When you get a home appraisal it needs to be accurate, and you need to be especially careful with online appraisal options. These generally come in higher or lower than expected, although some of them are very accurate. If you choose to base a home’s expected value on an appraisal found on a website, you want be careful to determine exactly how accurate that appraisal may be. With an online home appraisal, you could end up being disappointed when the in-person appraisal doesn’t come up with the same or a similar figure. Your lender won’t rely on an online appraisal, of course, but can it really give you a good idea of how the appraisal will turn out? Here’s what to look for.
1). How does it compare to in-person appraisals?
An online home appraisal is different from the in-person version in several ways, so it’s very hard to compare them with any type of accuracy. That’s partially because the person or computer program creating the estimated value of the home has never been to the house to look around or verify any information that has been collected. That means there’s a possibility the information the online site is working with isn’t even accurate. You need accurate and correct information if you’re going to have the right appraised value, and there really isn’t any good way for an online site to make sure the information it has is right for the house. There could be outdated, incorrect, or just plain misleading information included.
An in-person appraisal, on the other hand, is very direct and thorough. An appraiser actually goes to the house, and they look at the structure and the systems. Then they write a report about the house, and they use specific formulas to determine the value. That is the value and report that goes to the lender when you’re trying to get a mortgage for a home. The appraiser knows the information on the house is correct because they have seen the home, and the lender knows the information is accurate because they trust the appraiser. With that in mind, an online appraisal may or may not be accurate, when compared with an appraisal done in person.
2). What kind of information does it consider?
When you’re purchasing a house, you want to know everything about it. That’s true with appraisers, too. They need to know the year it was built, the exact square footage, the number of rooms, how big those rooms are, what condition the home and all its systems are in, and much more. Online appraisals may consider some of this information, but they can only take into account what they can collect from other online sources. In other words, they often aren’t getting the details that they need to make an accurate determination of value. You also don’t know what specific information they considered, so you can’t even base your opinion of the online appraisal on what it has or has not included. That can be very frustrating, and lead to an appraisal that is far from what’s expected.
3). Is it based on your area?
Anytime you’re buying a home, the local area matters. Homes in one part of the country aren’t going to appraise the same as homes in another part of the country. That’s true between towns, states, and even separate areas of big cities. Some places are simply more desirable than others, and homes there cost more than homes in other locations. Because of that, you need to know whether an online home appraisal is based on your local area, or on a more generalized overview of homes in your city, state, or geographic region. If the online appraisal doesn’t carefully look at the surrounding neighborhood and its information, it’s not going to provide you with any kind of real accuracy regarding the value of a home you want to buy.
4). How does it determine comps?
Another concern for those who consider online appraisals are the comparable houses, or comps. Does the online site know what homes have sold recently, and how they compare to yours? Is it taking that into account when it determines value? The problem with the comps is that you don’t know if they’re being used correctly, or even being used at all. The site could be basing a home’s appraisal on the two houses that sold on the same block last month, without any regard to how similar they actually are. If that’s the case, the comps won’t be accurate, and neither will the appraisal.
5). What does your agent say?
You may find that an online appraisal is not as accurate as one that would be done in person, and that could hurt your chances of getting a home. Your agent is the one to talk to about that concern. If you find a home you want to buy, the listing price is what matters most. Still, if you see that an online appraisal for the home is significantly higher or lower than the asking price, you’ll want to talk with your agent about why that may be the case. That can provide you with peace of mind and good, accurate information so you can move toward buying the house you really want.
2 Point Highlight
When you get a home appraisal it needs to be accurate, and you need to be especially careful with online appraisal options.
You may find that an online appraisal is not as accurate as one that would be done in person, and that could hurt your chances of getting a home.
