There are also non-tangibles like knowing your buyer and how much you can get from them.
My mother passed away last year and I handled the home sale as I was the executor of the estate. The buyer was a neighbor who heard about my mother passing away and saw it as an opportunity to buy the house for so his mother could live less than 100 meters from him and help him and his wife with raising their kids.
He knew we'd be eager to sell and thought he'd get a deal, but I realized that the reason for him wanting my mother's house was because it was ideal for his particular circumstance. This buyer was a real estate agent in my mom's office (she was also a real estate agent). At the end of the day, I got about $40k premium over the appraised value (almost ~10% premium) just because I knew I had a motivated buyer.
Situations with motivated buyers and sellers happen all the time and adds a lot of volatility in sale prices, and is a confounding factor that I would expect to really complicate machine learning approaches to appraising the value of a home.
Usually this is mitigated by the appraisal. Lenders generally aren't willing lending more than a home is appraised for because of the increased risk. I'm sure this varies from state to state but I think this holds mostly true in general. That being said, the appraisals themselves are quite subjective and only based off a few similar properties sold recently, so I still agree it's a difficult problem.
Appraisals magically come in at the exact offer price unless the offer is just completely off the charts insane. Appraisals are often times BS or, at best, just whatever you need them to be within some rather large margin (+/- 10%? 20%?).
Sadly, my appraisal came in "magically" at list price, so I had to put down a lot more at close. It was 3 years ago so we've done well regardless. I think you are right, I'm pretty sure the appraisal is just a guess. Most people I know had the appraisal come in way high, so maybe I got the one honest person.
When I sold my last house I had no idea what it was worth (the market was going crazy at the time) so I called an appraiser to see if he would give me a good starting point.
The first question he asked was what I was listing it for. He also made it clear that he would not physically inspect the house or do anything more than a cursory comp search.
Real estate sales are just loaded down with parasites looking to skim off of every transaction. IMHO it is an industry badly in need of disruption, but sadly a lot of the middlemen have their positions enshrined in laws, regulations, and corporate policy. Another good example: why do we pay Realtors a percentage of the sale price instead of a fixed rate? They're basically glorified babysitters that are just there to make sure you aren't stealing everything from the homes.
My mother passed away last year and I handled the home sale as I was the executor of the estate. The buyer was a neighbor who heard about my mother passing away and saw it as an opportunity to buy the house for so his mother could live less than 100 meters from him and help him and his wife with raising their kids.
He knew we'd be eager to sell and thought he'd get a deal, but I realized that the reason for him wanting my mother's house was because it was ideal for his particular circumstance. This buyer was a real estate agent in my mom's office (she was also a real estate agent). At the end of the day, I got about $40k premium over the appraised value (almost ~10% premium) just because I knew I had a motivated buyer.
Situations with motivated buyers and sellers happen all the time and adds a lot of volatility in sale prices, and is a confounding factor that I would expect to really complicate machine learning approaches to appraising the value of a home.