I have some good news and some bad news.
Home values are determined by the Market, not Zillow or Trulia! These are benchmarks and, unfortunately, based on inaccurate data. “Like for like” is the rule of thumb for appraisals! Some of the reasons these data sources are not accurate is because they go out 1/2 mile radius, but not necessarily like for like. What do I mean by that statement? I will use my home as an example:
I live in Cathedral City, directly across the street is Rancho Mirage. The home values in Rancho Mirage are higher for the same or comparable property. These data sources do NOT take this into consideration when giving an estimate of value. So, when I pull up my home, it includes properties in Rancho Mirage, which skews the figures to a higher estimated value. Also, comparable sales need to come from the same gated communities or subdivisions. If no comparable sales can be found there, then they will go out from there, but again, like for like is the golden rule.
The long story short is my home’s value, as computed by those two sites, shows about 5% higher than the subdivision’s comparable value.
So, why am I bringing this up? Because value perception does NOT equal actual value. A home’s value is determined by what a willing an able buyer and motivated seller whom negotiate upon the price and terms of the sale. Appraisals are used for valuation when a mortgage is used to purchase or when the property is being sold by an estate, executor, or bank.
Properties are usually overpriced because this piece of information may not be provided when listing a home. Agents don’t determine value, seller’s don’t determine value and buyers don’t determine value. Real Estate professionals can provide current statistics from the MLS and provide an opinion, usually expressed in a value range, but they don’t determine value. We have the valuable market experience, but every sale is different just like every home is different.
The market determines value. It isn’t as back and white as most of us think. But, please don’t take my word for it, check out this great article from RIS Media on the topic: