Free appraisal is worth every penny
Better to eat the appraisal fee and get more precise valuations, and some additional insight on how your home compares with others in the area, when seeking appraisal values.
A month ago Zoocasa.com launched a features that helped home sellers and buyers a chance to review property values.
By plugging in a street address, the number of bedrooms and bathrooms, the style of the home and the year the home was built Internet users can get an appraisal of what the home is worth, according to the real estate search site Zoocasa.com.
Now, this is long overdue. For decades only realtors have had access to a large database of comparables—now Zoocasa.com is attempting to level the playing field by offering free information on property value information for specific addresses.
But there’s a flaw. A big flaw. The values provided by Zoocasa.com are inaccurate. Consistently.
So, I own two homes in the GTA and used both as a way to measure the accuracy of the appraisal offered by Zoocasa.com. For both homes, the website offered significantly higher appraisals than what current homes were selling for on the street.
For example, for our rental property (near Trinity Bellwoods Park) the website offered an estimated appraisal price of just under $740,000—with a high of $779,000 and a low of $700,000.
But when you compare these appraisal prices to the actual sale prices you get a drastically different picture.
Of the five homes that sold in 2011, the average price was $594,800 with the highest sell price reaching $665,000—97% of the original list price of $689,000.
Now, Zoocasa.com deserves applause for at least trying to provide necessary market intel on home valuations. And their fine print and spokespeople do suggest that their free service cannot replace professional (read: paid) appraisals. Still, I think home buyers and sellers should be cautious of using this or any other free aggregate information, particularly if these free appraisals will be used in setting a list price in a For Sale By owner situation. In that case, it may be better to eat the $150 to $450 appraisal fee to get a more precise valuation (and some additional insight on how your home compares with others in the area). For those using realtors, consider this a standard part of their service, as your agent.
The problem is that Zoocasa.com, and other sites like it, use averages and aggregates that don’t take into consideration the upgrades, or the value of specific attributes, such as parking. These averages can easily be skewed by outlayers—very low or very high priced real estate in the same area. That means that while I might play around with this free aggregate appraisal information, I won’t rely on it. At least, not until the bugs are worked out.