We’ve seen every type of home (and most commercial buildings) you can imagine, from wrecks to regal.













Whatever the home, one topic comes up practically all the time:  “What’s this house worth?”  “Is this a good deal?”

The fact is that the condition of a home affects its value more than anything else.  Condition also forecasts expenses people are likely to take on.  Overall, condition is one of the most important things about a home.

You’ve heard people say the price of a home “comes from three factors: location, location, and location.”  That’s a red herring.

Think about it.  The price of practically everything you buy is primarily a result of the condition it is in.  A car with 150,000 miles of wear and worn tires is worth less than a car with 1,000 miles on it.  Trees, shrubs, and plants in perfect shape, well taken care of, are worth lots more than bent, broken, or sickly ones.  That’s true they are located.

In fact, the main reason “location” even gets involved in home prices is that the condition of houses in the neighborhood also affects each home’s value.

One of the tragedies of the recent housing meltdown was homeowners who watched helplessly as home after home in their neighborhood went into foreclosure.  Having empty, foreclosed homes down the street, with unmoved lawns and zero upkeep, hurt the value of every home there.

When it comes to condition, no one is better trained and equipped to describe a home than a home inspector.

So many people think a home inspector is the one to ask if a home price is a “good deal.”

The problem is that translating condition into a price tag is a different job.  The difference shows up several ways.

For example, a home may be a “good deal” for a client who is handy and has all the tools they need, and a poor pick for a client who wants no more trouble than hanging pictures when they move in.  Home inspectors never really know the skills each client brings to the home being inspected.

It’s also important to keep in mind that home inspectors are not appraisers.  Neither is anyone else in most real estate transactions.  Bankers and mortgage lenders hire appraisers to protect themselves, in case they have to collect on the loan by repossessing the house in foreclosure.  They want to know it can be resold for at least the balance of the mortgage loan.  If the home is a “good deal” for a buyer, that’s nice, but that is not the reason lenders hire appraisers.

Most inspection standards of practice point out that home inspectors are not required to estimate fair market value or the like. Still, that does not mean home inspectors live in a bubble.

We think home inspectors can help clients a little in this department, mainly by helping clients help themselves.  In this day and age, there are several useful tools people can use to get fairly close to value estimates for a home.

Here’s a map of tools that can be used to get a better idea of a home’s value.

PVA Assessed Value

For starters, anyone can check the “assessed value” of a home online.  In Metro Louisville, for example, the place to start is http://jeffersonpva.ky.gov.

The PVA’s “assessed value” is required by law to approximate fair market value, in each Kentucky county.  The Jefferson County PVA site also provides a list of “neighborhood value” for comparison to the specific house being checked.. PVA neighborhood values are at http://jeffersonpva.ky.gov/property-search/property-listings/.   For some reason, you have to pay to get much more, like the date of construction.  It’s easier to get elsewhere.

No government or computer site is “up to the minute,” of course.  PVA assessments for individual homes are updated every few years, not daily, except when a home is sold.  But it’s a start.

More Data

Several free web sites with well regarded price estimators are available. Among them are www.city-data.com, www.zillow.com, and www.trulia.com.
None of these computer sites are informed by actual on-site viewing of the condition of the home at this time. All they know is databases. Still, the truth is that automated computer appraisals, using pretty much the same databases, are becoming more and more common for mortgage lenders and underwriters.  They are far from worthless, even if they do not provide a price that “hits the nail on the head.”

Computer value estimates are based on computer comparisons of recent sales in the vicinity and price trends, using formulas that generally are not made public.  Using more than one computer estimator helps arrive at a ballpark estimate of a home’s value that is much better informed than any single home inspector is likely to be.

All three sites deliver comparative data for Kentucky (state-wide), a zip code, and a specific address.  Each one also has its own features and attractions.


There is a lot to like about the City-Data.com value estimator.  On City-Data, you start by jumping to a “Zip Code Detailed Profile.”  That’s a very useful start.  The Profile shows a 6-year chart of home sales in the zip code, by price and by volume (how many).  It’s easy to see if prices and sales have been going up or down there.  (You can also search “Just Listed” homes in the zip code while you’re there to look around at asking prices.)

The “Home Value Estimate” tool is right below the chart.

It produces more than just a number.  It gives a “low range value price” and a “high range value price” instead of just one number.  Then it rates how good the info is likely to be by estimating its “confidence.”  The price is too wide to be a lot of help, typically.  Averaging the low value and the high one produces a number that often is around 10% lower than the Zillow estimate.

Below that is a list of home sales it used to arrive at those numbers, showing their dates and distance from the home being asked about, along with a map showing them.  Then comes more data that most people ever thought of asking about, like ages of people living there, rental units and rents, property taxes, age of the housing stock, owners, condos,  public and private schools, disabled residents, facilities with environmental impacts, and a breakdown of mean house values.  Home mortgage values in the zip code also are charted at the bottom – and they’re broken down by FHA-FSA/RHS & VA or Conventional, as well as refinancing and remodeling categories.  That’s just a sample!


The Zillow “Zestimate”® for value is at http://www.zillow.com.  Zillow has worked hard to fine tune its estimating tool, having recently announced “third generation” algorithms to improve it further.

When you land on the Zillow home page, the Zestimate® tool is on the right side of a dialog box in the center.  Enter the home address, click on the button, and you get a one number estimate of price, instead of a price range.   The Zillow estimate often has been around 10% higher than the average of the high-low estimates of City-Data.com.  But averaging those two numbers probably gets about as close as any two computer feeds are likely to get in a matter of minutes.

The Zillow screen also shows a projected rental.  A “Details” button adds the year built, square footage, last sale date, and the last sale price.  A map shows neighboring houses and each of their prices.  You can click on any of the neighbors and get square footage, bedrooms, and baths.  Pretty cool.  A list of nearby schools follows.

The “Local Info” tab on the tool bar had neighborhood details and state information, but not Louisville stats. For that, you have to click on Real Estate Market Reports, under Local Info, and then enter Louisville and start a search.  It produces a chart of 5-year trends in Louisville home values.


Trulia.com produced the highest price estimate among the three sites, with a photo of the house.  That’s a nice touch, although the picture was several years old.  It also gave the bedrooms, bathrooms, acreage, and date the home was built.

Trulia provides an interesting “average list price for similar homes for sale” and the “average sales price for similar recently sold homes,” along with the average listing price for the zip code.  The difference is fairly wide between average list price and average sales price in the zip codes sampled.  Charts under the “Market Trends” tab can help explain that.

Trulia graphs media sales prices for over a decade.  That’s more help than shorter 5 to 8-year charts, so prices well before the housing meltdown, as far back as 2001, come into view. Trulia also charts median sales prices for the zip, with a year-over-year percentage change (declines are in red).  There also are comparative charts of the number of listings and average listing price, but weekly, along with a multi-year average price per square foot graph.  That “price per square foot” number is the kind of thing appraisers often use, if you want a preview of how an appraisal might go.

A “Louisville Real Estate Overview” tab under “Local Info” in the tool bar charts city-wide trends and helps compare neighborhoods.

Still, for a few homes where it was possible to check with neighbors, the Trulia price often seemed to be on the high side, though prices are picking up faster at this time (early 2013) than they have in years.  Maybe it’s just more forward looking.

Closing in on a Guide Number

Once again, it may be that averaging the three site’s values typically is a closer approximation than any one of their values.  It was not unusual for the three site average to come in very close to the “high range value price” on City-Data.  That average also was about 15% below the Trulia estimate and about 5% above the Zillow estimate.  It also felt close to the neighbors.  In the one or two cases where a recent appraisal was available, because of refinancing, it was the closest to the appraisal too.  We’ve soon worse starts.

On the other hand, the PVA assessed value was closer to “as is” fair market estimates for homes in seriously distressed condition.  In those (few) instances, the computer sites probably gave an idea of projected sales price for the same home in something more like average condition.  This also may be true of homes with substantial improvements that are not reflected in square footage, bedroom and bathroom counts.  A home we inspected with literally miles of new wiring for fully automatic lighting, plumbing, home theater, and climate controls – all of which also could be controlled for the owner’s car – and a backup generator, is one example.

Certainly there are more elegant calculations that can be fine-tuned from basic economics, like rent-to- mortgage ratios, inventory and sales velocity comparisons, ground rent capitalization, etc.  The tools and sites here are useful primarily for conventional single family residence values, not other specialized kinds of real estate. An investor buying a home with plans to convert it to commercial use, for instance, needs more than these sites are designed to supply.  There are several other methods of valuing real estate.  A “cost approach,” whether its is based on reproduction/replacement cost or depreciated cost (such as market extraction methods), or income capitalization methods, or yield capitalization techniques, all can be applied – but usually outside the setting of residential home pricing.  Anyone needing to value real estate in those ways also needs to employ InspectHomes commercial and due diligence inspection services.  There’s an inspector for that, too.

The shorthand automated estimates here also will not be as useful in special circumstances, where easements, encroachments, leaseholds, or zoning or deed covenant restrictions complicate things, for example.  All issues related to a single site, special plans or the like deserve individual attention from your professional advisors.  Still, overall, for the vast majority of homes and clients a home inspector sees, there is no better way for consumers to get a handle of home value in a short time and little cost.

As a quick way to get into the price neighborhood, with data more up-to-date than it is reasonable to expect from a mere mortal home inspector, using the three sites and averaging the results  is pretty handy.  It also opens the door to lots more useful information.  It’s certainly a whale of a lot better than banking on the asking price.  “Asking prices” can come from more places than any single person can imagine.

These tools are nowhere near perfect, or the “be all and end all” of pricing, of course.  In the end, for the ordinary home transaction, the price of one particular home is just what a willing and knowledgeable buyer will pay a willing seller.  Home shoppers also can employ appraisers to assist them, as a mortgage lender almost certainly would. Real estate agents also have skills useful to get another opinion of value.

No matter what, however, the basic rule in buying real estate always applies: caveat emptor.  “Buyer beware.”

We all have to do our homework, and get the best help we can when we need it.

Your Louisville Home Inspection at InspectHomes inspector is just a call away — any day, most of the time.

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