Online valuation tools: how accurate are they?
Online valuations are a popular way to check how much your home is worth, but they have their limitations. With that in mind, we thought we would put some of the more popular ones to the test, so we found a few properties and compared their official valuations to a group of online valuations to see how far out they were.
Although the online estate agent Yopa carried out a similar piece of analysis in 2017, these online valuation tools are always updating their algorithm, and all of the data below is accurate as of June 2018.
We decided to select two properties, one in Wakefield and one in Plymouth. Although there are lots of shiny examples on Rightmove, including an absolutely stunning eight-bedroom detached house for a mere £1.5 million, we thought would go for something a little bit more realistic.
The Wakefield property is currently valued at £350,000.
The Plymouth property was recently sold at £145,000.
On Zoopla, the Wakefield property is valued at £226,000, which is £124,000 lower than the current valuation. This is a phenomenal difference, and it just highlights how unreliable some of these automated valuation systems are. However, there is very little data for the postcode regarding sold house prices, and that’s where the Zoopla system falls down. The confidence rating, a measure of how confident Zoopla believes the price is, is 52%.
The valuation for the Plymouth property, however, is a little more accurate at £135,000. The official range is £133,000 to £138,000, yet this property sold at £145,000. This is despite a 99.5% confidence rating from Zoopla. This is primarily because the property was sold for £132,000 a year ago, but renovations bumped up the value of it.
Property Price Advice
Property Price Advice requires a bit more detail, and this should lead to a more accurate valuation. However, like any other property site, it requires accurate data to calculate how much the property is worth.
The Wakefield property was estimated at £177,500, with the local average for four-bedroom properties in the area being around £170,774. This is a lower valuation than expected, although it is likely that the a of data regarding house sales in that postcode affected its accuracy.
Thanks to relatively up-to-date data, the Plymouth house was valued at £144,000, which is very close to its true selling price. The tool noted that it had been previously sold in 2017, and it also provided an accurate comparison for three-bed properties in the area.
Property Price Advice’s tool requests a lot more data, but this should lead to a more accurate valuation in the majority of cases. However, when there is a lack of movement in the local market, it has to apply a lot more guesswork. Even so, many people consider Property Price Advice’s tool to be the most accurate on the market.
Mouseprice is a cutely named tool, and you just putting your postcode, select your house and sign in to see the current valuation. You can use either Facebook or a dedicated Mouseprice account.
Mouseprice produced the lowest valuation for the Wakefield property, valuing it at £163,000. The valuation range was an incredibly broad £121,000 to £205,000, which made it pretty useless. However, when the range is that broad, you know that these property valuation websites are essentially guessing on very limited information.
Mouseprice helpfully provided some similar houses in the area that had sold recently, but many of these cost significantly less than this house, so this may have skewed the valuation substantially.
Like Zoopla and Property Price Advice, Mouseprice noted that the Plymouth house had been sold in 2017, but it grossly overestimated the value of the house at £164,000, with a value range of £149,000 to £179,000. Helpfully, it gives a rental range as well, although you wonder how accurate that is given that it overestimated the selling price by nearly £20,000.
We also looked at a smaller online estate agent that offered free valuations, and it provided a value of £274,450 for the Wakefield property and £139,000 for the Plymouth property. However, these values relied on you being able to guess accurately how much your property was worth, so they were moot. When we put in distinctly lower values, the tool returned correspondingly lower values.
Ultimately, these valuation tools are no substitute for good research and a professional valuer. While you can get a broad idea of the value of your home from an online valuation website, if they are relying on incomplete data, they may overestimate or – even worse – grossly underestimate the value of your home.