In today’s tech-driven world, the real estate sector has seen considerable changes in how it estimates a home’s value. Many professionals and homeowners alike are now turning to new property valuation methods enabled by technology. The primary reason behind the same is that they overcome many obstacles related to valuation including, guesstimations by friends & family, removes middlemen, provide accurate prices, and most importantly save time, money, effort, & energy.
This blog post will explore how these new methods work and how they compare to traditional real estate property valuations. Continue reading to learn about the dynamics of these new methods, their advantages, and why they might be a better choice than traditional ones!
But before that, let’s take a quick look at the traditional valuation methods. We will also take a look at our proprietary property valuation solution Aurum InstaHome.
Traditional Property Valuation Methods
When examining real estate valuation in India, appraisers can use a few distinct techniques. The most common traditional valuation methods used extensively in the last decade are the sales comparison approach, the cost approach, and the income approach.
• Comparison Method
The sales comparison approach is pretty straightforward: the appraiser looks at comparable properties that have recently sold in the same area and uses them to determine the value of the subject property. This structure is best suited for homes comparable to others in the neighbourhood.
• Cost Method
The cost approach is a bit more complicated. The investigator estimates how much it would cost to replace the subject house with one of identical quality and construction. This includes factoring in land value and the cost of materials and labour. This property valuation approach is often used for unique homes with special features that make it difficult to compare to other properties.
• Income Method
Finally, there’s the income approach. This way values a property on its potential to generate income through rent or other means. The authorities will look at attitudes like market data and trends and the property’s physical condition to estimate its potential earnings. It is typically utilized for properties intended to be investment estates, such as apartment buildings or commercial office spaces.
Tech-driven Contemporary Valuation Method
As the real estate landscape continues to evolve, so do the methods appraisers use to value property. While many traditional valuation methods are still in use today, an increasing number of appraisers are turning to tech-driven solutions to help them more accurately and efficiently assess a property’s worth.
Some of the most popular tech-driven, online property valuation methods include:
• Digital Property Valuations Platform
Online property valuation platforms offer homeowners an instant, accurate estimate of their home’s value. These platforms use public data and proprietary algorithms to generate a report that factors in location, lot size, square footage, age, condition, and other features.
For instance, our solution Aurum InstaHome offers the ultimate digital assessment solutions with the quickest turnaround of two to three weeks instead of months & years. It offers an online property valuation calculator, runs on AI & ML, and is a part of rich internal database that coincides with real-time market data.
Going a step ahead, the latest technologies, such as AI, ML, and big data, are revolutionizing property valuations. These technologies provide valuers with improved ways to gather and analyze data, resulting in more accurate pricing.
• AI, ML & Big Data
AI is used to develop predictive models that can estimate a property’s value based on location, type of property, and recent sales data. ML is being applied to study large datasets to identify patterns and relationships that could affect the value of a property. And Big Data is being leveraged to provide insights into market trends that could influence the sense of a property.
Valuers can use these latest automations to provide more accurate pricing for ownership. This benefits buyer and sellers by helping ensure that properties are correctly priced when they come onto the market.
• Automated Technologies such as AVM
Automated valuation models (AVMs) are computer-generated estimates of the value of a property. Lenders and mortgage servicers use them to appraise properties for loans and by real estate investors to determine the significance of potential investments.
There are several different AVMs, but the most familiar is the regression model. Regression models use comparable sales data to estimate a property's rate. The statistics can come from public records, MLS listings, or other sources.
The advantage of AVMs is that they can be generated quickly and cost-effectively. They also do not require an appraiser to visit the property, which saves time and money physically.
In Conclusion:
To sum up, technology has revolutionized real estate valuation methods. By leveraging data analytics, artificial intelligence and machine learning algorithms, online property valuation models are now more accurate and efficient than ever. Together with advancements in other areas of real estates, such as PropTech and the Internet of Things, the tech-driven models have changed how we value property.
With this in mind, professionals must stay up-to-date with developments to ensure they deliver an appropriate value opinion to their clients.