Sites like Zillow claim to be an authority on home values, but are they truly friend or foe?

I know it’s easy to visit the sites that say “We can give you the true value of your home,” but take the information you see with a grain of salt.  They are based on tax records which is old and often inaccurate information.  Here’s why:

1. Tax records are past values. Think about it, 2009 tax appraisals in Austin just went out.  Do they really know what your home will be worth at the end of the year?  No, they are guessing what your home will be worth on December 31, 2008 based on data from 2007 and 2008.
2. Tax records are inaccurate values. Tax Appraisers are overworked and cannot possibly spend the time necessary for an accurate value.  They don’t know what your home looks like inside and they have access to limited data since Texas law does not require the disclosure of sales prices.
3. Tax values can fought. Ever hear what Michael Dell pays in property taxes for his home each year?  Let’s put it this way, it’s WAY less than you think and likely less than what you pay.  There are exemptions and many ways to fight the values to keep it low (and owe less taxes).  I successfully fought my appraised value to keep my taxes low as well.
4. Tax values can be high. Those that do not fight their taxes are often paying more than they need to.  The Tax Appraiser’s Office knows little about your home and takes measurements from the outside to determine the size.  Do you have a vaulted ceiling?  It may be counted as 2nd-story square footage.  Some homes are also taxed in the wrong district.

So calculations based on tax values are inaccurate, but Zillow and others do take other factors into account such as sales and list prices.  Still, these are often skewed as statistics often are because they depend on steady data — which we do not have in a fluctuating market.

What’s the best way to find the value of your home?  Hire an expert. Sounds simple, but I know many of you are on the fence about the value of Real Estate Professionals.  First, know that you don’t have to list with someone to get a value opinion.  Ask if how much they charge for a Broker Price Opinion (BPO); something usually used by banks for properties they own because the professional is out in the market daily and can view the property inside and out.  Don’t forget about Appraisers, although they will likely give you a different number so I suggest hiring both.

REALTORS® should use tax data (lightly, because it is OLD & inaccurate data), recent sales (old data, but better), and other active and pending sales.  They will take everything into account from your upgraded appliances to storage shed to any improvements that need to be made.  And above that, they can give you an objective opinion on what will be the best moves to bring your home more value for less money.

If you do want to take the stress out of selling your home by hiring a pro, interview agents before you commit.  Don’t just pick the first one you find.  But that’s an entirely different topic so I’ll cover it later.

For the record, I looked up some properties I know well because I have worked with them in the past couple months.

Property A’s Market Value: $758,00 – Zillow Zestimate: $639,000
Property B’s Market Value: $427,000 – Zillow Zestimate: $400,000
Property C’s Market Value: $486,000 – Zillow Zestimate: $569,000

If you want a ballpark, try these services.  Once you get serious, turn to the experts!