Who needs a home appraisal when we have Zillow? You do
Like many homeowners, my husband and I often play the “what do you think our home is worth?” game. The question is moot since we’re not selling our house, but we still play. We occasionally check Zillow. He believes in Zillow. I believe it’s wrong.
“Zillow doesn’t know what improvements we’ve made,” I tell him. “The landscaping we put in, the new roof, the new air-conditioning system, the hardwood floors, the remodeled kitchen and bathroom.”
“No,” he said, “but Zillow assumes we’re maintaining and updating.”
This past week we tested our assumptions. We were doing some financial planning. I suggested we get a home appraisal, so we could stop guessing.
The day the appraiser came, I was out of town and had to leave the whole matter to DC and the two dogs. (Deduct 10 percent.) Had I been home, I would have had the dogs in play care and the place sparkling. I would have served warm banana bread and hot tea. I would have waxed glowingly about all the home’s amenities. DC pointed out a few upgrades, then let the appraiser have the run of the place.
When the report came in, I opened the email with one eye closed. I texted DC. “I just read it,” he said. “I’m pleased.”
“Me, too,” I said. Not only because the appraisal came in 25 percent higher than Zillow’s value, but also because the number I wrote down was right on the dollar.
However, the whole exercise got me thinking about the arbitrary nature of home values, how much we can influence them, the role of real estate websites like Zillow, Realtor.com and Redfin, and when and why we need professional appraisals. For answers, I called real estate appraiser Richard Allen, of Port Orange, Fla., who has been appraising homes for 45 years and who was not involved in our appraisal.
“Homeowners seek appraisals for many reasons beyond just when they buy, sell or refinance a home,” said Allen. “Some get an appraisal for estate-planning reasons or, as you did, to do financial planning. We’re also called in for foreclosures or divorces. Some clients are just curious.”
Naturally, I had more questions:
Q. What’s the difference between what you do and Zillow?
A. Websites like Zillow extract data and spit out an appraisal based on the original purchase price, square footage, number of bedrooms and home sales in the neighborhood. Appraisers rely on the same hard data, but also incorporate a number of subjective factors.
We put ourselves in the buyers’ shoes and look at what will appeal to them. We analyze buyer and seller movement in the market to determine the price a prudent buyer and a prudent seller would agree to when neither is under duress.
Q. What can homeowners do to increase their home’s appraised value?
A. Anything a homeowner can to do make their home more current will add value. Kitchens are huge. If your home is 20 years old and still has the original kitchen that could hurt. Next most important are updated bathrooms.
Neglected maintenance will also count against you. Patch cracks, repair wood rot, make sure doors and windows open and close properly. See that heating and air, plumbing and electrical systems are in good working order, roofs are sound, and water damage is addressed.
Curb appeal is also important, as is landscaping. If you’ve made any structural additions, be sure they’re properly permitted.
Q. What affects your home’s value that you can’t change?
A. Location. If your house looks onto a powerplant or landfill, or is next to a train station or airport, you can’t fix that.
Q. When working with an appraiser, how can you walk the line between being helpful and annoying?
A. I love an engaged homeowner. Give me the comparative market analysis from your realtor. If you know why a house nearby sold for well under market, point that out. Show me any renovations you’ve made along with the receipts. Then, leave us alone while we do our inspection.
Q. Does a home’s interior decor matter?
A. While a well-decorated home will accelerate a sale, furnishings won’t increase market value. That said, if I come into a home that is dirty and uncared for, I am going to look a lot closer because that will plant a seed that the owners aren’t very conscientious.
Q. What if the homeowner disagrees with your appraisal?
A. I will always say, show me what I missed. If they come back with viable data, I will do a value reconsideration. Or they can always get another appraisal.
Or go back to Zillow.
Marni Jameson is the author of seven home and lifestyle books including “Rightsize Today to Create Your Best Life Tomorrow,” due out Jan. 2. Reach her at www.marnijameson.com.