Deciphering Real Estate Numbers

It is no surprise that many people are expanding the scope of their business as a result of the rocky economy. Many lawyers have moved to judicial foreclosure states in an effort to capitalize on the high foreclosure rate throughout the country. In addition, with the incredibly high unemployment rate, many businesses are seeking to make more money as consumer confidence is at an all-time low.

So what, exactly, do online real estate websites do to expand their scope? Many of these real estate websites offer extended real estate resources including mortgage calculators and home value estimators.

Why are Homebuyers and Home Sellers Using these Tools?

Many popular real estate websites boast their home value estimators that homebuyers can actually utilize on their smartphone or devices while they are out house hunting. Buyers are using these tools to help them determine the “true value” of the houses they are interested in while often using the number provided by these tools to make offers to the homeowner.

Furthermore, home sellers are also utilizing these tools to help get a better idea of what price they should use to list their homes. Clearly, everyone from buyers to sellers is utilizing the tools offered by these websites due to the convenience and accuracy—or so they think.

The Problem with Using these Home Value Estimators

Unfortunately, what many users fail to realize is that these home value estimators are definitely not as accurate as you would hope, especially since so many people are putting so much stock into these calculators. In fact, some people have found out that these home value estimators are significantly different from the appraised value.

Imagine having an $800,000 mortgage that you desire to refinance. In order to determine the current value of your home, you log onto one of the websites above and utilize their home value estimator. You quickly find out that the home that you just invested a ton of money in remodeling it from the inside out is apparently only worth $575,000. Obviously, as the homeowner you are floored by how much your home value has dropped in a mere 6 months, so you hire an appraiser. The appraiser comes back and tells you that your home is worth $1.7 million. At this point, you realize the inaccuracy of these online home value estimators that so many people are utilizing on a daily basis.

Use Online Home Value Estimators with Caution

Clearly, there have been significant errors in these online home value estimators which often significantly underestimate the true value of the home. The errors are more than likely due to the statistical models utilized by these real estate websites; however, homeowners and homebuyers must use these tools with extreme caution.

Although real estate resources offered by popular real estate websites can assist you in the home buying process, it is essential to remember that these tools have a high chance of error. As a result, those selling their homes or looking to buy a new home should definitely seek an appraiser to help determine the true value of the home.

In the end, be cautious when utilizing online real estate resources such as home value estimators when buying or selling a home.