Internet-Based Home Evaluation Tools: Are They Reliable?
Q. Do internet-based evaluation tools provide accurate measurements of my home/condo value?
A. The answer every eager seller is looking for when entering the realms of the real estate market is to the heavy question ‘What is the exact valuation of my house, apartment, or property?’.
The most important factor for a buyer and even more so for a seller is the money value of a property. The real estate market depends on the transactions between a buyer and a seller, and the higher the sell the better it is for a broker. Any person looking to sell their home has a monetary motive behind it, the higher they can take the bid, the more beneficial it is for them.
Therefore, it comes as no surprise that in the real estate world, free home evaluations are an essential part of every dealing. The first step for a seller, which is present to the actual buying-selling process is calculating the worth of a given house. Anyone looking to take a property off of their hands first looks for methods through which they can determine the value of their property.
This step can be carried out through multiple techniques available in the real estate market. They come in a wide range, starting from broker valuation methods, agencies that deal in such valuations or internet valuation tools.
Broker valuation method is a process wherein you approach a real estate broker and sign up for his/her services to get a proper value of your property. In such a method, brokers essentially take a look at the property, the key elements of the locality and using their expertise and the current value of the market provide a certain figure to the customer.
The second method is through agencies, wherein you contact a real estate agency and they provide you a realtor for the valuation. Its workings are the same as the broker valuation method.
Internet valuation tools are basically applications available online wherein you can put in the area and location of your property and it will generate your valuation instantly.
It is established that there are multiple wars to go about the valuation of your house, but often sellers are stuck in a dilemma, with a broker providing one rate, an agency providing another and online methods showing completely different results, which method can one truly trust? And why, if the property is the same, are there different valuation results?
These pressing questions need answers, and sellers are stuck with so many aspects to inspect but in so little time. The market is volatile and being stuck at the valuation stage for too long can be hazardous. So here’s some clarity on the issue.
The results you receive on a calculate depends on the numbers you type in. Similarly, the valuation of a house is a result of the information that goes into calculating it.
Realtors and agencies use the same kind of data but their results can be influenced by biases or human error. A software technique completely ignores the real elements of a property such as changes in a neighbourhood and can, therefore, be inaccurate. Thus, different methods sometimes show different results.
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There is no right answer on which one you can trust but rather a choice to make in deciding which method has a higher level of accuracy.
Traditionally, valuations were done by the broker method, whose results were, in the past, considered the ultimate word. People never cross-verified the final valuation and this often led to people being fooled into settling for a lower value than the actual value of the property.
But if the alternative is online house valuation, the question then remains, is this method any better than the previous? Or is it the same thing all over again, but now, with the risk of your credentials getting lost or misused in the large abysses of what we call the world wide web?
Internet evaluation methods are presented in the form of a software that can either be accessed on a website or through a downloaded application on your device, be it your laptop or your smartphone.
AVM, which is the abbreviation for ‘Automated valuation model’ is a real estate valuation model that provides properties valuations using large content available on their database combined with various pre-set algorithms. They are fast and easily available to anyone and everyone who wishes to access them, at any location at any time.
While the working and format of various AVMs may differ from one another, the general format is to do a comparative analysis of present-day home values and provide you a valuation for your property for that given point of time.
AVMs use public data in their home evaluations and as their number of users increase, their database broadens. With the market booming and there being a large influx of people making transactions within the real estate market, there seems to be no problem in this area. The reason more and more people are moving towards online methods of valuation can be narrowed down to one single word: Trust.
People’s entire lives depend on the sale of their property and the demand for an unbiased, fair evaluation is what has kept this internet valuation software thriving today. Having said that, this method, in spite of being unbiased, is not free from its faults.
Like any other real estate value evaluation system, even automated ones have their own set of limitations. One of the largest limitations is the dependency on data. The accuracy of AVMs is mainly dependant on the amount of data present in the database. The larger the database, the higher the accuracy.
Essentially what the program does is that, when a user inputs the information they have (address of the property) and asks for the information they need (valuation of said property), the software collects all the data related to the area, the geographical location, neighbourhood reviews, basic facilities, amenities, special features, general valuation of neighbouring properties etc. and putting all of this together, calculates a valuation.
One of the main advantages of using such a valuation technique is the decrease in manual labour for a broker. It reduces the time and is also a very cost-effective method compared to broker valuation methods. It aims at cancelling out the shortcomings of a physical broker property valuation.
Internet-based property valuation tools have both positive and negative aspects to them. Here are 3 reasons why you should go ahead with this valuation method for your home:
- Quick & Easy
Internet tools can be downloaded onto your laptop or smartphone and can be used at any time. It’s easy to navigate these applications and it comes with an easy set of instructions to make your valuation experience user-friendly. The results are almost instant and if the area you’re searching is slightly obscure, you will receive a mail or update with the required information within a few days max.
2. Cheap & Best
Most of the available property valuation applications or software are free of charge or have a minimum subscription fee. In comparison, manual valuation turns out to be a far more expensive proposition.
3. Let’s get the stakes down
Automation valuation methods are low-risk methods of valuation. Technology completely overshadows the possibilities of human error, be it intentional or unintentional. The software has pre-determined formulas that access data accurately, and there is no outside factor that can affect the results of your house valuation.
But with its numerous advantages enter the disadvantages of internet valuation tools. The most prominent one being ‘inconclusive data’. The primary raw material for results is data.
Often in such technologies, the software is unable to capture the exact condition of the property, thus leaving the results inaccurate. Also, removing the human element can lead to the ignorance of factors that technology cannot provide. These may include future changes in the neighbourhood or locality. To combat this issue many applications, attach user reviews of the area along with your valuation.
At the end of the day, we can come to the conclusion that in spite of its disadvantages, automated tools for the valuation of your property are a viable option. With the advancements in technology, the accuracy and efficiency of these tools will only increase. The method is popularly used in the market for all the right reasons, now it is in your hands what technique you would like to adopt.
As it is popularly said, your house, your rules!