I was sailing with friends a week ago, and they wanted to tell me how excited they are that their home in a hot Portland Neighborhood had increased by $38,000 in just a few days! They were unsure about whether to sell right now, and realize that huge gain, or wait, and fix up their house; they could see nothing but giant increases in value coming their way! Oh Boy!!! and what about buying in this market with these huge increases; they worried they might sell their wonderful home and then not be able to afford something else when they saw these huge increases in values.

I asked them where they got that incredible good news and information. Zillow. Oh. And I moved on. The Zillow Zestimate (t)  is a very sexy tool that home sellers absolutely love. But why does the consumer run into a road block with their real estate professional about this? Why does the real estate professional throw ice water on this wonderful news? I mean, commissions are based on the sales price aren’t they? You would think Realtors would be very excited about this wildly increasing market value.

The key here is in the fine print so to speak. Notice the language used in this discussion.   AVM, or Automated Valuation Models, are online tools developed by the very useful online real estate sites as a way to give consumers (buyers and sellers) a way to frame, in a general way, the value of the real estate property they are considering. The key word here is Automated.  These tools are pulled from sources including MLS’s and public records. The information is compiled without taking into consideration the nuances of the neighborhoods, the curb appeal (in spite of the google birds eye views), the updated or lack of updates in the interior and other important factors that a real estate (and here is the other key word) Professional takes into consideration.

What the real estate professional knows is that these AVM tools are developed with a plus/minus valuation of around 20%…..or a potential swing of  40% in the actual value of any given property. What the AVM’s are actually based on is that new sexy word, trending. To obtain accurate current information, such as the stuff your Realtor will use when preparing a market analysis for your property, you have pay for it.  And the big tools that Realtors depend on, do pay for it, and that is why a market valuation done by a Realtor will give you a more accurate window of current value to use when pricing your property.

AVMs and frankly, professional appraisals and Realtor market analysis’s are just snap shots of the market as of that moment. As a Seller or Buyer, it is best to depend on someone who has real local knowledge about all the aspects of your property.