Home search portal, realtor.com partners with Collateral Analytics, Quantarium and CoreLogic to … [+]
realtor.com
Real estate portal realtor.com announced today the incorporation of three home value estimates to both the for-sale and off-market properties it shows on its website.
“Our focus is making buying and selling homes simpler and more enjoyable for everyone and home values are of a great interest for both buyers and sellers,” says Todd Callow, vice president of product management at realtor.com. “We think it’s a really important part of making buying and selling decisions, so we wanted to make sure to meet that need with a really strong solution.”
Thus, instead of providing a single property value estimate, the way Zillow does with the Zestimate, realtor.com has partnered with three companies that offer proprietary valuation models used by lenders and insurance firms.
The three companies are Collateral Analytics, Quantarium and CoreLogic.
“[That] lender-grade opinion is one of the things that we think is important for a buyer or seller to understand,” says Callow. “Here’s what the banks and insurance companies are going to see as the value of my home when I go to apply for a mortgage.”
More and better knowledge of home values
The three valuation models, which crunch public records and comparable-home statistics, among other data points, often diverge.
For example, a newly listed three-bedroom home in Boston is worth $816,000 according to Collateral Analytics. Meanwhile, CoreLogic’s Total Home Value for Marketing tool values it at nearly $867,000 and Quantarium at almost $856,000. The asking price: $829,900.
“We strongly believe that there is no single model that is perfect in every instance,” says Callow. “One of the things we wanted to make sure that buyers and sellers understand is that there’s a range of opinions and estimates about the value of a home.”
Callow says that a better grasp of the complexities of home valuation can deliver a smoother real estate transaction for consumers. A single estimate – think the Zestimate, which remains contentious despite years of tweaks – may foster a wrong perception of definitiveness, leading buyers and sellers to set unhealthy expectations.
Currently, realtor.com’s newly unveiled home value feature, which is rolling out across the platform, can display value estimates on some 90% of homes in the country. Not all three valuation providers, though, have information about every listing.
The feature also carries estimates about off-market properties that homeowners can claim as theirs on realtor.com.
The challenge of luxury
Valuing high-end residences presents a unique set of challenges both for real estate agents and data-powered models. The Zestimate, for one, struggles with them.
Just recently, The Real Deal reported that Zillow’s former CEO Spencer Rascoff had listed his Los Angeles abode for $7 million above the Zestimate’s appraisal. As of March 12, the Zestimate sits at $22 million, while Rascoff’s mansion seeks $24 million. Zillow has been accused before of adjusting its valuation to more closely resemble the asking price.
On March 12, realtor.com shows a single value estimate for Rascoff’s house. It’s Quantarium’s – at $19.76 million.
A much lower priced house, a five-bedroom residence about two miles north of Rascoff’s home asking $5.25 million, has the three valuation providers coalesce around an estimate of $5.8 million. That convergence, though, comes after three years of differences, which have often slung by about $1 million from each other.
“When we’re talking about how [these valuation models] work, it is about finding comparable data and drawing relationships between them,” says Callow. “There are some places where luxury markets have less comparable data to draw from. So it can happen that there’s a wider range in some of those pockets.”
And, while a home-value estimate might be a good starting point, Callow advises sellers and buyers to discuss local home prices with a trusted real estate agent.
“One thing we believe is that an agent really has the richest insight about those market dynamics and can help guide the consumers through particular features or attributes or nuances that might not show up in the model,” he says.