Question: Is it better to use Zillow or the Arlington County assessment to determine home values?
Zillow can provide a fun way to follow an automated estimate of your homes value over time. Would I use it to price a home I’m going to sell or determine how much to offer on a property for sale? No. There is too much money at stake to look past the inaccuracies that Zillow is known for. I’m not an expert on Zillow, but my guess as to why it is often inaccurate has to do with the system’s inability to know about upgrades to the subject and comparable properties.
Arlington County assessments are a wholesale view of value based on very basic characteristics of a home. I’ve seen assesment values as much as $200,000 off from the actual market value. Of course the assessed value was less than market value so the homeowners were quite happy about it, because they were paying less in taxes than they could have been. Again, I would not recommend using assessed value as a gauge of market value.
I’ll describe how I go about determining market value, but keep in mind that this process is more of an art than a science. Lots of variables beyond price, weigh in on how a property performs on the open market, such as how it shows, how it is marketed, what time of year it is, etc.. The following explanation is as though I am getting ready to list a home, but you can use elements of the process when considering an offer to purchase a home as well.
The first thing I do is try to find at least three of the most recent and most similar sales in your area that have occurred in the last 6 months. The next step is to create an even playing field between my subject property and the comparable properties. This may sound backwards, but I deduct value from the comparable properties for items I feel adds to the value to those homes. Conversely, I add value to the comparable properties for items I feel reduce the value of those homes. For example, if my subject property is a condo with one parking space, but the comparable I am using has two parking spaces, I may deduct $20,000 from the value of the comparable. I go through this process to determine the adjusted value of my comparable sales. Keep in mind that the $20,000 adjustment (for a garage space in this case) can not be arbitrary. It should be based on a recent sale were the garage space was a common denominator. Adjustments can be made for many items, including:
Size of home
Size of lot
Days on market
Proximity to major roads
The second step I take is meant to help me understand what my competition is like. I search for properties currently on the market that are near my subject property (i.e. in the same zip code or part of town) that are about $50,000 below and $50,000 above where I am getting a sense my subject property should be priced (from the exercise above). Sometimes my range is as much as $100k or as little as $25k depending on the situation.
I then go through each active listing and make notes about how I think the listing would compare with the subject property. I try to find a sweet spot where our price would make us a better option than everything priced less than our future listing. It’s a good idea to preview the homes that most closely provide competition.
From here, you should start putting the puzzle pieces together and fine tune your price based on:
How the market is performing
How quickly homes are selling
How well your property will show
Unique factors that will draw or detract interest in your listing
How easy your home will be to show
I hope this helps. Please share other ways of determining home values in Arlington that you have found to work for you.
The views and opinions expressed in the column are those of the author and do not necessarily reflect the views of ARLnow.com. Community discussion guidelines: While we encourage a spirited exchange of views in the comment section, comments that are deliberately mean-spirited will be removed.