In previous generations, having your home valued was as simple as interacting with an estate agent and inviting them to inspect your property. They would then use their expertise and local knowledge to place a viable value on the asset, reflecting the real-time market scenario and the need to achieve a profit for all parties involved. The market has changed considerably over the course of the last 20 years, however, with legal and technological evolution created a virtually unrecognisable landscape.
Altering the Estate Agents Act to allow passive intermediaries to operate outside the scope of legislation has caused consternation concerning house valuations, for example, while the emergence of online agents has generated diversity in terms of how property is valued. This has created confusion and an inherent lack of trust, with both vendors and potential buyers now unsure as to whether they are achieving value for their hard-earned money.
A Look at Modern House Price Evaluation tools: The Pros and the Cons
To add to this unpalatable mix, we have also seen the emergence of online property valuation tools that are entirely independent and widely accessible. Each of these is different, and while some can be adopted by numerous agents others have been designed by specific operators. The majority are said to be fair and entirely objective, however, and you would think that they deliver a service that is welcomed by both agents and the customer alike.
This is not necessarily the case, however, with agents having various experiences of such tools and many reporting that they may be unreliable. They also offer huge advantages too, however, particularly in terms of driving trust between vendors and agents and maintaining open lines of communication between the two. With this in mind, it is i
Important to consider the pros and the cons of these tools and their true place in the contemporary real estate marketplace: –
The Cons: Are house valuation tools unreliable?
We have already touched on the fact that these tools may be unreliable, but is there evidence to support this? Some agents have sought to provide some, with a one offering the example of a probate property where the agent’s valuation came in 30% lower than the number generated by an online tool. While two independent agents valued the house at £180,000, Zoopla (perhaps the most popular online valuation portal) suggested a value in the region of £248,000.
Zoopla is not alone in this respect, however, with Calnea’s progressive and innovative tool also raising eyebrows in terms of the valuations that it publishes. In the case of one seaside holiday chalet that sold in Exeter for £150,000 last November, Calnea proffered a suggested valuation of £506,900 while FindaProperty came in a little lower at £282,500. Here, Zoopla arrived with the relatively conservative valuation of £154,000, although all of these were higher than the eventual selling price.
This could be down to other, external market factors, of course, as not every home sells for its valuation. Structural issues may have impacted the price after a sale had been agreed, for example, while the process of negotiation and the desire to achieve a quick house sale may also have driven down the price. Given that a similar property in Exeter also generated valuation discrepancies in excess of 30% last winter and the wealth of other examples where we have seen inconsistent results, there is clearly something awry that needs to be addressed.
The Pros: Why independent, Online Valuation tools should not be discounted
While these examples clearly showcase a lack of clarity in terms of valuations, they should not detract from the accessibility and choice that they deliver to aspiring vendors. In theoretical terms, they enable vendors to take greater control of their destiny in the marketplace, while also providing them with access to data that should enable them to make a more informed decision. This is part of a wider trend in the property market, where big data and property portals are empowering consumers to take a more active and knowledgable role in trading their homes.
The key is knowing how to use information to your advantage. In the case of independent and objective property valuation tools, while we may have seen alternative platforms deliver variable results it is surely the duty of the vendor or potential buyer to ensure that they have as much data as possible. This may involve using a number of alternative resources to create an average valuation, while taking into account the criteria used by each and treating all figures as estimates rather than definitive numbers.
When using a huge data resource such as Zoopla, it is also important to research historical valuations and subsequent purchase prices. You should also compare similar properties in the area that you are looking to reside in, as this will help you to determine if the tool offers consistent variations where appropriate. These data sets are already available to both buyers and vendors in the current market, as property valuation tools offer a sense of empowerment and preparedness that was simply not available generations (or even years) ago.
We live in a real rather than a theoretical world, however, meaning that it is hard to completely trust even objective online property valuation tools if they continue to deliver such variable results. After all, he primary mistrust surrounds the level of disparity between alternative valuations rather than the differences by themselves, so there is clearly scope to question these tools and aim to drive more consistent pricing in the future.
Ironically, the answer may lie in the hands of estate agents, you can utilise and leverage the benefits of free online valuation tools to deliver the ideal compromise between accuracy, insight and value for money. By perhaps including free valuation tools on their website alongside the traditional method of inspecting a property, they can combine the best of both worlds and help to establish an accurate price that is deemed to be fair.
By also adapting to the demands of the modern (and not to mention accessible) market and making valuations for free, agents can move their service into the 21st century and significantly benefit their clients.