How Much Is My House Worth?
It’s a simple question—one that many tech companies want you to believe has a simple answer. Unfortunately, nothing could be further from the truth. There’s a quick way to get a number, and then there’s the right way to determine your home’s value.
In an article published by Inman News, the National Association of Realtors (NAR) General Counsel, Katie Johnson, criticized Zillow’s “Zestimates,” stating they create “consumer confusion” about property values. Johnson noted that “consumers largely do not understand the wide margin of error in Zestimates, leading to conflicts when pricing a home for sale or making an offer”.
Beware the AVM!
Real estate tech companies – Zillow, Redfin, Trulia, Homes.com, and others—rely on algorithms called Automated Valuation Models (AVMs) to estimate home values. These platforms offer a quick and user-friendly experience by generating an instant home value estimate based on public data. Sounds convenient, right? The problem is AVMs often come with significant margins of error.
It’s not uncommon for an AVM to be off by 35% or more. Imagine a Realtor telling you your $1,000,000 home is worth only $650,000—or worse, inflating it to $1,350,000. Either way, that Realtor wouldn’t last long in business. But more importantly, these inaccuracies can seriously hurt homeowners, buyers, and sellers alike. That’s why the federal government—through the DOJ and FTC— stepped in to curb the confusion and limit the spread of misleading information.
Why Are AVMs So Inaccurate?
The problem is simple: there’s no reliable technology that can accurately determine a home’s value without human analysis. AVMs pull public data, such as:
- Square footage
- Bedroom and bathroom count
- Lot size
- Location
- Year built
They then compare these data points to recent nearby sales with similar specs. In theory, this approach makes sense—but in reality, AVMs fail to consider several critical factors, including:
- Condition (Is the home newly remodeled or in need of repairs?)
- Views (Does it overlook the ocean or a parking lot?)
- Traffic Counts (Is it on a quiet cul-de-sac or a busy intersection?)
- Landscaping (Is it lush and well-maintained or barren?)
- Topography (Is it a flat lot or on a steep hillside?)
- External Influences (Are there power lines, freeway noise, or nearby commercial buildings?)
These factors play a major role in determining a home’s true market value. Ignoring them—as AVMs do—often leads to wildly inaccurate estimates, frustrating both buyers and sellers.
The Right Way to Determine Your Home’s Value
It’s simple: hire an experienced, full-time Realtor—but not just any Realtor. Most agents lack formal appraisal training and rely on flawed valuation methods like a simple Cost/SF calculation. Next time a Realtor gives you a price, ask them:
- “Based on what?”
- “How did you determine that value?”
If their answer is “I ran the comps” and nothing more, run the other way. That’s not good enough. If they don’t provide a detailed breakdown—including spreadsheets, calculations, and adjustments—they’re not equipped to negotiate effectively on your behalf. A skilled Realtor, with the right knowledge and experience will follow a rigorous process, including:
- Thorough research
- Deep knowledge of construction costs and techniques
- Understanding of local market nuances
- Mathematical valuation adjustments
- Consideration of intangible property characteristics
This process isn’t quick or easy—but it’s the only way to establish an accurate and defensible home value.
Our 4-Step Valuation Process
At Reef Realty, we use a comprehensive four-step approach to determine a home’s market value:
- AVMs – Yes, we check them, but only to establish rough parameters.
- Case-Shiller Index Values – This national index is one of the most reliable tools for tracking home price trends. We’ve developed a proprietary formula to apply Case-Shiller data to the San Diego market.
- Desktop Appraisal – We conduct in-depth research using public records, MLS data, and title company reports, making precise adjustments for key factors.
- Field Appraisal – No valuation is complete without physically visiting the home and its surroundings. Factors like power lines, steep terrain, and noise levels can dramatically impact a property’s value.
Only after completing all four steps do we arrive at a final value opinion. This process takes 6-10 hours—not 10 minutes—but it ensures you have an accurate, data-backed valuation to rely on.
The Bottom Line
You have two options:
- A 10-minute guess with a massive margin of error
- A 6-10 hour analysis by an expert who will arm you with real data
Which do you think will serve you better in negotiations?
For expert valuation services and real estate advice, contact:
Kevin Dougherty
Broker/Owner, Reef Realty
(619) 977-7777
kevin@kevindougherty.com
A Final Warning: Don’t Fall for the Oldest Trick in the Book
If you’re looking to sell your home, beware of Realtors who promise they will sell your home at an inflated price just to win your listing. Here’s how it works:
- They tell you, “I can sell your home for way more than the last guy estimated!”
- You sign a contract with them.
- Weeks later, when your home doesn’t sell, they say, “Market conditions changed—time to lower the price.”
It’s a classic bait-and-switch. Don’t fall for it. A reputable agent should provide real data—not just MLS printouts anyone can pull in five minutes. Demand transparency, proof, and a well-researched valuation before signing anything.
With the right Realtor, you’ll get an accurate valuation—and the strongest possible position when it’s time to buy or sell.
