Home Value Estimator Tools can be very effective for agents and brokers, if you look at them in the right perspective… and particularly in the year 2020. That perspective is from the eyes of a homeowner. We will discuss later in this article why this tool will be so important in 2020.
First, let’s get right to the numbers. Some people in the real estate business might be reluctant to use home value estimator tools. They believe these computer-generated estimates give homeowners (and buyers) an inaccurate impression on the value of a home. But here’s the stark reality: Homeowners use them. In fact, they really like them.
Home Value Estimator Tools are Popular with Consumers
Check out these stats from Google:
- Every month these are the estimated number of searches for these keywords:
- How much is my house worth? – 27,000 monthly searches
- What is my home worth? – 6,600 monthly searches
- Then there are dozens of variations that all add up. For example:
- How do I find out the value of my home? – 1,900 monthly searches
- Estimate my home value? – 880 monthly searches
We all know that one reason that mega-real estate portal that begins with the last letter in the alphabet rose to prominence because of their home value estimator tool. That tool also helped the company build up a national lead generation program. The fantastic opportunity today is that the average agent can now feature this tool on their own local websites. They can level the playing field. If they choose to.
All a broker or agent needs to do is call a real estate data technology company such as Home Junction. This service can be easily installed on any website. With hyper-local real estate market data. (By the way, in 2018, Home Junction customers generated more than 1 million home value searches on their websites.)
When local consumers want to check out an estimated value of their property, they don’t have to go off in the webisphere. They can check with their local agent. And as we all know, most people prefer to visit a local agent’s website for local guidance. Of course, it is the agent’s responsibility to make it very clear that the information provided by these home value estimator tools are only a machine-generated estimates. They obviously are not a formal CMA. The consumer needs to know the difference.
Agents can also assure the user that home value estimator tools (also referred to as AVM or Automated Valuation Models) have been getting better over the years with their forecasts and their ranges of error. The other factor to make clear is that the machine can only make estimates on data that is available. So for example, if there have been very little or no recent home sales in a neighborhood, then the data might not be as current as a neighborhood where there have been several sales. Makes sense.
The other great advantage of a home value estimator tool is not just for the price estimate, but also the comparison value. With home value estimator tools, consumers can see the estimate for other properties in their neighborhood. They know if their neighbor Joe down the street plans to list their home for X, then they can see how their home might be valued based on that X.
The homeowner can also follow how their property is also increasing in value, based on rising estimates. (The home value estimator tool from Home Junction also provides more in-depth data, such as market rankings for Price, Price per Square Foot, Age of the Property and Square Footage. All super-valuable information and information every homeowner would love to know.)
All of this activity creates a big opportunity to create a lead for a homeowner who might be interested in a formal CMA. Naturally, the broker and agent needs to emphasize the value of that CMA compared to the estimate from home value estimator tools. Talk about a catalyst for lead generation.
Hopefully brokers and agents can see another opportunity here as well. A marketing magnet. Brokers and agents can promote their home value estimator tools in their direct mailings, email blasts and social media posts. Tell consumers and followers. Use local market real estate data to point out major movements in local trends. And let them know, you have an estimated answer and a formal CMA answer for this always popular question, “What is my home worth?”
Real Estate Forecasts Point Out Lack of Inventory in Some Segments
Because here is another reality that we are sure all brokers and agents know about. Realtor.com and other experts predict a major challenge for agents in 2020 will be the lack of inventory for sale. This is very unfortunate because market conditions are great.
Low Mortgage Rates
Mortgage rates are super low. In fact, the Mortgage Bankers Association predicts they will stay in the 3.7% range in 2020. That’s even better than the beginning of 2019. Borrowing money is super-inexpensive. (Who remembers those days when mortgage rates were in the double digits?). Low mortgage rates are not something to be taken for granted.
We are sure many potential buyers are aware of this. That’s why you see activity drop off if rates go up by just 30 basis points. (Those buyers need to know, those rates are still incredibly, incredibly low).
The second big factor that will drive the market are Millennials. This giant segment of the American population has decided they now want to own a home. In fact, the Census Bureau reported this is the biggest group in the American demographic right now.
For years, it was very frustrating to brokers and agents because Millennials preferred to be renters. This drove up rents and prompted many investors to purchase properties and hang on to them. But now that Millennials are older and working in a positive economy with higher pay, they want to purchase a home. Unfortunately, listings in the entry-level and mid-price ranges are scarce.
Plus, homeowners, especially Baby Boomers, are staying in their homes longer. However, there are homeowners out there who might be interested in putting their homes on the market. Perhaps they are thinking about downsizing from a larger home now that the kids are out. Or perhaps they are thinking about retiring to Florida or Arizona. They are going to go to the web to check out the answer to this question, “What is my home worth?”
By providing this tool, you are helping them move along the sales funnel to finally putting their property up for sale. Also, by promoting this tool, you are establishing a connection with these homeowners for when they are ready to sell.
Use home value estimator tools not as a formal valuation, but an estimate to start a conversation. A conversation where an agent can provide a more formal, in-depth CMA. Look at it this way. When you have a tough construction project, the process is so much easier if you have the right tools.
Home value estimator tools are the right products to help brokers and agents generate those listings, in a tough, limited inventory marketplace.