There is no shortage of websites and home valuing apps out there offering consumers free property valuations. Most major real estate and banking websites offer this service. You simply type your address into a search bar along with some information like the amount of bedrooms, bathrooms, parking spaces and block size. Then within seconds a valuation of your property will appear.
These websites rely heavily algorithmic data and essentially treat the property as a commodity. What these computing algorithms overlook is the emotional aspect of a property. They usually ignore the presentation of the home and additional features, whether the home is on the high or low side of a street, If the block is level or not or if they have views from the back deck. All of these variables effect the price a buyer will pay, hence true market value.
As quoted by Andrew Trim in his book Real Estate Dangers And How To Avoid Them “Pricing a property correctly is a combination of simple science mixed with complex art. An understanding of what constitutes value in a buyer’s eye takes skill and experience. Websites have the science but not the art.”
Why are these online valuation websites around you might ask? In my opinion there are two main reasons.
The first is generally a financial institution wanting to attract people to their websites in the hope of you using their services down the track whilst also providing a service to their existing clients.
The second reason is one to be a bit more wary of. The initial offer to provide a price is to try and find potential clients. They will then refer your lead to a local agent in return for a portion of their commission. These websites will claim to be Independent auditors of the real estate industry and will only refer you to the best agents in the area. This is simply not true. You will only ever be referred to agents that have registered with that particular website and is willing to pay them for providing the lead. This may mean that in order for the agent to cover these referral fees that the cost is unknowingly passed onto you as the consumer.
Be careful of any website that is being paid by a sales commission from the agent. Most of the best agents bypass these third-party referral websites.