The Real Estate Institute of New South Wales (REINSW) has called for online valuation sites to be investigated, claiming the online tools are inaccurate and offer overly-complex information.
REINSW chief executive Tim McKibbin said he met with NSW Fair Trading commissioner Rod Stowe to discuss the problems online valuation sites are creating.
“REINSW is calling for the practice of online ‘valuations’ to be investigated by the regulator to protect consumers who may not understand the complexities and therefore the significant differences between a valuation prepared by a licensed valuer and what is provided online,” McKibbin said.
“Correctly valuing a property is difficult and requires consideration of many factors… The skill and experience of the valuer are essential to getting it right. It’s not simply a number-crunching exercise that can be completed in a few seconds using an algorithm.”
REINSW president Christian Payne added that the problems with online valuations are two-fold.
“They use median prices,” he said. “Median prices are subject to being skewed easily, particularly if there’s a small sample set.”
The other issue, he claimed, is a practical one. Online valuations have no way for assessing a property’s unique characteristics.
“Topography can make a huge difference to a value. If it’s just a block of land and it’s easy to build on, it will cost less to build, if it’s a very steep lot it will cost more.
“[If it’s a unit], no one’s saying that it’s on the dark south/western corner of the block, or the top floor north/east. That doesn’t get taken into account with an online valuation. The smaller idiosyncrasies that make up value aren’t being considered.”
REINSW further claims that data provided by valuation sites is highly complex and the fact that many online valuation tools are backed by well-known banks and commercial property data providers means consumers are putting their faith in them.
“Armed with these online valuations and without an understanding of the nuances of the valuation process, consumers are questioning the accuracy of asking prices being quoted by agents,” McKibbin said.
“[We] believe these online valuations can be very misleading. At the very least, they need to be the subject of a detailed information campaign so consumers understand what they are getting.”