Online valuation tools might well be an easy way to gauge the value of your property, but just how accurate are they? As with all things in life, online valuation tools do have their place. They can, for instance, offer a quick idea about what your property could be worth, using historical data coupled with up-to-date information about the property market in your local area. Conversely, they also have their limitations, such as not knowing the current condition of your home, or whether you’ve made any alternations since you took ownership.
In this article we'll take a look at the pros and cons of using online valuation tools so that you can make up your own mind as to whether they might be of use to you.
They check how much other homes on your street sold for
Most online valuation tools have access to Land Registry data, meaning that they can base their valuation on the prices that other homes on your street have fetched in recent years. However, many of the websites that use the Land Registry update their own datasets at different times. Add this to the fact that Land Registry data usually runs on a three-month lag, and you might be looking at data which is six or more months out of date… definitely not an accurate picture of the current market!
Compare other homes with yours
Some valuation tools will show you the sale prices for specific homes in your area, with others showing you listings from when the previous owners had their listings on Rightmove or Zoopla. This can be useful for seeing how your home has improved over the years compared to your neighbours, and subsequently how this might have affected their house prices. For example, you can see the number of rooms, look at the style of decor and see if your home has anything extra that their home doesn't. Using these sort of tools can really help improve the accuracy of your valuation but bear in mind that it might be difficult to find a home that is similar to yours, that is in the same area, and was last sold at around the same time.
Many online valuation tools use algorithms to compensate for the fact that they can't always garner up-to-date information on house sale prices. These algorithms have come on leaps and bounds over the past few years, in part due to wider investments in RegTech, but also due to estate agents seeing the need to capture new leads through online channels. As with all algorithms though, their output is only as good as the information and data that has been fed into them, and even today they can’t take in to account hyper-local factors that could be affecting house prices, such as the building of a new Waitrose nearby (always a plus!), or an extension to a nearby dual carriageway.
Online tools aren't personal
It has already been touched upon, but the main downside of using an online valuation tool is that they have no way of knowing what is actually going on inside your home. Whilst you can key in information about the type of home you have, the number of rooms and any special features that your home may have, an online tool could never physically assess these things. The tool has no way of knowing what condition your home is, how much you have invested in your kitchen, for instance, or how beautifully decorated your bathroom is. In order to get a truly accurate figure about the value of your home, you ideally need a trained professional to assess the interior so that they can understand the condition of your home. Having somebody internally inspect your home also means that they can have the chance to take into account any special features that your home has and assess the value that this adds.
In summary, online valuation tools can be useful if you just want a quick idea of what your property might be worth. However, when it comes to accuracy, they are no substitute for having a professional, face-to-face valuation from an estate agent.
Even if you are looking to sell your home without an estate agent, our advice would be to still invite at least two of them around to value your property. After all, you will be under no obligation to instruct them, and having a professional’s opinion for free is never a bad thing!