Is there still a need for a human in the valuation process?
Photo by Alex Knight at Unsplash
AI is certainly the trending topic right now. Who hasn't had a go at Chat GPT yet? Surely most of us have tried to fool 'the machine' by asking a bunch of weird questions?
We already have AI in the property sector. There are a bunch of web sites out there that offer estimates of property values, like homes.co.nz, and qv.co.nz. These web sites track property sales and provide an estimate of market value. Sometimes that estimate will be a price range, but some do provide an exact figure (an exact figure is of course nonsensical, but that's a whole other blog topic) .
Are these computer estimates reliable enough to make an informed decision?
How reliable should they be?
Will they continue to develop and replace me - the real person who values your property?
Here's an important question. Is there anything missing in an AI valuation that occurs in a 'real person' valuation'?
Yes there is.
The one thing thing missing is a physical inspection of the property being valued.
So why is an inspection not happening and why is it important in the valuation process?
Fun facts. Computers don't have legs, yet, and they can't drive, yet. Elon Musk has tried but so far failed to conquer the 'can't drive' part of this equation. When Elon does sort these issues it will certainly be an interesting challenge for the ElonValua Mk1 to tackle some of Wellington's nastiest streets and walk-up pathways. I'm looking forward to seeing a ElonValua Mk2 with legs, although maybe it's unwise to admit that.
But anyway, why is this important? Why is physical inspection a vital part in the valuation process?
It's because every property is unique and the uniqueness cannot be fully appreciated if you don't physically stand on the site, and then physically walk through the interior.
What might you discover by doing this? Importantly, what wouldn't a computer pick up using it's off-site evaluation?
How about these things:
the cracks in walls or paths that indicate land movement
the conversion of a basement area into habitable living space
deferred maintenance that will lead to bigger problems if not tackled
a land or building issue relating to boundaries and/or Record of Title
shading effects from neighbouring buildings/trees/landforms
the potential to subdivide or otherwise trade land for financial or other benefit
changes made by either externally or internally that alter the original house style
Although land is a static object, how buildings and land relate together and how the land and buildings relate to their surrounding environment, are issues that can and do change. These changes can happen quickly, or over a long period of time. These changes can be positive or negative on a property's value, or have null effect.
Here's an important thing. These issues often lie undetected and often don't have any relevance at all, until the property is marketed for sale. And that's when the property certainly will be physically 'inspected' - by every potential buyer that the agent can lay their hands on.
That's when market value becomes a reality.
This is why the physical inspection is so important in the valuation process.
The property needs to be seen through a buyers (a real persons) eyes to really reveal its unique qualities or unique issues.
So right now I think I'm safe from the AI replacement theory. But just to be on the safe side, let me know if you ever see any of those Flamingo scooters peering into your windows and taking notes!
Opmerkingen