To dispel some myths...
Property Value and Property Price are two different things.
Value of a Property - is established by 1. a realtor, or appraiser, using past sales of similar properties, in other words historic data - the past look. 2. by market competition as in similar properties for sale now, the current look. 3. market trend as in have prices been rising or lowering over time, the future look. Property Value is a refined pie-in-the-sky sort of number. It is also perceived differently as in “I wouldn’t buy that piece of junk of a house for $250,000.” OR “Man, at $250,000 that house is a deal! I can do some updates and it would be worth $320,000!”
Typically how we want to Value our homes is $100,000 to the tax assessor, $300,000 to our friends, and $500,000 when we want to sell it. On the other hand...
Property Price - is determined when a property actually sells, defined as what a seller agrees to take and a buyer agrees to give. That’s the hard and real number.
Property Value fluctuates all the time due to innumerable factors. Just one example, when mortgage rates are low, buyers have more buying power, more home sales, prices trend up. When mortgage rates climb, buyers lose buying power and the opposite occurs. Remember, the interest rate is the “price” of money. All sorts of factors come in to play and change all the time. Something as simple as, “It used to be such a nice area, but the traffic is so bad now!” affect Property Value. Hence, in the industry we say “An appraisal is good for only one day.”
Another misunderstanding relates to refinancing. Mortgage companies are a lot less discriminating on Refi appraisals. It not the same as a new buyer. You are already in the home and have been making payments for some time. You a have a good payment history. Lenders see this type of financing as less risky. Don’t confuse the Refi appraisal as an indication of sales price, it’s not. The Refi lender could care less what type of counter tops you have or if your fixtures are still antique brass! A buyer will though.
Another myth is that there is a national MLS. There isn’t. The Multiple Listing Service (MLS) is a service created by the NAR, National Association of Realtors. The NAR is made up of many local associations usually determined by city or counties or whatever geographical area, each with its own MLS system. Only a licensed real estate agent can join the NAR through their local entity and thereby use that MLS. In doing so, they become a REALTOR. You’ve seen that word thrown around. That’s all it means They can access the MLS, you can’t. But that too has been changing. I’ll explain...
The NAR collects listing and sales data from all the local MLS’s around the country and assimilates the information. Nearly all economic data on the real estate industry comes from the NAR. When you see info in the news it is typically quoted from the NAR.
Realtor.com is the NAR. So, information you see on that website is coming directly from all the local MLS’s. It is information entered by each individual real estate agent as they list and sell properties. It’s usually very accurate because agents have to follow very stringent rules when entering info. If not, they can lose their license.
Now as I said before, only licensed agents that belong to the NAR (REALTORS remember?) can access the MLS and you can not. That is still true. However, with the advent of internet property searching by potential buyers and real estate companies setting up resulting websites, the NAR at the demand of real estate companies came up with a way that you, the buyer or seller, could see some, not all, of the MLS info. They allowed agents to “link” some of the info in local MLS’s to their websites. Of course it cost agents $$$’s to do but it allowed you to now search for properties on that agents website directly from their local MLS, updated pretty much instantaneously.
Now comes the fun part... One day some techno people looked at this and said, Hmm we can do that on our own, and maybe do it better, and offer people the property searches (from different sources) AND include other info real estate agents use such as tax records, sales history from the county clerk, school performance and lots of other stuff people might want to know about a property. We can even do a basic Property Valuation maybe. So came Zillow and Trulia (at least they were the most successful)... Then Zillow bought Trullia, you know to get rid of competition. Like Facebook and Instagram, true to the tech world. And Zillow has grown.
Zillow is a good source of some information, but it must be taken with a grain of salt. Zillow is free to buyers and sellers, because on Zillow, you are not their customer, you are their product. They sell you to real estate agents. That’s how Zillow makes their money, mainly by advertising real estate agents. They make it from mortgage lenders, and other advertisers, too. Zillow is another way real estate agents say, “Pick me! Pick me!” It’s just like newspaper ads, yard signs, and billboards. Just with more juicy information
And the real estate agent myth... We use financial advisors to help us through these golden years, we see doctors for our ailments, we use CPA’s to do our taxes, lawyers to do our wills, so when you are looking to buy or sell one of our biggest investments, go see a professional. First, definitely shop them, like you do the other professions . Get a good one and they will get you the most current and relevant info, guide you through the process you know little about, protect you from the pitfalls of required representations and disclosures, and get you highest & best net proceeds which is really all you care about.
There will always be for-sale-by-owners, there will always be day-traders, and there will always be a gazillion golfers, but very very few, and probably not you nor I, will be successful pros at any of those.