Technology allows us to perform tasks with more efficiency while at the same time reducing human error. A great example of this is illustrated in aviation where ‘auto pilot’ has seen a huge reduction in pilot error.

In real estate, it is becoming increasingly common for buyers, lenders and advisors to rely on computer generated market valuations or ‘desk top valuations’. These were developed to replace more expensive manual valuations, such as the old GV, for both local authorities and lenders. Both groups are less concerned with the accuracy of each individual property value as they know the overall margin of error that works within their risk parameters.

At present there are a number of large volume data companies, like QV, who have successfully monetised this technology by making the reports available to the public at large. The fundamental flaw for consumers relying on this information is that desk top valuations work on the basis that humans operate in a balanced frame of mind more commonly known as homo economicas.

But we all know that this is not the case. From that stunning heel - just made for your outfit - to an overpriced limited edition sports car, humans go through a range of emotions during the process of buying or selling. Perhaps no more so than when buying and selling real estate. From emotional attachment, greed and fear of loss, this industry has it all. But the computer does not. A computer model cannot detect the difference between a well-presented and styled home vs. a poorly presented one. Nor does it take in to account the usability of a home. This means that while two properties may have the same floor plate, one may have been architecturally designed with careful attention paid to design and specifications, while the other is boxy with plenty of wasted space. See the illustration below, both are the same size but visually one looks bigger.

Computer models aren’t purchasing real estate and if they did there would be no such thing as a housing bubble, therefore any assessments should be taken as a rough guide only. Your best assessment comes from good market research or an experienced market assessor.

Ben Stevens – BBS Property Valuation and Management
As Wellington’s only licensed agent and registered property valuer, Ben’s career has been focused on all aspects of residential property. From valuation, consultancy, investment and residential sales, Ben has the right qualifications for the job. Backed by a team of specialist agents, Ben was recently awarded Trade Me Property’s and Leaders ‘Top Property Marketer’ award for 2015. Check out more about Ben and the team over their website or Facebook page.

The information contained in this article is of a general nature and should not be taken as advice. It reflects the opinions of the writer only and does not necessarily reflect the opinions of New Zealand Home Loans.