Warning: NO golf content
We hear this word bunted back and forth when certain subjects are broached. So, my word of the day for February 22nd, 2018 is Algorithm. A quick google search renders:
a process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.
“a basic algorithm for division”
For me, the first time I heard this word outside of a math class was when Pandora became all the rage for streaming music. Their very special Algorithm (proprietary no doubt) was used to select the songs you liked to hear. I’m no writer of computer code but I can only imagine it worked something like this… last ten artists you searched and any artists in the same genre, last 50 tracks you played and hit “like” in a heavier rotation, and a little randomness mostly dominated by the artists who they pay the least per track to send into your stream. This was more or less confirmed by a good friend who was working for a similar company and simply called the algorithm “marketing bollocks.”
So, how does this relate to Real Estate?
Many of us migrate to the website that most suits our taste to look at properties when we’re thinking of buying or selling a house. Many of these websites, mine included (quick plug: My website RogueHomesandRanches.com ) uses an estimated market value on their website. Once again, these values are defined by an algorithm. Something along the lines of recent sales in the neighborhood and town or even the larger comparative markets, as well as property tax records, and basic information about the house such as square footage, the size of the lot, and the year it was constructed.
A member of our local community asked me recently how accurate that number really seems to be? The answer was tricky…. it depends.
So, should you trust it? I would probably use it as a reasonable ball park and if it were an object of my desire under $100 in price just write the check, hit the buy button, get that think shipped out ASAP. But, when it comes to several hundred thousands of dollars, or even ninety thousand dollars, not so much. Let’s remember that no one has seen the inside of the prospective property and it has not been inspected by a licensed contractor. As I often explain in Buyer’s Interviews, there’s a big difference in market value of a house that’s a 1 vs. a 10. That could mean bathroom upgrades, crown molding, new floors, or state of the art appliances, not to mention potential defects.
Why are you buying the house? Is it an investment? Are you moving your family into the home? Do you hope it appreciates at least as fast as the average?
Competent professionals in this industry ask these questions. They also represent you exclusively unless it’s an extraordinary situation. Be smart, don’t just hit on any Listing Agent and have him/her write you an offer. They’re inherently a bit biased towards the Seller. Can they overcome that? Perhaps. But, you’re paying the commission either way. Why not know that you have a gal or guy in your corner?