Is an online property valuation reliable?

The technology behind the scenes: Big Data instead of gut feeling

Every reputable online property valuation is based on the so-called hedonic method. Put simply, the computer compares your house with thousands of similar properties that have been sold in the past. Large Swiss data providers like IAZI or Wüest Partner collect this transaction data.

When you start an online property valuation , the algorithm looks for statistical patterns. It knows that a square meter of living space in Zurich-Seefeld is worth more than in the Glarus hinterland. It knows that a construction year of 2020 implies a higher standard than one from 1960. Therefore, the online property valuation is only as reliable as the database it uses. In regions with high sales volume (high liquidity), the online property valuation is often surprisingly accurate. However, in remote valleys where a house is sold only once every five years, it is often inaccurate.

Human factor: Input accuracy

A critical factor that massively influences the reliability of an online property valuation is you. The tool is tailored to your needs . Inputs instructed .

• How exactly do you know the net living area?
• How objectively do you assess the condition of the kitchen and bathroom?

Many property owners tend to view the condition of their property more favorably than it actually is. "Well-maintained" often means something different to the layperson than it does to the market. If you enter overly optimistic values into the online property valuation tool , you will inevitably get a result that is too high. Online property valuations operate on the principle of " garbage in , garbage out." They cannot correct erroneous entries because they cannot physically inspect the property.

What online property valuation cannot see

This is its biggest weakness. An online property valuation is blind to details that can significantly drive up or down the price.

• The micro-location: The online property valuation knows the address. But does it also know that the neighbor has been running a noisy car repair shop in their garden for years? Or that the unobstructed lake view is hidden by fog in winter? Such things nuances escape dem Algorithm often.
• Individual features: Did you install expensive Carrara marble or inexpensive click-lock laminate from a DIY store? For online property valuations, both are often categorized under "Flooring: renovated." High-quality investments are often not fully reflected in online property valuations .
• Structural defects: A damp basement or asbestos in the facade significantly reduce the property's value. However, an online property valuation generally assumes a sound building structure unless you specify otherwise.

The range of results

Studies show that a good online property valuation deviates from the actual selling price by +/- 10 to 15 percent in approximately 80 percent of cases. For a house valued at one million Swiss francs, this translates to a fluctuation range of 100,000 to 150,000 Swiss francs.

This is excellent for getting a first impression. However, when it comes to setting the final asking price, this tolerance in online property valuations is often too great. If you sell below value due to an overly low online valuation , you lose money. If the online valuation is too high, you won't find any buyers and your property will become unmarketable.

Standard vs. collector's item

The reliability of online property valuations depends heavily on the type of property.

• Standard apartments and single-family homes: Online property valuation works very well here , as there are many comparable properties.
• Villas, historic buildings, or conversions: Online property valuations often fall short in these cases . A converted 18th-century farmhouse has so many individual characteristics that no algorithm in the world can accurately capture them. In these cases, cases Online property valuations often produce unrealistic figures .

An instrument for Market observation

Despite its limitations, online property valuation is a powerful tool. It helps you identify market trends. If you perform an online property valuation every six months, you can see how the value of your property is developing relative to the overall market. It acts as a barometer for your assets. Furthermore, banks often use a professional version of online property valuation behind the scenes when granting mortgages . So, if you use the same tool, you 'll know in advance how much credit the bank is likely to grant the buyer.

Conclusion

Is an online property valuation reliable? The answer is: Yes, but with limitations. It's an excellent starting point for getting a feel for the market value, especially for standard properties in desirable locations. It's fast, data-driven, and objective.

you should never consider an online property valuation as the final word. It doesn't replace the trained eye of an expert who can examine the building structure, emotional value, and local characteristics on-site. View the result of the online property valuation as a range, not a pinpoint accuracy.

Use digital technology for an initial overview, but rely on human expertise for the final step. Loft helps you reconcile data from the digital world with reality to achieve the best possible result for you.

Glossary

• Online property valuation: A digital process that uses algorithms and databases to calculate the estimated market value of a property without an on-site inspection.
• Algorithm: A calculation rule used in online property valuation to determine a value from input data (size, location) and comparison data.
• Hedonic method: The statistical procedure behind almost every online property valuation . It breaks down the property into qualitative characteristics (location, condition) and evaluates these based on market prices.
• Range: The area (e.g., +/- 10%) within which the actual value is likely to lie. A reputable online property valuation often provides a price range rather than just a fixed amount.
• Market liquidity: The frequency with which properties are sold in a region. High liquidity Improves the accuracy of online property valuation .