Why automated Valuations Are Bad

Have you ever wondered why most of the internet sites that provide an “instant home valuation” such as Zillow or Trulia are typically off by 20% to 40%? The simple reason is that a computer analysis of home values can only take into account tax data, a trailing indicator. In an appreciating market, a trailing indicator will always put a home’s price too low. Why? These types of reports depend upon tax records. When a home is sold, the sale does not work its way into the tax data for as long as nine months after the sale.