What Is My Home Worth? Why Online Valuations Stink, So Do Appraisers
“What do you think my home is worth?” “How’s the market?” By far, the two most asked questions of any real estate agent. We’d venture as to say the latter is more common, but the former is certainly something on everyone’s mind.
So how do you answer this, and how do you, the person not entrenched in the real estate market know? It’s not so simple, so let’s break it down.
The first thing NOT to do is trust an online valuation from any source. They can give you a ballpark, sort of, but definitely not something to bet the farm (or your home) on. Online valuation tools can’t get inside your home. They can’t walk around. They can’t feel the space. They can’t see the views. They can’t know just how close your neighbors really are. They can’t hear noises in the area. They can’t smell smells in the area. They just can’t get it right.
For example: In San Francisco a two bed, two bath remodeled Victorian home that’s 1200 square feet with a “bonus” room not counted in the square footage, walls knocked down to open up the kitchen and capture views right next door to another two bed, two bath Victorian in original condition are not going to be remotely similar in value…but the algorithms don’t know that. The algorithms base their valuations off of what can be quantified and that is only square feet, bedroom count, and location. So don’t trust the online valuations. Maybe in a Sacramento tract home community, but not in San Francisco where we have so many incredibly unique homes.
Second, don’t trust an independent appraisal. Yeah, we’re coming out and saying it. They are almost as bad as the online valuations. Truly. It is only their OPINION of your home’s value. They are human. They are subject to error and bias. Case in point, we were recently party to a property that just six months ago appraised for $1,865,000 for a refinance. Just last week, this same property was refinanced again. The appraised value…$1,600,000! That’s a huge difference for the exact same property in a market that has gone up in value, not down. Sadly, that’s only one example of hundreds of inaccurate independent (non resale) appraisals out there. So take them with a grain of salt.
What you should do…you need a licensed real estate expert in your area to come in, check out your property, assess the situation, show you comparable sales in and around the area, have a dialogue, and give you a BALLPARK of what it MIGHT be worth. Why all caps on those points? Because, nobody can truly tell you what your property is worth, until you find a buyer willing to buy your home, at a price you’re willing to accept. If you can’t come to an agreement on a sales price, guess what? You’re home is not worth what you think, so time to rethink the value.
Three examples of fluctuating values that appraisers or online valuations got totally wrong:
Numero Uno: 973 A 14th St. A TIC in San Francisco’s Duboce Triangle Area – We listed this property for $1,349,000 based off of reasonable comparable sales in and around the area in the $1.5M to our dream price of $1.65M. Had we received an offer anywhere near $1.65M my clients and I would have been thrilled. As it turns out, a couple buyers just had to have this home. We received 9 offers, and the price went silly to $1,850,000!!! Our recollection is that Zillow was claiming a value around $1.4M
Numero Dos: This property in the Mission we alluded to a couple months back. Our clients closed on the purchase of it in March of 2019 for a few million dollars. There were multiple offers, and we did what it took to beat out everyone. Fast forward two months (yes, just two months) and they just sold this exact same property, literally no changes, barely unpacked the boxes, for $2,000,000 more! That’s $2,000,000 increase in value in two months. (Did the value really increase, or did someone just have to have it?) No appraiser would ever see that price, nor would an online value algorithm. In fact, we recently received a call from the city assessor questioning the price at which our clients paid, and the $2M bonus sale wasn’t even on their radar yet.
Numero Tres: 1662 Page Street. By all accounts, a very desirable property, in a very desirable location, located directly across the street from two other properties we sold only a couple months prior: 1649 Page, and 1651 Page. The lower unit, 1649 Page was an extremely good, and timely, comparable sale for 1662, and it sold in the blink of an eye for $1,800,000 from a $1,649,000 sales price. Along came our listing at 1662 only a couple months later, the market took a hiccup, and it took us ages to get 1662 sold. We finally sold it off market for $1,700,000, a VERY good price indeed, but we all felt it should have sold for more. Alas, it didn’t. Again, the algorithms had it wrong, an appraiser certainly would have, and even we were blind-sided by an unexpected short-lived shift in the market.
So the long and short of it is, your home is worth what someone else is willing to pay at that given time, and the only way to find out the most accurate fair market price is to have that meeting/conversation with an expert, review the comparable sales, make an educated guess as to what the value might be, get it listed (publicly or privately), come up with a marketing strategy, expose it to the right people, and see what someone else is willing to pay you for your home…that’s what it’s worth.
To further make the point, the top 10 Weekly Overbids…we’d bet our farm some of these results were total stunners to all involved.
|453 Colon Avenue||4/2.00/N/A||12||$1,199,000||$1,876,000||56.46%|
|209 Elsie Street||3/2.50/N/A||13||$1,495,000||$2,105,000||40.80%|
|83 Coleridge Street||3/2.00/N/A||12||$1,298,000||$1,750,000||34.82%|
|700 Vicente Street||4/4.00/N/A||23||$1,295,000||$1,720,000||32.82%|
|274 Tocoloma Avenue||2/1.50/N/A||28||$849,000||$1,105,000||30.15%|
|2146 25th Avenue||2/1.00/N/A||14||$999,000||$1,300,000||30.13%|
|67 Pearl Street||3/1.50/||14||$1,295,000||$1,650,000||27.41%|
|2183 16th Avenue||3/2.00/N/A||14||$1,395,000||$1,750,000||25.45%|
|435 Oxford Street||3/2.00/N/A||12||$1,095,000||$1,370,435||25.15%|
For the better part of 15 years we’ve been sharing our tips, tricks, stories and advice publicly so you all can make educated decisions when it comes to your real estate needs. All we ask in return is to have a seat at the table when you’re deciding which agent you want to list, market, and sell one of your most valuable assets. We are pros, and our track record shows it. So if you’re wondering what your San Francisco / Bay Area home is worth, or how the market is, give us a shout and we’ll get you dialed.
Happy Aloha Friday!
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