Complete Appraisal Blog

One of the common things a homeowner looks at when trying to figure out their home value is what the house next door sold for, or what Zillow reports. While these methods are not completely off, depending on the situation they are not a reliable way to determine your current home value.

First, let’s talk about Zillow. Appraisers do not consider the values estimated here to be reliable because it lacks the ability to take into consideration information gleaned from a physical appraisal. Renovations, wear and tear, unique property features and upgrades can’t be assessed accurately via an algorithm. 
Zillow’s algorithms rely on generalized data points and market trends, which means it may not accurately depict the market of a particular local area or marketability of a particular type of property.

Bottom line, Zillow may be able to give you a very rough, ballpark style estimate of what your home is worth, but it is not 100% accurate and could swing much higher or lower, depending on the circumstances.

Looking at what the house next door sold for seems like the next best place to get an estimate, and a lot of the time it’s not a bad idea! If it’s next door you share a similar location and neighborhood market which is a good start. But there are other aspects to consider.

Appraisers use comparable sales that are similar to your home in varying ways:

• Style – 1 story living (ranch, raised ranch, split level) or 2 story living (colonial, contemporary, cape cod)
• Year built – it’s not ideal to compare a home built in 1900 to a home built in 2020
• Location – as much as possible, appraisers try to obtain sales that are located within the neighborhood, preferably within 1 mile of a property. If necessary, the boundaries of search can expand to allow for bracketing items like living area, age, style, etc.
• Gross living area – similar to age, comparing a property that is 1,200sf to a home that is 3,500sf is not going to be reasonable
• Extra features – items like inground pool with cabana and outdoor kitchen, home theaters, decks, porches, basketball/tennis courts, etc all can effect the value of a home and the marketing appeal.
• Condition – the general condition of a property is an important aspect of valuation determination. Is it needing updates and repairs, or has it been remodeled? Is it somewhere in between?

The house next door may end up being very similar to your own, and therefore a good comparable sale. However, if it has drastic differences in some of the areas listed above, it may not be viewed as a truly comparable sale.