Getting an online home appraisal sounds highly convenient, especially if it's free. So how exactly does it work and can it replace getting your house appraised in person?
hash-markWhat Is an Online House Appraisals?
An online house appraisal is a home appraisal performed online, typically by software which uses publically available data to determine a house's value. Online house appraisal websites and tools use data about the home, the real estate market, and comparable homes sold to determine its value.These online tools are also known as home value estimators and while they can give you a rough appraisal value of a house, they aren't nearly as accurate as traditional appraisals.
hash-markHow Do Online Home Appraisals Work?
Online home appraisals work by using an algorithm to estimate the value of your house. It’s called Automated Valuation Modeling, and the algorithm takes into account the information you provide, the house’s sale history, and the prices of houses nearby. That means an online house appraisal is only as accurate as the data available. While they can provide a quick estimate, they won't be as accurate as a traditional appraisal as they cannot easily account for things like new renovations and differences in the quality of finishes between homes.
Since AMV home appraisals take virtually no effort to conduct, it’s possible to get an online home appraisal for free. This makes them very attractive to people who are short on time and cash.
hash-markHow Do You Get A Home Appraisal Online?
All you need to do to get an online home appraisal is to head to a site that offers online appraisals, such as Ownerly, ask for an appraisal, and give them the details about the house in question. From there, they will provide you with a ballpark estimate of the real estate value based on similar homes in your area.
It's easy to get an online home appraisal, but you need to remember they only provide a rough estimate of your home’s value. Even the most accurate home value estimators are only able to be within 4-6% of a property's true value.
hash-markHow Accurate Are Online Home Appraisals?
Superficially, they can be pretty accurate. However, they are rarely ever (if ever) spot on. This is because online home appraisals can’t tell the following things:
- Damage to your home:An online appraisal won’t be able to spot the leaky pipes in the basem*nt or a bunch of holes in your wall. These types of damages can severely reduce the value of your home, even if your home looks great on the outside.
- Updated accessories:Newly remodeled bathrooms won’t show up on the appraisal either. If you have a unique feature that adds a high amount of value to your home, it probably won’t be a very accurate estimate.
- Historical value:Though some AVMs will account for historic homes, not all do. So if your home is the only historic one on your street, you may get lowballed. If you choose to try a free online appraisal, make a point of doing ones through multiple sites. This can help reduce the chance of a lowball appraisal.
hash-markWhy Do Online Home Appraisals Vary?
Let’s say that you decided to get a home appraisal online. Then, you got another one. And another. You take a look at all three, and then you notice that the estimates are off by several thousand dollars. Shocking, right? You might be wondering why this is.
The answer is actually simple. Different sites source their data differently and also use different algorithms. As a result, you end up with differing estimates. That being said, it’s important to remember that these are just vague estimates rather than perfectly reliable appraisals.
hash-markWhat’s The Most Accurate Online Home Appraisal Tool?
It’s not easy to find the most accurate online home appraisal tool as new providers are always creating new tools, and the technology is continually being approved upon. What we can say is that one of the most notoriously inaccurate home valuation tools on the market belongs to real estate juggernaut, Zillow. Their Zestimate appraisal is famously inaccurate, even though they claim to always be within 4.5 percent of a home’s actual value. Some infamous examples include when former Zillow CEO Spencer Rascoff listed and sold his homes for prices that were more than 30% off-of the Zestimate appraisal.
hash-markCan A Free Online House Appraisal Replace A Standard Appraisal?
Though they can help you get a general idea of what you might be able to get for your home, free house appraisals done through the web aren’t going to be as reliable as the in-person thing because they don’t really tally up all the damages and upgrades that your home will have.
If you are serious about buying a particular house, you will most likely need to have an in-person appraisal. This is especially true if you are getting bank funding since lenders won’t allow you to go through with the purchase without an official appraisal.
However, if you’re just curious about the current value of your house, then a free online home appraisal is going to be just fine. The key takeaway here is that you shouldn’t base your life decisions on an algorithm.
hash-markAre There Other Ways To Get A Free Appraisal?
There are! If you are curious about selling your home, it’s possible to ask a realtor for a “soft appraisal.” This means that your realtor will be able to pull up your house, and use comparable real estate prices to determine what your price point should be.
Of course, if you’re actually selling your home, the buyer will be most likely have to get a professional appraisal done. Since this is the buyer’s responsibility, you won’t have to pay a dime. However, you won’t have the chance to choose who appraises your property. Even so, it’s an option to consider.
hash-markOnline Home Appraisal Bottom Line
Online house appraisals are a thing, and not only are they around, they’re increasingly accurate. Most of the time, the best way to use online house appraisals is as a general advising tool and as a way to gauge what your house might be worth if it were sold today—assuming there’s nothing too crazy going on inside.
If you’re serious about buying a house, relying on an online appraisal isn’t advisable. In fact, most lenders won’t allow you to use online appraisals as a proper buyer’s appraisal. This means that you may still need to give a call to a local appraiser, even if you don’t want to.
That being said, buying a house is an investment. To make sure that you get the best possible price during your transaction, you need to consider (at the very least) hiring a live person to take a look at your house. In the long run, it’ll save you time and money.
An online home appraisal is now an increasingly attractive option, especially for individuals who don’t feel comfortable inviting strangers over.
