Kathleen Shilkret guessed her five-bedroom Linda Vista house, with its roomy lot and inviting backyard, was worth around $400,000. By one estimate, she was $300,000 on the low side. By another, she was $50,000 too high.


To verify her estimate, Shilkret turned to the Internet and found a home valuation calculator at http://www.homegain.com. The calculator produced a stunning reply: Shilkret's 1950s-era home has a value range of $600,000 to $700,000. The results prompted the 57-year-old retiree, who wants to sell her home to create a nest egg, to call a real estate agent.

"I was basing my estimate on an appraisal I got almost five years ago,"Shilkret said. "This certainly has helped move me along as far as making a decision to sell."

But several other Web sites gave Shilkret wildly differing estimates for her home, causing her to wonder about each estimate's accuracy. Shilkret's experience underscores confusion among consumers about how to interpret the abundance of real estate information online.

First, dot-coms liberated lists of homes for sale from Realtors and made them available to consumers. Now the global computer network is chipping away at the real estate industry's hold on "comparables"or "comps."

Comps list the sales prices of homes that have sold near a specific home in the last six months and are similar in size, age and condition. This information is contained in public records that until now have been difficult and time-consuming for consumers to access.

Agents use comp databases to compare historical sales price trends in a neighborhood. This information helps agents price a specific home by comparing it to similar homes nearby. Today, consumers can do the same by accessing comps for free at a handful Web sites, including HomeGain.com,http://www.domania.com and http://homeadvisor.msn.com.

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There's a lot at stake: These sites use comps in part to determine a value for a consumer's home--often their most valuable asset. But home valuation calculators can overestimate or underestimate a home's value, causing consumers to base crucial financial decisions on inaccurate information.

Understanding how home valuation Web sites work can help consumers determine if they're valuing a home properly.

These sites use computer programs called "automated valuation models," or AVMs, that cull tax assessments and deeds for information including demographics, property characteristics and sales price trends. Some programs use mortgage, multiple listings and appraisal data.

AVMs run a homeowner's address and ZIP Code through various mathematical models that compare the home against others that have recently sold in the same area and against historical sales trends in that region.

Some of the more sophisticated models compare a home's unique characteristics, such as number of bedrooms and baths, to others like it, rather than lumping it in with everything that's been sold in the same ZIP Code.

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Homeowners can use the range of value they get for their home from these sites as a starting point in deciding to sell, refinance or take out a home-equity loan for remodeling. AVMs can also be useful for buyers in a bidding war.

"In a hot market consumers can walk into an open house and be pressured into making an offer on the spot," said Nick Karris, an Internet real estate analyst at Gomez Advisors, a Lincoln, Mass.-based research firm. "If they want to compete and they've never seen an appraisal, they can go out to their car and sign on to see what homes in the area sold for."

Banks have used AVMs for years to review appraisers' estimates and in lieu of an appraisal on home-equity loans and in deals where there is a low risk of default. Some mortgage lenders are starting to use these databases for loan originations as well.

The use of AVMs by an increasing number of mortgage lenders promises to save consumers time and money. An in-person appraisal can range from $300 to $500 and take from one to three weeks. A virtual appraisal takes minutes and runs about $25. (Banks typically use huge AVM databases provided by Freddie Mac and Fannie Mae and other AVM providers that charge fees.)

Appraisers say AVM databases are useful to take the pulse of housing prices in a particular neighborhood. But they're quick to add that an in-person inspection by an appraiser is still the most accurate way to determine a home's true value.

"They're useful as generalities, but every property needs to stand on its own," said Carol Chirpich, a certified residential appraiser in Orange County.

Indeed, whether they're used by consumers, real estate agents or mortgage lenders, AVMs are not foolproof.