Why House Value Websites Do not Work for Sellers in Texas
There are a number of nationally recognized web sites that offer homeowners an indication of the current market value of their home. Sites like Zillow typically utilize tax records and publicly available comparable sales data in conjuction with a computer model to provide homeowners with an indication of what their home might sell for. This system may work well in the 37 states that have full disclosure laws where everyone has access to home sales data, but what about the other 13 states that do not make this information available? Seven of those states disclose transfer tax data from which one might be able to back into a sales price using the transfer tax rate and some simple math. This leaves six that do not discriminate any home sale data. What does a seller do in these states?
Well, he or she can still go to the aforementioned sites and request a value, but those values will likely be quite inaccurate. A survey done by Zillow itself using data from September, 2010 showed that, in the Dallas-Fort Worth metro area, the values provided by their system were off by more than 20% about a third of the time.
Houston had a similar percentage. Another independent study from the University of Texas – San Antonio indicates that the "Zestimates", as Zillow reflects to their value analysis, are overestimated 80% of the time, leading a potential seller to over price their home most of the time. This has a number of negative consequences beyond just a home that sits on the market without offers. If an offer is made and accepted at that high sales price, the home may not qualify for mortgage financing when an appraisal comes in low.
There are six states with statewide non-disclosure laws: Alaska, Idaho, Louisiana, Mississippi, Texas and Utah. Since most homes are sold through a real estate agent, sales data for these homes is grouped by the local Multiple Listing Service. Because the MLS is wholly owned by the local Realtor association, the data is not publicly available unless that association decides to release it. Therefore, in states like Texas, it is even more important to utilize a local agent who has access to the MLS, or a Realtor®-owned site like www.MyHoustonHouseValue.com, so a home may be competitively priced.
It appears that the momentum is on the side of disclosure as more and more states have required the public disclosure of home sales. There may indeed come a time when Texas homeowners have the ability to log-on to a computer system and access sales data through public records in the same way that property tax records can be accessed. However, we may also find, as homeowners in other states have, that the systems providing this information are not very user-friendly.
In addition, the unique characteristics of each home make it challenging for someone who does not have an intimate knowledge of the real estate markets to establish an accurate home price, particularly in a declining market. Furthermore, the extensive marketing expertise offered by an experienced, licensed Texas real estate agent made the associated commission well worthwhile. A 2010 survey indicated that the average home sold through an agent sold for $ 193,300, while the typical property sold without an agent's assistance sold for only $ 140,000. This difference is far from insignificant to most people and underscores the importance of professional advice.
The internet is an amazing source of information – but beware when you use it to replace a Realtor's® professional advice on your largest investment – it might cause the sale of your home to fall through.