Why Online Instant valuations arent always accurate...
Online valuations are a great starting point but to get an accurate valuation you need the help of a local property expert. Here's why..
As technology becomes more advanced, the rules of estate agency continue to change. Today, we have other innovations that have propelled us into new territories. With the advent of new technology comes new ways that agents have to adapt, or improve.
One of these key pieces of technology is the online instant valuation tools lots of agents now use on their websites including us, you may have recently took one with us.
Made popular by sites such as Zoopla they seek to give any seller an initial idea of how much their home might be worth. The convenience is undeniable, but the same can’t be said about the accuracy.
These tools are popular for homeowners who are just beginning their home sale process. Someone gets an idea to sell their house, and they just want to “check the market.” After the 2008 market collapse, it’s not uncommon for people to want to know how the market is doing before seeing if it would be wise to buy or sell.
There is no question that these are very popular tools and they're great for getting an idea right at the start of the process how much your home might be worth.
All of these websites have an algorithm and they determine the value of your home based on price per square foot in the area. Sounds simple enough, right? What could be wrong with this?
Well, a lot actually
Reason 1: It’s Automated
The data is uniform and isn’t actually based on a carefully put together appraisal based on anything concrete. It’s not as if there are thousands of little drones all equipped with Artificial Market Intelligence sweeping through each property and generating some sort of educated estimate. Automated systems are responsible for generating a predictive estimate all on their own without any oversight from humans with market knowledge. Keep in mind, this computer-generated software isn’t looking for future movements. So anything like the current covid-19 crisis isn’t going to be covered. The computer’s prediction isn’t focused on any hard and fast data, other than patterns.
Again, this article isn’t intended to denigrate these easy-to-use services, I just wanted to lay out the facts for future home buyers and sellers who may be reading this so that they are aware of the how these systems work.
An estate agent is always going to be the best bet for clients who want to know the ins and outs of the market in question.
Automated data and generalized findings aren’t the surest path to getting a proper estimate.
Some would argue that consulting these services actually does you a disservice.
Proponents of this thinking claim that by skipping agents and going straight to online estimate tools, clients may have inflated numbers in their heads. Since this is their first impression of the market, it can leave clients feeling misguided. This can also set you up for huge disappointments down the road, when your agent tells you that you aren’t going to be getting an unrealistic fairy tale price for your home.
Reason 2: They Look for Patterns
These services rely heavily on computer algorithms that have been pre-programmed to scour data and look for patterns. Operating a system of predictions based on patterns seems like it would be a good idea, and in theory it seems very sophisticated, at least on the surface. However, one of the major things to consider is that real estate isn’t just a system of patterns and fluctuations. It isn’t as cut and dry as certain aspects of the financial world. There are obviously patterns and predictable fluctuations, but these happen based on aspects of the market that typically aren’t perceptible to a computer program.
When you consider that the value a house has changes over time, computers who are looking for patterns may be able to make sense of data, but they are relatively poor judges of which data is most important in the sale of property.
In order to be able to truly read a pattern, you need to have years of experience with markets and have some knowledge of predictable trends that occur throughout time. Without this background information, it can be really hard to understand what is going to happen--even for a computer.
Here’s why.
Let’s say your home is a gorgeous four bedroom property on badgers walk. You've lovingly spent years making the property absolutely perfect. You've got a top of the range Wren Kitchen installed and have had a brand new top spec bathroom installed. The garden is beautifully landscaped and overlooks the Buckley line woods. The house opposite is also four bedrooms but is really tired, still has the original Kitchen in and the garden is overlooked by the houses opposite.
All of these websites take one postcode and average out the price per square foot for the entire postcode. This is what confuses buyers and sellers on the valuation of their homes, and one of the reasons you must be extra careful using online tools such as these..
These tools are not run off of comparable sales that have been examined by the human eye. They are simply price per foot within a location and it’s put out by the computer.
Reason 3: They Can’t Account for Unique Property Values
A computer-generated system also won’t know that your house has emotional value. And sometimes, you as the home buyer or seller won’t know this either.
It always surprises me when a client believes that just because their house has the same number of beds and baths as the house next door, that they will be worth the exact same price.
Even if you live on the same estate, houses can have widely different qualities that make the price of the home differ substantially. When using the computer’s algorithm, it can’t input a price adjustment for special amenities, or spectacular features. Other factors such as your gorgeous skyline view, for example, will not play a factor in determining the estimated price.
Getting a great estimate is as simple as picking up the phone and calling a local agent.
To recap
If your thinking about selling in the coming months give a local estate agent a call, this is possibly your most valuable asset and it's an emotional and complex transaction. Having a great person at your side can be really valuable. The other alternative is to take our social distancing valuation tool which will give you a far better idea of the sale value of your home as it will be myself who will be determining the value. The more information you can provide the better.....click below....