Online Property Valuations: How Accurate Are They?
I’m witnessing an increase in the number of websites that promise to value your house…
True, more data is available than ever before to determine a prospective valuation. And I utilize a variety of independent services to help me evaluate my own investments, but never in isolation from the human touch.
And, as is usually the case, you get what you paid for… rather than a rough estimate.
There is no alternative to local knowledge and expertise when it comes to understanding figures.
The first difficulty with internet valuations is that the results are based on historical data, which is sometimes many years out of date. That’s OK if the market remains stagnant for extended periods of time. However, this has certainly not been the case in recent years, since property values have soared at double-digit rates. And it’s only of limited utility right now, as we enter a period of turbulence… Mortgage rates have risen, and hundreds of mortgage products have been removed from the market.
The other major issue is the bluntness of the instruments available to users of these websites. When you search for a postcode, the results are often based on the radius surrounding that spot. A lesser radius will often produce skewed findings due to a lack of data points and the outcome will most likely rely on older data entries. A larger radius will include results from areas that may be significantly different from the property you are interested in, skewing the results even more.
Many additional considerations, such as the property’s condition, will be vital to know. So are concerns directly or indirectly linked to the property, such as newly obtained planning consents, which can clearly have a substantial influence on valuation, depending on the nature of what has been granted.
