Lisa and Jim's Northern Nevada Real Estate Blog: Internet Home Value Calculators - How Accurate Are They?

Internet Home Value Calculators - How Accurate Are They?

Myrl ... You said it so well!  This is and continues to be a major problem in our area.  There is not rhyme or reason for what these auto "valueators" do and yet they pop in and out of our lives regularly!  Next to "Robo" signing this has got to be the worst abuse of technology that we have ever experienced!

A great blog ... Everyone should read it!

Occasionally, I will hear or read comments from homebuyers, homeowners, sellers and real estate professionals, about the value and use of online housing calculators that provide estimates of property value.

Earlier this week, I came across an interesting article in the Yahoo Finance section titled, “The Fuzzy Math of Home Values,” which delved deeply into this topic.


The article was written by Alyssa Abkowitz, of Wall Street Journal’s SmartMoney.  In one case vignette, Abkowitz showcased Jason Gonsalves, of our Greater Sacramento area.  Gonsalves had invested hard work to turn his 6,500 square foot home in the Sacramento suburbs into an ultimate grown-up party pad.  The home boasted a custom wine cellar, game room and a home theater.  There was a wood-burning pizza oven, and searing station outside.  An infinity-edge pool overlooked the lapping waters of Folsom Lake.  BUT as Gonsalves was finishing up on his home improvements, and delved into refinancing his $750,000 mortgage, he became startled when according to one popular real estate website, his home value had dropped over $200,000 during a recent seven-month stretch.

Another on-line real estate estimating website valued Gonsalve’s home at a mere $640,500.  Adding confusion to the picture – a real-life appraiser had valued the house at $1.5 million.

According to SmartMoney Magazine, the calculations behind online estimates are adding confusion to an already tricky housing market.

As increasing numbers of consumers are groping for information in a cloudy housing arena, the home-value technology provided by Zillow,, and have offered an alternative for consumers.  In the past years real estate professionals generally held most of the real estate informational data.  But with today’s fingertip technology, homebuyers, home sellers and owners can key up almost any home, in hopes of learning what a home is worth.


However, critics say, the estimates can be far rougher than most consumers realize.  Variations in home valuation can vary 20, 30 or even 50 percent higher or lower than a property’s eventual sale price.


The on-line companies, which provide their valuation estimators, rely on the use of algorithms.  Because these algorithms often change, the values of homes often change.  According to the SmartMoney article, this summer Zillow made adjustments that affected all of the 100 million homes in its database, and some home value quotes swung by hundreds of thousands of dollars in as little as a month.  A special Louisville, Kentucky home which according to legend, acted as inspiration for Daisy’s home in The Great Gatsby, quadrupled in value over 30 days.  While according to Zillow, a Brooklyn, N.Y. townhouse currently listed for $5 million, was valued at a jaw-dropping $31 million in the middle of the real estate crash.

The former owners of the “Gatsby house,” watched Zillow put a $331,000 value on the house in May.  In July it had climbed to $1.5 million.  Zillow claimed the lower estimate reflected errors in its statistical model.  The sellers had to fend off a stream of lowball offers before they ultimately sold their dwelling this autumn.


Zillow, Trulia, and all their competitors make clear their numbers are only guesstimates.  They present disclaimers about information and material consumers garner from their websites.  However, homeowners don’t always pay attention to the disclaimers. 


In most of real estate history, home values have been an appraiser’s task.  The process involves gathering data on recently sold properties in the vicinity, and comparing them with the “subject property.”  Size, condition and characteristics, are components considered.  Unique qualities and added amenities, such as a swimming pool can add value.  The appraisal process is as much art as science.


The SmartMoney article written by Alyssa Abkowitz is really an in-depth piece that goes more deeply into the process of home appraisal and the use of on-line calculators.  I recommend consumers and real estate pros read it in its entirety.  It can be accessed via: “The Fuzzy Math of Home Values.”

Real Living Great West Real Estate
(916) 635-0420



Comment balloon 0 commentsLisa Wetzel • November 17 2011 10:18AM