The Problem with Automated Value Models (AVMs)
In 2018 I wrote a general article, The Price is Wrong : What Zillow & Trulia Are Saying About Their Automated Valuation Models (AVM) about how generally Zillow, Trulia and other companies openly admit that their Automatic Valuation Models are prone to error. This holds especially true in Oakland Park’s South Royal Palm Acres neighborhood, often abbreviated as SOROPA.
Why AVMS in SOROPA Are Highly Susceptible To Error
SOROPA has homes that are not on the water and homes that are on the water and that have ocean access via the Middle River. The fact that these house are on the water elevates their property values quite a bit, particularly if they are remodeled as many of them are.
This past week I conducted a Comparative Market Analysis (CMA) of homes in SOROPA. The difference in value between those houses o the water and those that are not starts at about $50,000 and goes up from there. In some cases the difference is $100,000 or more. The amount of the difference depends on the properties being compared, but such high differences do exist in SOROPA.
Such a high variation is not very common in ‘normal’ neighborhoods but in this case because of the particular geographic make-up of this neighborhood there is a very valid reason for the variation and owners should be aware of it.
How To Find A More Reliable Estimate Of Property Value in SOROPA
First of all, if you own a property in SOROPA, do not rely on the AVMs on the internet. They will most likely be wrong because they do not know how to take into account the fact that some houses are on the water and some are not. These are algorithms that depend solely on data that is input to them and they cannot account for geographic peculiarities : waterfront property, corner lot, oversized lot, lot that abutts a busy street, etc. So there are two ways that you can obtain a more reliable property estimate.
Call An Appraiser
One of your options is to call an appraiser. Appraisers are highly trained and qualified real estate professionals that systematically evaluate a property and its surrounding area in order to give you their informed opinion of value. This service can cost anywhere from $300 or more depending on the property and depending on how much the appraiser charges.
Contact A Local Realtor®
Without divulging details, at the time of this publication there was a house listed, similar to the one I did the CMA for, with a real estate agent with a Limited Service Agreement. In other words it is For Sale By Owner, and the owner is paying a fee to have the agent list the property in the MLS. But because they are getting Limited Service they did not get a professional opinion of price and the house is, in my best estimation, priced about $50,000 more than what it is worth.
Sadly there is another house, listed with an agent, and that house is priced about $60,000 more than what it is worth. It has been on the market over 340 days. It is not selling because it is overpriced.
An experienced real estate professional will conduct a proper CMA to help a property owner arrive at an informed value of their property’s worth. Best of all a Realtor® does not charge for this service. It is not an appraisal because Realtor® are not licensed to do so, but the practice of arriving at a good and true estimated property value are very similar to those used by appraisers. In my case for example, I did receive some of my training from an appraiser.
Call a real estate professional that knows the area and that you trust. This way you will get a more reliable evaluation or your property’s value and if you are thinking of selling, you can move forward with your plans with certainty and if you are just curious, well then you will know what your house is really worth.
I hope you have enjoyed this article. If I can help you with anything, please feel free to contact me at 954-993-4246 or by email at firstname.lastname@example.org or click here to fill out a contact form.