Austin Real Estate and Automated Valuation Tools

You’ve no doubt heard of Zillow, and know how inaccurate its Austin real estate valuations can be. That’s not completely the fault of Zillow because Texas is a non-disclosure state, meaning when you sell your house, it’s nobody’s business what you sold it for, or what the buyer paid.

This results in limited sold data being available in public records. Thusly, it’s more difficult for third party estimation tools such as Zillow, Trulia and Yahoo to produce an accurate home value estimate. In most states, all real estate sales data is public record and thus there is more data from which to draw conclusions about a particular home value. Not so in Texas. So, with the exception of lower valued homogeneous neighborhoods where value ranges fall within a fairly tight range of size, age and condition, estimates from Zillow (or Zestimates as they call them), can be all over the map, sometimes grossly inaccurate.

Lately I’ve been experimenting with a new valuation tool that mashes up public data with actual Austin MLS sold data. This is called Value Map and is provided by our Austin MLS to its members. I have mine it set up at because the default url is long and ugly.  It’s free, no signup required. And so far, I’m finding it to be surprisingly accurate, though of course not perfect. You can also sign up for alerts when a property similar to yours and within a two mile radius is sold. For some reason, though provided by our Austin MLS, you can type an address from anywhere in the U.S., not just Austin. Try it out, let me know what you think about the accuracy of the value for your property, even if you’re not in Austin.

Lending and appraisal companies seem to be trending toward automated valuation system. The Value Map product is used by banks and appraisers all over the country. It uses a proprietary algorithm to determine values. Often, when we sell a house, the bank trusts the value produced by this methodology and won’t even order a full appraisal, opting instead for a “drive by” appraisal, where an appraiser drives by to make sure the house is indeed there, but doesn’t go inside or perform the full appraisal. I think this is dumb.

On the other hand, though it might be inaccurate, the valuation tool won’t commit purposeful fraud, as many appraisers and lenders did during the most recent real estate boom. So it may be, from a bank/lender perspective, the benefit of fraud elimination outweighs the occasional over-appraising of a home. And probably, if the value is way off from the contract price, they’re going to order a full appraisal anyway.

But as a buyer or seller, will there ever come a day when you simply type in your address and it spits out the true market value of your home (what a buyer would pay)? No (except by coincidence), and here’s why.
Let’s take a 15 year old home in Circle C for example, like one we recently encouraged our buyers to walk away from after the inspection revealed over $20K in needed work.

This particular home had all original mechanical equipment, including the roof. One of the A/C systems had a coil leak and need replacement. The other was functioning ok but at the end of it’s useful life. Ductwork was deteriorating, the roof was baked (literally, from poor ventilation and design), and there was a basket of miscellaneous repairs on top of the big ticket stuff, such as original water heaters and appliances, plus more small stuff.

So, if you’re a buyer of a home in the 12 to 18 year old range, with all original equipment, you have to assume that you will be paying to replace all of that stuff very soon, and you thusly, it would be prudent to mentally add the cost of doing so to the price you’re paying so you can know what the home is really going to cost you. In the case of a 2500+ sqft home with two HVAC systems, roof, water heaters, some siding, we’re easily talking over $2oK to replace a roof and two A/C systems. If you don’t make adjustments to what your willing to pay, you will in fact be paying $20K too much for that home. On a $250K home, that’s more than 8% of your purchase price. Figuring it costs 8% to 10% of sales price to sell a home, if you buy the home in its depreciated condition, you’ll need to see almost 20% appreciation in value before you get to break even. Not a smart buy.

And since there is no valuation tool that can know the age and condition of the major component items of a home, there will NEVER be a valuation tool that can accurately predict market value of a home. Also unknown to a valuation tool are the “look and feel” attributes of a home and its surroundings. For example, two identical homes, same builder, same floorplan, two blocks apart, can easily sell for more than a 10% difference in price.

This could be, for example, because one home has all of the aforementioned component items updated and replaced and sits in a culdesac lot with trophy oak trees in the front and back yard backing to a greenbelt, while its identical twin two blocks away backs to a busy street, has a plain lot, no trees, and needs complete replacement of roof, HVAC systems, water heater and appliances. Add an updated kitchen with granite and stainless appliances to the first, and original outdated kitchen in the second, and these two homes will not be valued anywhere close to each other by ordinary buyers and experienced agents. But an automated valuation tool would spit out the same or similar values for each.

So while I think we will continue to see adoption of automated real estate valuation tools, and they’re fun to play with, if you really want to know what a house is worth, you have to go inside and have a look, have it inspected, and have a Realtor who knows the neighborhood run a CMA with appropriate age and attribute adjustments.

If you have a second, type in your address in the Austin Value Map and leave a comment here or otherwise let me let know how close it came to what you think your home is really worth. (NOTE: For homes currently listed for sale, it may return the list price value, which is sort of weird, but that’s what it seems to be doing)

19 thoughts on “Austin Real Estate and Automated Valuation Tools”

  1. It was probably pretty close for my house off Brodie, at 171k. If I was to sell it, I’d probably ask 190 to 200, but it would show like a champ before I put it on the market.

    As it is, I plan to keep it until I can’t get up and down the stairs any more.

  2. I checked out our street. One house which sold two month ago for 248k was valued for between 185-237K. Big range! When I zoomed in more I noticed it narrowed the price to 237K. Still below what is is worth considering it just sold. To continue the confusion my house, which is the the same floor plan, and similar interior. (yes i have been in it recently) is valued for 7k less. Not sure I like the auto value tool.

  3. I’m impressed — it was very close (off by 4% or less) to the price I’d expect to get if I sold my condo. And automated valuation usually has lots of trouble with condos in my building, because the market price varies so much based on location in the building: one side of the building faces Town Lake and one faces I-35, so a condo on the I-35 side will generally sell for 20% less than an identical unit on the Town Lake side. And a condo on one of the bottom floors will generally sell for 25% less than an identical unit on the top floor. But Value Map seems to be doing a very good job of picking up those differences, so the values are surprisingly accurate.

  4. Its pretty close… maybe just a little low. Its giving 175k and my guess (and the tax appraiser’s) would be 180k.

  5. Not sure I believe its valuation for my home in Lost Creek. But when I had a couple of cma’s and an appraisal done last year they had a wide range between them so perhaps it’s just a difficult neighborhood to evaluate. I also checked a few streets in Barton Hills and saw numbers that are generally lower than the current listing prices in the area.

  6. This estimate of 210,000 is way off for my 2500 sq ft duplex in 78704. Currently the rents on it total 1350 per side, or 2700 per month and it’s one of the nicer duplexes, the units are back to back facing different streets, lots of trees. more like two houses. but the values on the map for the single family homes on the rest of the street look a little more realistic.

  7. I’d say it was in the ballpark for my home. I live in a small neighborhood near Mabel Davis Park just east of I-35 and north of Ben White.

    That being said, as you point out, there’s a rental property across the street from us that I *know* is in much worse shape than our place (having been in it) and is 300 sq ft smaller and it only values that house at $12k less than ours. I suspect that one is over-valued and ours is a bit under valued (but I guess we all think that about our own homes).

  8. It showed my 2100sf greenbelt house with every upgrade available to be worth 10K less than a house 200 sf smaller across the street with no greenbelt.


    It also showed my friend’s house on Alsatia to be worth 10K less than a house that is 1000 sf smaller by the same builder – 3 doors down.


  9. Thanks everybody. This confirms the limitations of these auto-valuation tools.

    Rob, your description of the price variances caused by the floor level and directional facing of condos in your building describes exactly the challenges in automating the valuations. I’m surprised it got close on yours and so far off on some of the other residential properties.


  10. I live in the same neighborhood as TTrentham and it majorly undervalued our house, at least compared to the appraisal we had when we re-financed our house in December. We have the largest lot in the neighborhood and lots of mature trees, including an Oak Tree that’s estimated to be 600 years old. So of course, you can’t expect a computer to know that, that’s definitely where you need a person.

    That said, I think the appraisal was probably too high and so the truth lies somewhere in the middle. It doesn’t really matter to me since we don’t plan to sell until we’re old and gray!

  11. I just refinanced last month and the site was way off. 145k site, 187k appraisal, and interestingly, I believe I could get close to 200k as a few houses on the block have sold for that much over the last couple of years, I assume because a creek runs through the backyard. I think the site used our tax appraisal.

  12. Steve, it looks pretty accurate for our house in 78746 as well as our house in Connecticut. Much more on target than Zillow and some others. Obviously each house has it’s own idiosyncratic pluses and minuses to value, but your system is actually as good or better than any data-driven model I’ve seen. – David

  13. It was definitely in the ballpark for my house. A bit higher than I’d put on the market for, a bit lower than what the bank said it was worth a year ago (auto-appraisal by computer) when we re-financed but within +-10K on either side. I’m in 04.


  14. To all those saying they think the website is way off, let me remind you the market value is not what you ‘want’, ‘wish’ or ‘think’ your house is worth. The market value is what someone is willing to pay at a particular point in time. So, unless you have a written offer from a buyer, you can’t say your house is worth more money. And obviously, your house will always be better than others in your block.. the sentimental value makes some people come up with ‘wishing’ prices…

  15. Way off – it is estimating my house at a 47% increase to its purchase price in 2006 (over $150K too much). I’d be lucky to break even if selling today. I’ve got 2 homes on the mkt near me that are way overpriced and will not move anytime soon, which must be influencing this valuation. Please don’t have Travis County look at this…

  16. So, unless you have a written offer from a buyer, you can’t say your house is worth more money.

    Thanks Brett for your comment. I think more home owners have a fairly accurate idea of their home value than don’t. We all an “optimism” factor that can puff our valuations somewhat, but it doesn’t take an offer to ascertain market value.

    Thanks for the comments everyone.


  17. Well, other than it getting the location of my house wrong (it thought we were across the street), when I selected the actual location of my house it is close to my actual appraisal (only $6K lower), and $35K more than the $299K I bought it for last June.

  18. 78751 – 2 unit attached townhome. 98% identical (mine even has TCAD sq ft difference higher on my unit). The other unit has a larger back yard (an LCE, so still owned equally) which this tool couldn’t know and isn’t a huge difference. My unit has a very slightly higher tax appraisal. This values my unit at $300K and the other at $330K. That 10% difference is definitely not right.

    It’s good to have another tool though.

  19. 1400 sq ft, 4br 2ba single family home in 78702. Value Map says $179k, I concur. That’s low for the sq footage, but the house is unremarkable.
    Travis county wants to tax me at $213k.
    What supporting data do I need to present to use the value map as part of my tax protest?

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