Residential Homes vs Investment Properties
We do a lot of research at The Terrell-Drager Team so you don’t have to! One of the things we are always looking for is an easy way to get reliable market information to our clients so that they are able to keep up with the approximate values of their properties. The valuation tools that are available are very sophisticated now, and many use artificial intelligence to determine values. We try out the systems all the time, hoping to land on the perfect tool. But we have found that they all have the same “hole” in them when it comes to our unique market.
Home valuation systems use geographical proximity to find homes that have sold close to the home they are valuing. That means they use, for example, the ten closest homes that have recently sold, and get an average price per square foot for homes similar to the subject. This is where we find the hole…. The artificial intelligence systems don’t know the difference between a residential home and a high-income-producing cabin. In our crazy unorganized community, beautiful residential areas can be extremely close as the crow flies to short-term rentals.
A recent test we did on a very sophisticated “cutting edge” system valued a 3/3 bedroom condo unit in Savannah Glenn, a 3/2bedroom ranch in Belle Meadows, and a 2/2 bedroom in an overnight rental community. The system hugely undervalued the 2/2 home and substantially overvalued the condo and the ranch. Looking into it a little closer, we could see that the “comps” used by the system for the condo and the ranch were rental cabins for overnight rentals which escalated the “value” of the subject homes more than $100,000 over the true market value of the residential homes. At the same time, the 2/2 cabin was undervalued by over $300K! These prices made no sense to our team, and it would be difficult for a buyer/seller to know the true value of their property using these tools.
Solution? An experienced Realtor® will know the nuances of the Sevier County market and be able to help you get a more accurate idea of what your property may sell for. By looking at not only the neighborhood, but the intended purpose of the home, the improvements made, income or potential income, and the fast-changing market, your Agent can hopefully do a better job for you than the robots! Contact a Terrell-Drager Team member today if you have a question about the market value of your home!