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.

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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.

6 comments on “Free appraisal is worth every penny

  1. Yes, the estimates are way out of whack. I am a real estate broker and currently have a home listed for $359,900 and the Zoocasa appraised value is $418,000. Scary if consumers take the Zoocasa appraisals seriously. Most REALTORS® offer free home evaluations with no obligation. Our comparative market analysis take into consideratio recent solds, expiries and current listings. There are so many variables including upgrades, condition, lot size, location on street, etc. Many REALTORS® also offer evaluations on their websites allowing consumers to fill in the required information about their home.

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    • if you read the disclaimer on the zoopraisal it clearly states that you should contact a Realtor or an appraisor for a more accurate value.

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  2. My understanding from information on Zoocasa's site, is the data comes from contract.com, which is from Brookfield, itself a Real Estate company.

    Some areas seem to be better than others. This agent tested it out on 10 recently sold properties, and it did pretty well. http://www.chrisdavies.ca/2011/11/10-real-life-yeg-prope...

    Also, appraised does not equal sold price. That seems to be a common misconception!

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  3. It's good idea but impossible to get any kind of accuracy with an automated process. I too am a Realtor and I offer free online home evalutations but I also try to make it clear that without actually seeing someone's home, I can only give an educated guess at a possible range. It is always best to have a professional come to inspect your home to ensure you're getting a more accurate opinion. http://www.yourmarkhamrealestate.com/4a_form.php?…

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  4. This is hilarious. How a company can attach their name to something so incorrect blows my mind.

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  5. So Zoocasa.com offers inaccurate real estate property values? How long has this company been around? Do you know of more accurate place to find home values?

    Reply

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