There are a number of nationally recognized web sites that offer homeowners an indication of the current market value of their home. Sites like Zillow typically utilize tax records and publicly available comparable sales data in conjunction with a computer model to provide homeowners with an indication of what their home might sell for. This system might work well in the 37 states that have full disclosure laws, meaning that everyone has access to home sales data, but what about the other 13 states that do not make this information available?
Seven states disclose transfer tax information from which one might be able to back into a sales price using the transfer tax rate and some simple math. This leaves six that do not disclose any home sale data. What does a seller do in these states? Well, he or she can still go to the previously mentioned sites and request a value, but those values will likely be quite inaccurate. A survey done by Zillow itself using information from September, 2010 showed that in the Dallas-Fort Worth metro area, the values provided by their system were off by more than 20% about a third of the time. Houston had a similar percentage. Another independent study from the University of Texas – San Antonio indicates that the “Zestimates”, as Zillow refers to their value analysis, are overestimated 80% of the time, leading a potential seller to overprice their home most of the time. This has a number of negative consequences beyond just a home that sits on the market without offers for months on end. If an offer is made and accepted, the home might not qualify for mortgage loan financing at that sales price when an appraisal comes in low.
There are six states with statewide non-disclosure laws (Alaska, Idaho, Louisiana, Mississippi, Texas and Utah). Since most homes are sold through a real estate agent, this sales data is collected by the local Multiple Listing Service. Because the MLS is wholly owned by the local Realtor association, the data is not publicly available unless that association decides to release it. Therefore, in states like Texas, it is even more important to utilize a local agent who has access to the MLS, or a Realtor-owned site like www.MyHoustonHouseValue.com, so a home may be competitively priced.
It appears that the momentum is on the side of disclosure as more and more states have required the public disclosure of home sales. There may indeed come a time when Texas home owners have the ability to log onto a computer system and access sales data through public records in the same way that property tax records can be accessed. However, we may find, as home owners in other states have, that the systems providing this information are not very user friendly. In addition, the unique characteristics of each home make it challenging for someone who doesn’t have an intimate knowledge of the real estate markets to establish an accurate home price, particularly in a declining market. Furthermore, the extensive marketing expertise offered by an experienced, licensed Texas real estate agent make the associated commission well worthwhile. A 2010 survey indicated that the average home sold through an agent sold for $193,300, while the typical property sold without an agent’s assistance sold for only $140,000. This difference is far from insignificant to most people and underscores the importance of professional advice.
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