My clients lost their dream home!

I was so frustrated today! With no evidence at my figure tips to disprove a popular website’s home valuation estimate which claims to be accurate within 2% of the close price, I was stuck.

I met this new client this morning at our first showing. It was their perfect dream home. The home was not on the mls. After we saw the home, my client found the home on a popular website. The website’s estimated home value was drastically different. The website’s value bothered my new client so much that they were hesitant to write an offer.

We lost the home a few hours later to another buyer.

This experience woke me up to write this post. I have evidence that I have been saving over the years, but I never compiled to show proof that the website’s estimated home values should not be relied upon. Thank you for reading this post and passing along to your friends.

How good are Home Value Estimates?

Depends ~ is the home on the market; or off the market

If the home is on the market, the algorithm uses the price listed on the mls to determine its home estimate. Literally, the moment a home is listed, a new estimated value for the home is created.

But what if the home is selling on the off-market? The home I showed my client this morning was not on the mls and selling on the off-market database. Access off-market listings at bottom of this post.

If the website’s home value algorithm does not have a current listing price, the algorithm’s home estimate can be drastically underpriced or overpriced.

Underpricing Examples:

The average home in the above table was underpriced by over 15%.  Click this link for Screen Shots of each Website Estimates

The above are all 312 Estates listings. Interesting, all of the above homes closed on average more than 15% higher than the before listing estimates. If our clients had relied on these estimates before listing, on average they would have lost $215k.

Overpricing Example:

I have a client who sold a home in Winnetka. My client disagreed with my pricing. Why? My clients were relying on a popular websites estimate. My value was nearly a $400k difference:

• Websites’ Estimates value before listing: $2.1+M
• My suggested list value: $1.75M
• My clients chose to list at $1.935M as they pick a midpoint between my value and the popular website’s estimated value
• Websites’ Estimate after listing changed to $1.917M
• 3 months later: I adjusted the price to $1.75M and the home sold for $1.735M.

If we would have listed for $1.75M originally, we probably would have sold closer to the $1.75M number due to seasonality and market time.

The Sad Truth:

Many agents use these home estimates to determine their pricing.

How I learned these websites changed their values

I figured this discrepancy out as I was doing a listing appointment. The potential client accused me of overpricing in trying to get her listing. The agent I was up against was using a website’s home value estimate in her pricing. I gave the potential client my price analysis and she went with me.

After I listed the property, the popular website’s estimated value of the home changed. The new estimate was very close to my pricing. I was shocked so I started to screen shot the before and after pricing estimates on these websites.

312 Estate Pricing

Why is 312 Estates pricing so much better?

312 Estates Pricing Model

1. Wisdom: We have personally seen thousands of properties and we have done hundreds of pricing analyses.
2. 312 Estates Pricing Analysis has 2 parts:
   1. Customizable proprietary software analyzes from a statistical side
      1. Everyone loves to say proprietary. Here are links with proof of our proprietary software for 3 very different types of analysis:
         1. Single Family Home on Wide Lot: Click here for our Spreadsheet for Single Family Home Analysis
         2. Land: Click here for our Land Value for Developer Analysis
         3. Condo Value of Boutique building with elevator: Click here for our Boutique elevator Penthouse Analysis
      2. Market approach: We provide you with all the photos and mls data for all properties on and off-market which we included in our statistical analysis.

~ No property is the same, and every analysis is different. We can customize to analyze virtually any stat which would increase or decrease value of a home. We created analytics for how a developer’s homes would sell in the future versus other developers. Sales in season versus out of season. 312 Estates has more than 50 different Macros we use to scrape our data from thousands of listings. We summarize our analysis for each home to give our client the best perspective on selling or buying. We use this data in negotiations as well. It can be very persuasive.

How do other Brokerages Price Homes

Nearly all brokerages use the mls CMA system given to all realtors. The mls CMA system typically analyzes 3 to 6 MLS properties, then decorates the deliverable with their company’s customized lipstick. 312 Estates uses 1000s of comparable statistics for us to analyze and then we individually summarize our deliverable. This provides us with a better basis for our pricing no one else has.  See above for samples of our spreadsheets we use to come up with our summary.

Conclusion

I wish I had this post for my client to read this morning. The home we saw was not listed in the mls. As shown above, popular websites’ estimated home values can be way off.  I am hoping the evidence in the post will persuade the next person to not rely so much on these popular websites’ home values estimates.

Please, please, please, call an expert and do not rely on these popular website estimates.

If you do not have an experienced realtor, I would love to help. My estimates are all free. To learn more about me click my name: Steve.

Call/text me anytime. Cell 773 580 2907

Access to Off-market Listings

If you know anyone who wants access to Zenlist which allows you to search properties that are available for sale but not listed on the mls, please send them my Zenlist link. I do about 35% of all my deals per year from the off-market. https://zenlist.com/a/steven.jurgens

Thank you for reading this post.