Residential Property Valuation: The End of The Beginning or the Beginning of The End?
Recently, Zoopla announced its latest acquisition, the capture of housing data firm Hometrack for a cool £120 million. For those that don’t know, Hometrack provides residential property insights, analytics, valuations, and data services to over 400 partners including mortgage lenders, developers, investors, housing associations and local authorities.
Should we be concerned by what appears to be a pretty routine acquisition of one data company by another? I believe that we should. In my humble view, residential property valuation is in great danger of being simplistically packaged up for automated use, and presented to an unsuspecting public as if it were gospel. Sure, historical market data always has relevance in the valuation process, but the whole notion that you can press a button on a website that will guarantee a factual valuation of your property is not only a myth, but much worse, might be considered a con trick.
I think that we would all agree that the advent of increased automation in our everyday lives has largely been a good thing, but the notion that an algorithm (however intuitive) can be a substitute for human inspection and acquired knowledge, is a deception of the greatest kind. The art of a good property valuation comes from the ability to make comparison between condition, fittings, improvements & extensions, garden orientation, and scarcity as well as external factors such as traffic or aeroplane noise etc, which only an experienced professional can accurately gauge.
Given that for most of us, our property is both our greatest and most valuable asset, are we not in danger of short changing ourselves by accepting the current perceived wisdom that you should trust in historical market data supplied by a commercial website?
I would also add that as an industry, estate agency has done itself no favours in being so passive in its response to the outlandish claims of the portals regarding their ability to value our homes. This has been compounded by many of the low cost internet “disruptors” who claim that their so called “property experts” are expert, when in reality, many have very limited experience.
Finally, the silence has been deafening from professional bodies such as the RICS and the National Association of Estate Agents who seem committed in their stance of making little attempt to defend the professional standards of their membership. It is indeed a perfect storm, more’s the pity, with all the relevant parties seemingly coming out of this with very little credit.
So, what is the solution? Well firstly, government/consumer groups/trading standards/ professional bodies need to hold the internet portals and agencies to account and get them to reign in their claims with regard to their ability to accurately value your home. Secondly, the RICS and the National Association of Estate Agents should make it their business to both uphold and defend the professional standards of their members, and educate the public so that they can distinguish an estimate based upon historical data from a true valuation. Thirdly, estate agents themselves need to get a lot better at communicating the knowledge and expertise that they offer to a potential client, so that the general public can start to understand that not all estate agents are the same.
The author of this article is Jeremy Wright, Director of Ideology Consulting. For more information go to www.ideologyconsulting.co.uk
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