When you are thinking of buying, renting, or mortgaging property, it is reasonable to seek out information about the price range of properties with the characteristics you are looking for. One way of getting an estimate is by using online property valuation tools. There are several property valuation tools on the internet utilising different algorithms with varying levels of accuracy.
How they work
Most online property valuation tools will require the user to provide a postcode and email address. They may also request further information about the type of property the user is looking for and the area where it is located. The calculator has an algorithm that uses this information to provide a rough estimate of the property price. Some tools require users to provide specific property information, while others accept general inquiries.
Online calculators give estimates with a certain margin of error, otherwise known as confidence intervals. Different calculators have varying confidence ratings such that one may have a rating of 99.5% while another one has 53%. It is often the case that a higher rating corresponds to a more accurate estimate than a lower rating.
How accurate are they?
The accuracy of online valuation tools depends on several factors. One of them is the available records about the property. In most cases, online tools give reliable estimates if the property in question has readily available information online and has been actively marketed or traded in recent years. For instance, a property that went for £85,000 two years ago may get an estimate of between £82,000 and £87,000, which relatively close to the actual price.
In contrast, a property valued at £75,000 that has not been traded or advertised for over 10 years may yield an estimate of £55,000 or even £115,000. The huge deviation is because there is little data online and in the property databases for the calculator to use. In most cases, calculators resort to using the local average price for properties with similar characteristics when they cannot find specific information about a particular property.
Instead of asking for a price estimate, some tools ask for the previous selling price and adjust it for inflation to give an estimate. The figures can be wildly off the mark if the property value has reduced or increased substantially since the last sale took place. Others make valuations based on the prices quoted by local agents. Such estimates can be really close if the characteristics are similar to those of quoted properties.
Calculators are not similar
Online calculators use different algorithms and data sources to estimate the value of a property. For instance, some tools use specific property data and only resort to averages when they cannot find particular information.
Such calculators request precise details, including neighbourhood, property number, and other characteristics. Other tools provide general estimates for any property located within a particular region or country. Such tools do not request precise details, but instead, focus on general characteristics such as size and the amenities available. Further, some calculators give an estimate and a price range, while others only give absolute valuations.
The Property Price Advice Valuation Tool
Property Price Advice provides a free valuation tool that potential buyers and tenants can use to get an estimate for the type of property they are seeking. The calculator requires users to submit their postcode and email and provide information about the characteristics of the property they have in mind.
Their tool is the best because the estimates are based on recent valuations with an 85% confidence interval, and take into account the dynamics of each market. They ensure that the estimates are accurate by regularly updating the information used on their algorithm to align with data on the Land Registry.
The property valuation tools available online differ significantly in terms of the accuracy of their quotes. Some are very simplistic, relying on user-provided data to compute figures while others utilise comprehensive property databases from housing authorities and local agents.
Typically, those that use databases are more accurate than those that rely on simple algorithms. Finally, properties that have been active in the market in recent years tend to get more accurate estimates than those that have been off the radar for several years.