Tuesday, May 30, 2023

Which One Is The Best, Manual Valuation or Automated Valuation?

Are you looking into the world of real estate investment? In the process, have you come across the term property valuation? Whether we speak about acquisitions, legal property problems, sale and purchase, mortgage, or taxation, there is one thing in common – property valuation. In layman’s language, determining the accurate price of a property, depending on various factors, is known as property valuation. Property valuation methods determine the fair market value of a real estate property. However, the value of a property should not be confused with its price. For instance, a property seller might have to sell away his property at a cheaper price than its actual value due to an emergency situation. Hence, the accuracy of real estate property valuation is essential for mortgage lenders, property sellers, buyers, and real estate investors. Getting in touch with a skilled real estate property valuer like Sydney Property Valuers Metro can walk you through the basic concepts and methods of property valuation so that you don’t fall prey to real estate-related malpractices.

There are many property valuation methods like the cost approach, sales comparison approach, income capitalization approach, value per door method, cost per rentable square foot, and value per gross rent multiplier. But broadly, when we talk about property valuation systems, it is widely divided into two segments- manual and automated. In this article, we will talk about both manual and automated property valuation and which one is better for you.

Automated Property Valuation: 

With the world shifting digital in every respect, the real estate valuation process has also become online. With online property valuation tools offered by property valuers, you can find your real estate property’s current worth in the market. All you need to do is- enter the postal address, area measurements and dimensions, zip code, and a few additional details like constructed area, type and age of the building, location, size, owner details, and general details related to the subject property. The property valuation tool will thereby show the estimated property value. These online property calculator tools use advanced analytics like machine learning models for analyzing different data points for a given property to predict the current and future value of a property. The machine learning algorithm also takes into account- the number of rooms, size, quality, characteristics (like air conditioning and countertops quality), and location and combines with the price history of the property to show the final result. Sometimes, online property value calculator tools also offer records of recent sales in the neighborhood. And the best part is sometimes, these tools are free to use. However, in other businesses and digital marketing, analytics that requires data valuation follow different procedures. These services come with a fee or maybe included in professional consultancy packages, but they are definitely worth it.

Manual Property Valuation: 

A manual property valuation is performed by a professional and experienced appraiser who is well versed in different methods of manual property valuations. Some of them are: 

  • The cost approach: This method considers the cost of rebuilding the structure from scratch and takes the cost of each and every element of the property into account. Both the land and building costs are calculated separately and finally combined or as the final value.
  • The income approach: This approach uses the current and past market data of sales prices for estimating the value of a property. For instance, a similar-looking apartment building can be compared to another in the same neighborhood, which was sold a few months earlier. Some of the determining factors are the number of rooms, square footage, current condition, location, and age of the building are taken into account in this process.

Which One Is Better? 

Valuation of properties by a skilled and professional property valuer who has been in this industry and line of work for a very long time is a service that remains unparalleled. Moreover, there is no way to check the accuracy of an online property valuation tool. But when it comes to the services of a real-time property valuation company, one can examine the value and understand it even more deeply and discuss the renovations that have been recently made to the property. Moreover, the sense of relief and satisfaction of a human touch remains undefeated in every realm of business. Your local property valuer can inspect, compare, analyze, calculate, and evaluate the property value while keeping you in the loop so that you, too, understand the whole process, which will never be the case with an online tool.

Accurate property valuation is a crucial concept in real estate investing as it is the determining factor of property insurance and taxes one has to pay for certain real estate property. It is also important for mortgage lenders before providing a loan against a certain property so that they don’t end up lending an amount that crosses the actual value of a property or gets hold of a non-marketable property. Efficient property valuation also protects potential buyers from overpaying for a real estate property and protects financial institutions from funding a property worth less than the investment amount. Apart from this, an efficient property valuer will also help in property appraisals during real estate settlements, lawsuits, and divorces. Hence finding an expert property valuer can evaluate the worth of your property and discover the right value at the right time.