Equity List Criteria

[Clay Walker]

So I'm trying to refine my equity list on listsource.com and key in on the mid level price range houses in my market.  My first ever mailing that I sent out I didn't specify a price range so I got a few phone calls from sellers with homes in the upper range of home prices for my market but I want to specifically target mid range value properties.  On listsource.com, there are a couple categories that I think can help narrow this down; Current Home Value (which uses an AVM, whatever that means) and Total Assessed Value (which is what the county values the home at).  My assumption is that it would be best to use the "current home value" since it tries to assess actual market value but I wanted to get some opinions from folks that have used either one or both of the criteria before I go about purchasing another list.  Thanks for any help!

[Sean OToole]

@Greg H. said "Listsource valuation- without MLS access, there number just like Zillow and the rest is totally unreliable".

That's not really accurate. Corelogic, the company behind Listsource, also offers MLS software and has a ton of licensed MLS data that is likely used in their automated valuations (they don't publish their algorithms so I don't know for sure). One of the National Association of Realtors own companies, RPR, also sells MLS data to AVM providers. Zillow almost certainly has also licensed a ton of MLS data for use in their AVM's. To the degree AVM's aren't reliable, access to MLS data is probably not the issue, though it is a common misunderstanding about AVM's.

The real issue with AVM's is that they are based on public records data which doesn't include a lot of important details like floor plan, curb appeal, view, quality of neighbors, etc. In the end they typically work great in large subdivisions of similar homes which have regular sales activity. Conversely they tend to be really bad in neighborhoods that have a lot of variety in builders, age of homes, views, etc; or which have very few sales to base the value on.

Even with their limitations AVM's are an AMAZING tool for real estate investors and should not be overlooked just because they aren't as good as hand selected comps. Specifically they are very good for narrowing a list to be closer to your specific target price range. If there are 20,000 properties in your town, but you are only looking at stuff in under $300k range, an AVM will do a very good job of limiting your list to those homes. On the other hand it would be IMPOSSIBLE to cost effectively run MLS comps on every property. So for @Clay Walker's stated purpose, an AVM is the perfect tool for the job.

Bottom line - would I recommend using an AVM to make a purchase, absolutely not. For narrowing my list to the best prospects, absolutely always.