Zillow is making moves with digital floor plans, launching a new feature that consumers are sure to love. The problem? Tackling how to manage data from a variety of sources to make sure the valuations they are creating are accurate.
The good news for American homeowners is that they have accrued more equity today than ever before. In fact, 39.5 percent of mortgaged residential properties nationwide were regarded as “equity-rich” in the third quarter of 2021, per data from Attom Data Solutions.
In other words, the combined estimated amount of loan balances secured by those properties did not exceed 50 percent of their estimated market value.
The not-so-good news? Plenty of these homeowners don’t know the accurate value of their properties, rely on imprecise property valuation methods, or lack confidence in their home’s true worth. And that can put homeowners at a significant disadvantage, preventing them from fully unlocking their equity and making well-informed financial decisions.
Why homeowners need accurate information
Homeowners must have an accurate and updated home valuation that they can count on, especially when preparing to sell their property, refinance their mortgage or invest in home improvements. Accurate home valuations play an essential role in planning for retirement or ensuring fair distribution of property for estate planning.
Appreciation is still on the rise
That’s why it’s crucial for homeowners to not blindly accept estimates and valuations of their homes that can be easily found online or via an app. It’s OK to question the first estimate provided by an appraiser if something doesn’t seem quite right.
Having confidence in your home’s characteristics and value before needing an appraisal for a financial transaction gives you the tools to spot any inaccuracies, much like knowing your credit score before applying for a loan.
Technology isn’t just for appraisers anymore
To aid homeowners in better understanding the accuracy of an estimate or automated valuation model (AVM) presented to them, it’s essential that they know their exact square footage and how others will view their property in the real estate food chain, particularly a mortgage lender.
The appraisal is based on publicly available information, such as sales of similar properties in the area and current market trends and the home’s features, including amenities, square footage and floor plan.
The challenge comes when there are significant variances in appraisals. Inaccuracies in county housing records, which appraisals also rely on, can complicate sellers’ process.
A long-term solution is digitizing floor plans, which can help render a dimensionally accurate and richly-detailed layout of a home with reliable GLA numbers.
With the right technology, it becomes much easier to use advanced image-recognition capabilities to scan and map out the total area and create a detailed and accurately measured digital floor plan sketch that meets proper industry requirements and standards.
Such resources significantly improve the conventional hand-drawn process, minimize inconsistencies and variations in the property inspection and data collection process, and make it easier for homeowners to collect reliable property data.
What lies ahead
Floor plans are becoming ubiquitous in property listings, essential inclusions that everyone will eventually expect to see. In addition to providing more clarity when it comes to sales, there’s potential for floor plans to support greater accuracy when it comes to home improvements. Imagine submitting a digital floor plan directly to a local contractor or big box store and getting a detailed, accurate bid remotely in a matter of hours.
Why this technology is what homeowners need right now
More than a mere modernized graphic layout, think of technology-driven floor plans as a needed tool for helping depict the true value of a home and ultimately driving more well-informed financial decisions for home buyers and sellers alike. In addition to saving time and money, floor plan digitization improves confidence among home sellers, buyers, lenders, insurers and others that the property is accurately sized and depicted.
Call us at (480) 205 2234 to discuss your mortgage needs.
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