Online home value estimates can vary — here’s why

Different property valuation websites use different data sources and algorithms, which can lead to big swings in estimated values.

“Valuation websites typically base their [estimates] on public and user-submitted data taken from multiple listing services (MLS), county and tax assessor records, and real estate brokerages,” explains Nick Stoddard, an expert property appraiser based in Kansas City.

Here are a few key reasons why home valuation websites can differ so much:

• Data availability: Some sites pull from public records, others rely on MLS data, and some use both and calculate an average. If your local records are outdated or incomplete, your estimate may be off.
• Errors in the system: Most of the sources that AVMs use are populated with data input by humans. Typos happen, including errors on construction dates, home sizes, purchase prices, and tax assessment amounts.
• Lack of comparables: If you own a unique, isolated, or custom-built home, an online valuation site may not be able to locate suitable nearby comparable properties.
• Update frequency: Home values can change quickly, especially when market winds blow from different directions. Some sites update their data more often than others, which can affect accuracy.
• Valuation models: Each website uses its own formula (or “automated valuation model”) to calculate your home’s value. These models weigh things like square footage, nearby sales, and zip code trends differently.
• Local market nuances: Online tools may not fully account for what’s actually happening on the ground, such as buyer demand in your neighborhood or events that impact local property values, such as a major employer opening up or closing down.