Introduction
Property valuation remains an integral part of conducting business and development in the real estate sector. It is required to finance homes and development projects, optimise sales listings, carry out investment analysis, conduct surveys for insurance, and generate tax revenue for the government. According to one study, accurate and transparent real estate valuation can lead to a boom in a country’s real estate sector. Companies worldwide are using different technologies and methods for property valuations. With the proliferation of technologies like big data analytics and artificial intelligence, many sectors of the economy have developed a strong interdependence. Data from multiple organisations can directly be collected and merged for deeper insights on numerous fronts. From online tools to artificial intelligence systems, many products can be found that vary in accuracy and transparency. Continue reading to understand more about how different companies are providing property valuations to their clients and consumers.
Research Questions
- How are different companies carrying out real estate valuations?
- What is the scope of property valuation in the global market?
Why Need Property Valuation
Besides knowing an estimated price for buying and selling real estate, property valuations can be used in various applications. It is essential to understand that a property’s value is not the same as its cost or price. Governments usually place legal requirements on the sale and purchase of land. The tax generated on each transaction is in direct proportion to the value of the property. Therefore, property valuations play a vital role in determining stamp duties when transferring ownership between owners, entities, and trusts. Many people invest in real estate commercial properties as they offer higher returns than their residential counterparts. Tax agencies also require property valuations to calculate the number of capital gains accrued when selling any commercial property. Real estate markets are also competitive. An individual also needs property valuations for market assessments to determine a fair market price value (Duong, 2021). Therefore, property valuations have several benefits for buyers, sellers, investors, and regulatory agencies.
How Private Sector Companies Provide Property Valuations
An estate’s value can depend on multiple factors ranging from plot size, location, covered area, curb appeal, and many other indicators customarily used to define a property’s characteristics. Many businesses are now using the power of artificial intelligence and extensive data analysis to make comparisons and connections across such a comprehensive database of indicators. Property listings on real estate websites have been used to populate a database of indicators. Zillow, the most popular home estimate site in the USA, has over 110 million homes listed on its database. A feature called Zestimate has been included on their website, which uses the power of its extensive database to bring comparisons to users in just a few clicks. Once an address is entered, the system uses specific data points to estimate how much a home will sell in the market. As the value of property changes over time, the system also tracks changes over 30 days to 3 years and can predict a home’s future price by up to 1 year. Zillow updates its database regularly and manages to have an error margin of 1.9 per cent. The margin of error largely depends on the accuracy of public records and historical data (Cain, 2021).
Another company named Remax uses estimations from three different sites; namely, Eappraisal.com, SmartZip, and Zillow, to calculate an average. This saves users time to check estimates from various sources and allows for a lower margin of error. Trulia is another website that offers home estimates from its app. The app provides real-time updates on comparables and also has tools like refinance calculator and lender search. Some websites also use data directly from real estate agents and brokers, such as realtor.com. The website refreshes information every 15 minutes and allows for a more real-time evaluation experience. Collateral analytics is another tool used by the website that supports financial institutions and reputed realtors. The website hosts a remodelling section where an individual can see the impacts of modifications to the property’s value (Seligar, 2015). Therefore, it can be seen that companies in the global real estate sector have used multiple technologies to bring real-time and accurate property estimations to consumers. Pakistan can also develop a similar system to streamline its real estate sector by protecting it from real estate bubbles and inflation. Companies like Graana.com, Pakistan’s first online real estate marketplace, are leading examples of innovation in property valuations in Pakistan.
Conclusion
Property valuation is a valuable tool for buyers, sellers, and investors. Getting an accurate estimate of a property dramatically enhances transparency in the real estate sector. Malpractices and fraud have become rampant in the real estate sector of Pakistan. Companies like Graana.com are helping revive the real estate sector of Pakistan by introducing innovative technologies in various aspects of buying, selling, and investing in real estate.
Key Takeaways
- Property valuation remains an integral part of conducting business and development in the real estate sector.
- It is required to finance homes and development projects, optimise sales listings, carry out investment analysis, conduct surveys for insurance, and generate tax revenue for the government.
- According to one study, accurate and transparent real estate valuation can lead to a boom in a country’s real estate sector.
- With the proliferation of technologies like big data analytics and artificial intelligence, many sectors of the economy have developed a strong interdependence. Data from multiple organisations can directly be collected and merged for deeper insights on numerous fronts.
- Zillow, the most popular home estimate site in the USA, has over 110 million homes listed on its database.
- A feature called Zestimate has been included on their website, which uses the power of its extensive database to bring comparisons to users in just a few clicks.
