Changing the Estate Agents Act to allow ‘passive intermediaries’ to operate outside the scope of the legislation has thrown the spotlight on valuations.
Just how will private sellers going through ‘passive intermediaries’ put a value on their properties?
The traditional answer would have been to get three agents round to value it and pick the highest valuation (or possibly the middle one).
However, today’s answer is far more likely to be to use one of the several online property valuation tools available (including, it must be said, the Calnea product that the publishers of EAT, Angels Media, is currently marketing as a tool that can be white-labelled to go on agents' own websites).
But what are agents’ experiences of these? We would be very interested to know.
Feedback so far suggests they can be unreliable, and certainly varying.
One person, dealing with a probate property, is up against the beneficiaries querying agents’ valuations being about 30% lower than the valuation they got through online valuation tools. Two agents have given identical valuations of £180,000, but Zoopla comes up with a suggested worth of £248,000
Nor is Zoopla’s valuation tool the only one raising eyebrows. We have heard of a seaside holiday chalet sold (The Dunes EX33 1PR) for £150,000 last November. The Calnea valuation suggests it is worth £506,900, while FindaProperty puts it at £282,500 and Zoopla at £154,000.
Another Exeter property (No 28 EX31 2ER) sold also last November for £166,000. Zoopla put its current value at £175,000, Calnea at £208,000 and FindaProperty at £189,000.
As posters to earlier stories on EAT about property pricing and the change to the Estate Agents Act have said, one complication of valuation tools is that they cannot see the state of the property ‘on the ground’. They cannot detect whether a house has an avocado bathroom suite, or the latest in electronic wizardry and walk-in showers.
What are estate agents’ experiences of these valuations tools, and which one, if any, comes out best? Do you believe they potentially mislead the public? Have you, as an agent, come across cases where vendors know the ‘price’ that, for example, Zoopla gives and refuse to accept your own valuation?
In the light of the impending change to legislation, are agents rethinking the notion of providing free advice on value?
Do please post your thoughts below. It is an important subject for several reasons.
For one thing, Calnea is the official number cruncher for the Land Registry.
For another, sales of probate properties could be badly held up if beneficiaries of estates refuse to accept lower valuations than they can find online.
Thirdly, just why are these online valuation tools so wildly varying in their results, when they apparently use science?
But mainly this is important because it could cast possible doubt on the business model of new entrants to estate agency that the Government is – despite so many warnings about consumer protection – so keen to encourage.
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Comments
It is dealing with a probate property, is up against the beneficiaries querying agents’ valuations being about 30% lower than the valuation they got through online valuation tools. Solo Property Estate Agents in Exeter
I think it is brave of EAT to run a story on a product that they are white labelling and selling onto Agents. I think it is wise too.
Sadly the UK is now a bit too much like America with Litigation Lawyers ready to pounce on anything that was preventable.
In the middle of these austere times how long will it be before someone who gets repossessed works out that the duff advice on value was the cause of a delay selling and with a pocket full of legal expenses cover tries a frivolous claim against the "valuation tool"?
Or how long will it be before disgruntled beneficiaries try a claim against an Agent or Executors for underselling the Estate? Armed with evidence from amongst others the Government number cruncher or Portals off the telly there is no telling where the litigation is going to come from.
Advice on Value ought to rank up there with the FSA advice on investments after all even those who own for the sake of having a home rather than profit still have an awful lot of money invested in their property.
Valuation is not a job for an Algorithm and it is not just a case of analysing past data, when the market moves either way, up or down, owners should not face the level of uncertainty evidenced here.
Am I trying to put the wind up anyone offering these valuation tools and making their erroneous valuations available to the public or new Passive intermediary services? Damn right I am and if I can find a way of taking every wrong valuation through the courts I will.
Rightmove and all of the DPG offerings which are strangely all wrong by different amounts should give access to the agents to whom the data belongs but it ought to be off limits to anyone who does not understand the limitations of what is being pumped out.
The main problem with automated valuation tools is that they don't take account of property condition and immediate factors that can influence value.
That said, Zoopla.co.uk and rightproperty.com are not that bad.
Online vals will soon become established but right now they're inaccurate.
The present system largely relies on price as it's control group and disproportionately ignores many variables that only a property visit would highlight, things like home improvements to neighbours etc.
By dismissing even minor variables from the coding, the equation is flawed. The software needs adjustment and should even allow information to be input 'on the fly'. Only then will it's results be more realistic and trustworthy.
If Zooplas automated valuations is remarkably accurate, then what you are really saying is "whats the point in using an estate agent to value our property now"
these valuations are not only wrong, but they are effectively doing us out of a job- AND we are paying them a monthly fee for doing so!
Whatever 'tools' are used to assist in market appraisals EVERY house is UNIQUE, even if one in an identical looking row of twenty or more. There is an obvious need for an actual physical visit to give advice based on a reasonable amount of detail. In my view anyone who queries this is not very well versed in the art of appraisals.
There are NO IF's or BUT's regarding this!
Valuing property is part science and part art. Doing so, even with the benefit of visiting the property, is not a perfect science, hence why 3 agents will give sometimes widely varying valuations. Doing so, without visiting the property is much harder of course. Zoopla seem to do a pretty good job as evidenced by the 3 examples in the article above where they are more accurate than others and remarkably so in some cases. These estimates don't do anything to undermine agents and simply provide a guide for interested consumers - much like the multiple house price indices that are front page news every few weeks. The vast majority of consumers rely on agents to visit and value and this has not changed nor will it change. But having this data out there to provide a guide is actually helpful to me and I use Zoopla regularly in conversations with vendors to look at sold prices and current values.
For the record I believe my property is slightly overvalued by Zoopla!, I recently had it valued by an agent (my wife wants to rent i out, i want to sell it). It was valued by the agent and I was bang on the money for what they said "it should go on at" However I would not give them a quote from another agent......it was the first thing the agent asked, would they have said there valuation was 5% higher who knows....I would like to think they are more professional than that.
If i want a quick sale I will put it on at less if i want to be greedy i will put it on at more....will i use an online agent or traditional one or go FSBO....it depends on many things
Most Vendors get 2 or three local agents to value so 2 lose out any anyway. Its accepted as part of the process. Yes can be exploited by vendors that know they are going with an online agent. So perhaps as a defence to the online industry...ALL agents charged a nominal fee for valutions that was refunded upon instruction......getting any competitive industry to work together is tough though.
I hope not all people see me a troll i try to stay on topic with my answers, and have always said there is a need for all types of agents....outta here i am busy elsewhere today!
Michael, as an agent that presumably values his business and his income, you should not want Zoopla to get better at valuing.
As demonstrated with The Evening Standard Zoopla have no qualms in powering a system that is designed to undermine you. You are paying them and driving traffic to their site so that they can give away valuation data to any Jo blow how wants to sell a property. Once the data is near perfect they certainly won’t need you.
Your data is the valuable bit and you ought to decide who uses it for what purpose.
You wouldn’t let me know where the spare key to your house is kept and most definitely wouldn’t want me to share it with the world so we can all come round, make merry and help ourselves to the Silver, it is strange that you effectively want to do the same with your business.
I use my own comparables, Hometrack, Zoopla & RIghtmove to help me with my valuations.
Hometrack is useful because it includes historical mortgage valuation data as well as sale prices so I can find out remortgage prices.
Zoopla for me in Surrey is remarkably accurate. Certainly to about 5% of sale price in 90% of cases. Asking prices in my area are a good 10% or more over-inflated but it is very accurate for actual sales prices.
RightmovePLUS is absolutely brilliant for historical searches (and nicking other agents floorplans!) by postcode - you can check 10 years back in a single postcode, great for knowing what work has been done to a house (and working out how inflated the vendors' egos are going to be - best house in the road style!).
Using these 4 guides leads me to a conclusion on price.
Then I go and talk to the owner and watch as they put it on with a liar agent for far too much money.
Hey Ho
Whoops Michael! don't try to type on an ipad if you have fat fingers! Duck is another word to avoid!
Happy is on the other side of the industry, he works for applicant clients.
Please let him put his side without this descending into the usual slanging match.
The online valuation tools are great at providing a ballpark figure to consider as a baseline. I now pretty much only use Nationwide calculator as I find the Zoopla tool pretty but usually wildly optimistic ... perhaps as Zoopla expands they will have a nigger database & get better.
Sometimes it is very clear that even the Nationwide guesstimate is ridiculous, in which case I don't show it to the potential client. Whatever, its just a tool and I always use a heap of actual evidence of local similar sold and on market (& for how long).
Agents will be abused more than before, to provide price suggestions for people who have no intention at all of using any agent ... that has always happened & will continue to do so, but now, even more. Annoying? Yes, very but that's life, its still an opportunity for the agent to advise the benefits of using an agent rather than a Tesco type outlet.
Probate .... I charge £100 + VAT for probate valuations & state that I may have to stand up in court to justify my work. I also state on my normal valuations that they are marketing advice & not for other purposes. I also advise people that if they want a really formal valuation as distinct from a market appraisal, they should talk to their solicitor & then pay for a RICS type 'Red Book' valuation ... but at £3-400 few want to do that.
Once read advice to a vendor ... never use an agent who relies solely on the online tools when valuing your home.
Actually Happy strictly speaking it is not just the vendor who decides on an asking price, anyone or firm that has a charge over the property has a say too.
Well at least this is progress; at last it is no longer agents that are the ones overvaluing just to win instructions. Finally vendor choice and the non agent influences that guide them are finally being recognised. We need a name for this. How about greednecessity? In many cases vendors simply want more than the market or agents suggest in other cases (negative equity) they need more than suggested.
Have you checked out your house Happy, go try all the valuation tools you can get your hands on and tell us which one is most accurate, after all that is what this story is about and what Ros is trying to find out! You give us you opinion from a non agent perspective.
You are in property procurement. What do you advise your clients when faced with someone who is asking too much for the place on offer? You must be doing the same exercise only with applicants' interests in mind, where do you get your evidence from?
Happy Chappy
Using terms of exasperation like "Sheesh" doesn't make you right and everyone else wrong.
Charge for valuations, eh? Again, you show your lack of knowledge of the real world of running an EA business. In a market where the public expects all agents to provide free no-obligation valuations, the first one to put his head above the parapet and start charging will be the one that won't get asked to any valuations.
The public will just ask those who are still free.
Can you see how this wouldn't be a positive move, and could be bad for business....?
Zoopla can be resonably accurate for estimating the current value if there has been a very recent transaction of the property but it is wildly innacurate if the sale price it's working from is older. If the property has been improved or altered since the last transaction then it is way out.
I recently dealt with two identical flats right next to each other. One last sold in 2007 for £165k and Zoopla estimated it was now worth £148k. The other last sold in 2002 and Zoopla estimated it was now worth £127k.
That's a 15% difference of 21k but they are identical.
I imagine that we will start to charge for our valuations and then refund that charge from our sales commission when the property is sold by our firm.
Otherwise we'll all be running round providing the 'accurate' data to potential clients who may have no intention of using us.
I'm keeping an open mind on the developments.
Where do you get off Chappy? It seems every article these days is riddled with a ‘chappy don’t get it’ comment.
Why come here on a regular basis just to make yourself look like a bigger idiot than you did the day before? We are not here to explain the inner workings of an industry that you don’t understand. Please troll somewhere else.
@Chris Holmes, I agree with everything you have put but how are the 2 or 3 Local agents going to charge for those valuations, advice on value in the future?
Most agents currently give that advice free of charge, they accept the win some lose some nature of valuations and accept the balance of local competition. However what changes or provision should be made where 3 agents offer advice on value only to find that the vendor has listed with a passive intermediary giving none of them the opportunity of a fee or commission?
Valuations do require an understanding of the local area, the street side discrepancies that often occur and it requires knowledge of the applicants that the passive intermediaries and online valuation tools simply do not have. If agents do not find a way of protecting or earning from that experience then without a review of how their fee structure works they could be in for a rough and very frustrating time. The bigger threats to the industry, the RM/DPG duopoly along with Tesco are capable of developing systems that consider demand when valuing but they will do that with data that Agents are driving to through those sites. If agents don’t think about the future they will end up like the Dairy farmers who now supply Milk at a loss to Tesco and Robert Wiseman.
@Vince Cable dumbing down a profession that neither you nor you advisers understand is not progress and it isn't sensible, hopefully by reading this thread you will understand why.
The automated valuation tools simply rely on an incremental increase or decrease based on what the housing market has been doing since the last sold price for the property was registered.
That is fine if it was a straightforward arms length transaction and still very close to the sale date. But the automated valuation cannot recognise a property that has been bought and had £35,000 spent modernising it, nor a property that has subsided since the last sale transaction.
In fact we have actually seen a sold price that we know was actually a part-exchange price and therefore not a true reflection of a true sold price anyway. Ergo, automated valuations only have an accuracy within limited circumstances.
Now the suggestion in the article seems to be to get 3 local agents out to give their professional expertise and then hand it to an online agent to sell. Amazingly, the local agents have kids to feed, bills to pay etc. Therefore, in the event that any sort of trend appears of doing market appraisals and seeing the property appear on tesco.com then the local agents will start charging a fee before they even step out of the door to see the property in the first place.
Sheesh it is up to the vendor what price they ask for their property not EA's. If you are worried about vendors using your expertise but not instrucing then charge for valuations.
They should come under the same scope as tarot cards. Not only but homeowners could loose £1000s if they based their value on something like this that pulled out under valued prices.
Zoopla are placing it in their ad campaigns. II think trading standards should be called into look at subject.
Well done Ros
This has to stop, the market relies on good, sound valuation advice to keep it moving.
When a house is sold there is always a story behind why it achieved the price it did, it could have been that they were just about to be repossesed, if that's the case they may have let it go at below the value it may have achieved if they had more time to spare.. An online tool uses the sold price data but isn't a human and doesn't record the reason behind the sold price.
Please lets try and back the great advice out there that most agents give! Online is great for a lot of things, but it should only be used as an aid not an overall solution to pricing someones home!
Actually where Zoopla have a recent sale price to guide their valuation, it is the most accurate of the lot, but the strange thing is it while it gets that valuation a lot closer (is still only seems to add a monthly % increase) it can not cope with the property next door which hasn't sold recently.
Take a pair of 1930's semi detached houses identical, in size, position, layout and location. Number 1 sold at the start of the year for £150,000 now Zoopla worth £152,000. No3 (next door) Zoopla worth £165,000?
My opinion is that it is not possible to value a property without visiting it and its location and it is not possible to value without considering applicant demand. Demand controls prices, rises and falls, while comparable evidence merely provides a reference point for the rise or fall.
The "sensible" vendor will simply get 2 or 3 local agents round to value their house and quote for the job of selling it as normal. They will then check out the costs of selling it themselves online and know they have a pretty accurate valuation.
There is no way an online valuation engine can ever be accurate to any worthwhile degree as they do not have sufficient details regarding variations between properties. In my road we have 17 different designs of 3 bedroom semi detached houses dated 1902 to 1930 all with various alterations ranging from loft conversions to rear extensions. A 3 bed fully refurbished sold for £250k 18 months ago and a 4 bed (box room) same design in need of insulation ,DG, new heating, wiring, plumbing, kitchen, bathroom etc; has just sold for £320k and between these two sales another 3 bed sold for £300k and the new owners have spent a further £25 repairing it.
On line valuation engine? forget them and go with local knowledge.
yes the are! just take a look at zoopla's effort grossly misleading