How Much Is My Home Worth?

Wondering what your house is currently worth?

The quick answer is: whatever someone will pay for it. A more comprehensive answer will depend on several variables, including what's happening in the housing market, particularly in your area. For example, is the demand for houses high, but the supply is low? In this case, you are likely in a seller's market. What your home was worth a year or two ago may no longer represent its current value. When supply and demand are not balanced, values become more of a challenge to determine. 

So, how do you find out what the value of your house is? You lean on tools and industry experts to paint a clear picture. This leads us to our next question — is one more favourable than the other? How accurate are online valuation tools, and how do they stack up to working with a local industry expert?

How does Royal LePage Value Your Home?

If you search "how much is my house worth?" online, you will get dozens of hits showcasing the top home value estimators. According to NerdWallet, 22% of homeowners determine the value of their home using this method. The technical term for these tools is "automated valuation model.

Two big players in this space in the U.S. market are Redfin and now Royal LePage in Canada. These tools leverage the data from public records, such as tax assessments and property transfers. Using mathematical modelling, these tools aim to predict the value of your home based on the most recent listing prices and sales in your area. 

Both companies are transparent concerning their national median error rates. For example, Redfin reports that its current median error rate is just 2.72% for houses for sale and 6.79% for off-market homes. This means that the estimate is within these margins of error half the time. So, when a home is on the market and sells, Redfin's estimate will be within 2.72% of the sales prices half of the time. 
 

Zillow reports that its national median error rate for on-market homes is 1.9%, and for off-market homes, that error rate increases to 6.9%. 
The issue is that a median national error rate does not represent your local market. So, the error within your local real estate market may be better, or far worse, than the advertised national medians.

The Pros and Cons…

Both Redfin and Zillow are easy-to-use and convenient, but the price you pay for that is low accuracy. There have even been instances where homeowners (unsuccessfully) sued Zillow because the estimates were so far off.

These companies warn users that the estimates provided should be used only as a starting point. The figures provided are not appraisals — they are algorithm-based computer estimates. They should certainly not be used as part of a bargaining strategy.

They are good “estimate tools” — they are not all-knowing tools.

Pros

• Tools like Redfin, Zillow, and Royal LePage are good starting points, giving you some insight into what you can expect from your journey ahead.d

• The figure you receive can be discussed with a local industry expert to determine if you can ask for less or more depending on a more comprehensive analysis. 

Cons

• Online home value tools only consider certain factors because they do not often have access to the same information that a local real estate database has. This lack of information creates skewed results. This means you will only get a partial estimate, resulting in a figure that isn’t accurate.

• These tools are not ideal when dealing with fast-moving markets, especially when homes sell in a few days. That is why an estimate on Redfin may significantly differ from the one you got on Royal LePage. 

Nothing Beats Working With a Local Real Estate Agent

Online home value tools can provide a good starting point, allowing you to get a ballpark estimate. However, there is no substitute for a local industry expert. Unlike most third-party real estate sites, local real estate agents have access to the information you need to ensure greater accuracy.

Your local real estate expert will dive deeper than Redfin, Zillowcor Royal LePage, providing a comparative market analysis. They will also give you a more accurate value based on when your house was last renovated, the property's condition, the type of view you have, the amount of natural light inside, and the list goes on. These are the type of key variables that online estimate tools and the algorithms responsible for estimated values miss.

PS.

Speaking from my own experience, I recently sold a property located in Burnaby, BC, for $200,000 more than the high estimate provided to the Seller by the Royal LePage QuickQuote tool. You can just follow this link to try out this newly introduced tool for the Canadian Real Estate market. Follow this link if you wish to receive a custom report prepared by a human being that won't be "instant" but will be accurate.

Current tools & technology make it quite simple to list a property for sale. By entering information into the MLS system, the average Real Estate Agent can automatically have their listings appear for sale online. We don’t do average. Ever. We certainly don’t do what ‘most’ Realtors do. We customize everything. We create an experience. Click here to find out more.