I’m sure by now you have heard of “Zestimates” and other terminology to explain what your home is worth. So this article is to help you understand the difference of a Comparative Market Analysis (CMA) vs. an Automated Valuation Model (AVM) and other box estimates.
Understanding CMA vs. AVM
Comparative Market Analysis (CMA)
- Includes a professional Realtor® personally viewing your home to account for unique characteristics, condition, updates, layout of home, and more
- Includes that same professional Realtor® researching your area comparing unique characteristics of your home as compared to others: housing trends, supply and demand, conformity, contribution, encroachments, title, externalities, highest and best use, untampered sales records, substitution, change, competition, balance, and anticipation of the future market
- Are ACCURATE 95% of the time if done by an experienced professional Realtor®
Automated Valuation Model (AVM) ex. Zillow Zestimates, Trulia Estimates, Realtor.com Estimates
- A computer values your home in 10 minutes
- Are WRONG only 95% of the time
- AVMs publicly say they know they are off by 8% or more
- On a $150,000 home…that’s off by $12,000!
- Can’t determine actual condition of the home or unique physical characteristics, externalities; everything specific and unique cannot be accounted for…which is everything!
- AVMs account for the number of bed/baths/sq ft, but these don’t always correspond to a higher or lower price; sometimes a bedroom is tiny or your house is sitting in a neighborhood of 4 bed homes and you only have a 3 bed home but due to conformity and supply and demand your home is worth just as much even with less bedrooms
Bottom Line?
- AVMs are quick, non-professional, cookie cutter, out-of-a-box guesses
- The Value of Real Estate is defined by its unique land, unique improvements, unique privileges, and unique rights
