You're likely to get a warm fuzzy feeling if you look at what your home is worth on Zillow, Trulia or any of the other real estate sites that provide values for millions of houses. Home prices have risen rapidly, and the value these sites assign to your home is sure to reflect that.
But don't carried away by a single Zestimate, SmartZip quote or Trulia estimate. While they are fine for spotting trends, these home valuation services come with a caveat: they offer rough approximations by computer programs. If you want a more precise estimate, hire an appraiser, talk to a real estate agent or check around your neighborhood and see what homes are selling for.
The sites all use what's called “automated valuation models,” or AVMs, to make sense of mountains of data, typically drawn from recent sales, property history, size and number of rooms, market trends and other factors that influence price.
“Depending on their methodologies, the values are going to necessarily be pretty wide,” said Gary Painter, director of research at the University of Southern California Lusk Center for Real Estate. “They basically are trying to provide an estimate for every property in a geographic zone. The data modeling requirements are far too great to do what they are claiming to do.”
But while not reliable for determining the precise value of a particular home, the services “do a decent job of capturing the overall trends in prices, which gives you a sense of how your particular house fits in a neighborhood,” Painter said.