A real estate data provider has fired back over real estate industry criticisms of automated valuations.
Real estate groups earlier this week criticised the labelling of computer estimates as “valuations”, with Coopers principal Paul Cooper claiming they can only legally be called an “opinion of value”. But RP Data Valuations/Government Solutions Manager Chris Spanos has told Australian Broker
valuations can help prevent "highballing or lowballing".
"The Automated Valuation Model (AVM) has three advantages over the full valuation: they're much cheaper, they provide instant results, and you don't have the issues of someone concerned about fraud or highballing or lowballing an estimate," he said.
Spanos said both AVMs and valuer-performed estimates had a place, and that the choice between them was an issue of "horses for courses", but said AVMs provided consumers with data they couldn't pratically procure otherwise.
"A consumer valuation as opposed to a bank-ordered valuation, the banks get an aggressive bul discount. For the consumer it can be anywhere from $400 to $600 to get a full valuation. How many investors or first homeowners who may go to five or 10 auctions before they buy their home can order a full valuation? It's not practical."
Spanos conceded, though, that full valuations were still important in some cases.
"Properties are unique, especially in markets where stock is heterogeneous, so a valuation with a full internal inspection of the subject property remains the industry ‘gold standard’. Full valuations are not going away."
But Spanos argued that AVMs were a useful consumer tool, albeit a tool that required further consumer education.
"The use of AVMs in real estate and consumer markets is a later development which will require an amount of education. In addition to this, consumers do not have the training or expertise of a real estate or mortgage professional, hence AVMs need to be delivered to market appropriately. In light of this, rpdata’s consumer AVMs are branded ‘Estimated Values’ and often delivered in value ranges to underscore the nature and intended use of AVMs."