These usually cost about half as much as an interior appraisal and take approximately 24 hours to complete.

However, there are limitations with desktop appraisals that can compromise the final value conclusion. For example:

• Inaccurate assessor data
• MLS photos that do not show any issues, like water damage
• Complex property
• Extensive deferred maintenance
• Rural area location
• Unobstructed strip views
• Not enough data

When this occurs, a desktop appraisal is not appropriate. An accurate valuation will need a full appraisal.