There’s no shortage of websites offering free or low cost valuation estimates for properties and it can be common for buyers to obtain these or consult with their broker before making an offer.
But if you’re relying on these estimates to help you purchase a property, you might be compromising your chances of buying your dream home.
Price estimate sites use what are known as automated valuation models (AVMs) to determine an estimated value for a property.
As an agent I have access to these estimates too, but for the most part I ignore them.
The data AVM’s use comes from publicly available sales information provided by a number of agencies such as Landgate, as well as real estate agents themselves, and the way that the estimates are calculated varies between providers.
But here’s the thing, the estimates produced are very dependant upon the quality of the data and the “comparable” sales that are automatically chosen by the system, and these comparable sales can be very different to what I as a local real estate expert, or a licensed valuer, might use to price a property for sale or produce a sworn valuation.
In newer suburbs where block sizes are similar, the build year of homes is similar, your location within a suburb is neither here not there and most 4×2’s look pretty much like every other 4×2, the margin for error in the online estimates will be slimmer.
But in older suburbs, where there’s been ongoing subdivisions and renovations, homes built in different styles over different periods, different sizes and zoning of blocks and over time, more highly sought after streets and pockets within a suburb, the estimates can be way off.
And as they’re system generated, AVM’s don’t take into account differences in build quality nor internal presentation and finishes between homes either.
So whilst AVM’s can provide some level of guidance when buying, they’re not a valuation, they’re simply estimates and averages with often questionable levels of accuracy.
So if you’re in the market to buy do your own research – speak to local agents, go to home opens and ensure you look at appropriate comparable sales evidence rather than relying on an online AVM report. That way, you’ll have a better idea of where the more realistic market value for a property may lie and be less likely to miss out when it comes time to make an offer on your dream home.
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