What’s the difference between an appraisal, an assessment and a Zestimate?

November 17, 2017

Video Transcription:

Andrea Lutz:                     Hi, everyone. It’s Andrea Lutz with Re/max Acclaimed Properties here in Bloomington, Indiana, and today I’m here with Jeff Goldin who is the owner of Goldin Appraisal Group. And he’s here to help me discuss the difference between an appraisal, an assessment and a Zestimate. And I have clients all the time going on Zillow and looking at that Zestimate number thinking, “This is a really good idea on what my home is actually worth,” and I can tell you it is not so. He’s gonna help me explain the differences and he’ll probably do a much better job of it than I will.

Andrea Lutz:                     So, Jeff, if you can help me out.

Jeff Goldin:                       Thanks, Andrea. There is a lot of confusion around that and the Zestimate is a real easy way to look at value and I would tell you that what Zillow does is what’s called automated valuation. They take a whole bunch of data and they use public records to come up with that value. No one ever goes into your house, no one knows about condition, no one knows about quality. It’s a lot like mass valuation, which is your assessed value. They take a whole bunch of data and relate it to county records.

Jeff Goldin:                       Unfortunately, county records are often wrong. What an appraiser does and what a realtor does is they go in your house, they often measure, an appraiser always measures, so they know exactly how big your house is, they know exactly the features of your house, and then they choose based on experience. So, when I do an appraisal I use my experience to pick the correct comparable sales. I don’t look at all the comparable sales. I look at the most relevant comparable sales. And so it’s a more focused way of value. Zestimate is really, really, it’s like a big picture and the range of error can be significant.

Andrea Lutz:                     That’s super helpful, Jeff. If you can also let us know a little bit about the difference of an assessment and an appraisal. Because people will go onto the county site and they’ll look at that number and they’ll think that that assessment is actually what their home is worth. If you can expand on that a little bit, that’d be great.

Jeff Goldin:                       What the assessor does is compare your house to this mass data. Say you live in a neighborhood and there’s houses that are 1,000 square feet, and there are houses that are 4,000 square feet, and they compare them the same. Same with quality and conditions. So there’s no of that experience, an appraiser or a realtor puts into when they value your house around what are the real factors around marketability? What does a buyer really look at when they’re looking at houses? And that accounts for none of that.

Jeff Goldin:                       When I look at assessed values, I give that no credence at all. The real value is what somebody’s willing to pay. And that discounts that totally.

Andrea Lutz:                     That’s awesome. I think that’s so confusing when people look at the assessed value, they see one number, they look at Zillow, they see another number, and then they have an appraiser or a realtor come in and give them another number and it just confuses them. Well, trust the professionals, people who are in houses every day doing the measurements, looking at all of the neighboring homes, they’re out in the market all the time, they know best what your house is worth. If you need any help call Jeff, he’s a great guy, he can help you out. Call me, I will be happy to give you my thoughts on your home value as well. And until next time, have a great day.