As of late, It seems that a new pricing Automated Valuation Model (AVM) rolls out every week! So I decided to make a run down of what's out there. I think that as Real Estate professionals you should know these products inside and out as well as be able to use them in your arsenal of tools. They can in fact provide excellent research data in preparing for a pricing presentation and truly supplement a broker CMA.
Considering that most all the AVM models are using information available from public records, I do believe that the most critical data needed to really make a complete and thorough pricing opinion is not present.
The first element not present is the "Under Contract" information. This is what I call the ghost of Christmas Future, from the Dickens story of the third future telling ghost. This is really make or break information needed by any person to look at true market trends. Most of this data is available only through broker MLS systems.
Secondly, any and all sales CONCESSIONS are not listed anywhere in the public records. This is a HUGE area and should be deeply concerning to most citizens, because I believe that the Tax Collectors don't want this information available (lower taxable real estate value). This is quite common in the Denver Metro Area. Take the builder who refuse to lower the price but instead gives away $30, $40 or $50 in upgrades and or financing incentives. Now when you look at the public record sales data, it appears they paid say $600,000...the same as the other people in the neighborhood. But we know the net price is really $550,000. With the advent of seller paid closing costs becoming more common, these concessions can also amount to large numbers. Once again, the local MLS system has very detailed concession information.
The third non tangible is the "localism" involved in pricing. I hear a lot of brokers from the urban areas complaining most about AVM pricing...because AVMs can not take into account "transitional" neighborhoods. Another unique issue is in fact the physical attributes of the home. I consider cat urine (lots of it) to be a very "localism" kind of thing! Also another local issue is true "Days On Market" and historical listing data of properties. Therefore, I tell all my clients that it's great to have online pricing models available, but take heed to the last three and most important three items relevant to pricing; under contracts, concessions and localism.
Once again, consumers today are doing their own homework and if anything this transparency provides a means to "smoke out" the incompetents and "listing liars" in this industry! You had better run every public AVM known to man and then justify your CMA with the "secret sauce" data.
So contrary to what most people believe, the brokers still control very critical "secret sauce" data and the transparency of of any online pricing model is missing three huge components that can not be fed into their algorithm pricing models. Remember, in the transparent real estate world YOU ARE THE HUMAN BROWSER and you had better know more than the consumer in every area of not only real estate but technology...or you be replaced by someone that is.
Probably the most infamous of the online pricing models. Zillow offers a branded API with basic valuation information. The site allows the "Owner" to claim their property and make the proper corrections to the data to provide more relevant pricing information. Of all the pricing sites, Zillow is moving to the community real estate portal complete with an excellent WIKI. The site is powered by GlobeXplorer and Proxix mapping.
This product is very similar to Zillow. I really like that it pushes the used and not used sales comparbles along with the dates and addresses right below the estimate window. This product is powered by Google
This offers a quick 3 or 4 comparable estimate and tries to get you to subscribe to monthly email subscription to
home valuation reports ($4.95). You can make no online property characteristics or seek other comparables.....unless you pay. This doesn't seem to make sense when the information
is freely available. This product is powered by Google mapping
This product has the most properties (100m) and bloggers seem to think that the data is most accurate. They offer a fee based white label version of their service to website owners. I love the format and the whole design of the product. While Zillow may have the Buzz, this Fidelity National product is superior in results and information. Their mapping is VirtualEarth.
The basic appraisal value is free and seems to be the most inaccurate. You can tell it must be run by brokers as you must register for detailed info! They provides a
white label service that's reportedly cheaper than Fidelity's. But I guess in this case you get what you pay for. It is powered by Virtual Earth
This site provides a value report. Reply.com is doing a few interesting things. They seem to be the most "Zillow Like" in look, feel and features. They are monetizing the site with ads, the same way Zillow is except they are a lead generating machine for brokers. Once again not the Buzz of Zillow, but a great data site. Most unique is their "Make an Unsolicited Offer", like the Zillow "Make Me Move" feature. I also like it because they give my house the highest valuation of any of the tools. Its' powered by Google mapping.
So I am sure there a few more than I have listed out there and I would appreciate anyone posting up the latest and greatest AVM. I see AVM's as a must use tool to supplement the broker CMA. In fact, the more data and the faster I can get it, GREAT! I just want to make sure I am the ring master at the circus. I think most of this comes to educating yourself and your clients and finding out what they want and expect. Brokers using and presenting both systems, AVM-CMA, are what I see and clients will see as the professional, expert broker.