Five reasons people shouldn’t rely on Automated Valuation Models, with Nigel Watts – Ep. 99

For the latest episode of the Geared for Growth podcast, Mike is joined by Buyer’s Agent and Co-Founder of Niva Property, Nigel Watts, to talk about the pros and cons of Automated Valuation Models (AVMs) and why you shouldn’t rely on them as the best guide to what a property may be worth.

More and more we see valuation guides being posted on the likes of Domain and Realestate.com.au. But how reliable are they really? Can you take them as gospel for what a house will actually sell for? In this conversation, Mike and Nigel discuss the relative merits of AVMs, when they may be useful and how you can do your own due diligence to decide how much you want to offer on your next property purchase.

Nigel talks about how far technology has come in this space and how on a macro level it can offer fantastic insights into the direction of property values. The fall down comes when you start looking at individual properties. Nigel explains why this is the case and where automated models might be missing some important criteria in valuing specific locations.

Mike and Nigel step through the due diligence process you can undertake for yourself to determine a property value and shed some light on what the professionals are looking at. Nigel explains what he looks for and offers one surprising detail that may just be the make or break in whether he recommends a property to his clients.

If you’re getting caught up in the valuation estimates from the online property platforms, and wanting some insider information that may differentiate you from the competition, then this episode is for you. With big data and automation ostensibly taking over the world, this conversation is a timely reminder that there is much value to be found in good old fashioned on-the-ground knowledge and insight.

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For the latest episode of the Geared for Growth podcast, Mike is joined by Buyer’s Agent and Co-Founder of Niva Property, Nigel Watts, to talk about the pros and cons of Automated Valuation Models (AVMs) and why you shouldn’t rely on them as the best guide to what a property may be worth.

• The trouble with big data
• What happens when five different people all rely on the same Automated Valuation Model (AVM)
• The impact of the bank’s turnaround time for loan approvals
• Reasons why the AVM might not have all the information
• Finding the data on comparable sales
• The surprising property detail that Nigel believes makes all the difference

Data can only do so much, technology can only do so much and whilst data and technology these days is amazing and what’s behind these automated models is amazing where it does fall down is that looking at that individual property” Nigel 2:44

“This is where I think some of the portals get it wrong. I think some of the portals used statistical modelling but also comparable sales and or a combination of both. I don’t proclaim to know to the algorithm exactly but if you’re using comparable sales which is what I do and a lot of agents do it’s really important to pick the right comparable sales” Nigel 10:52

“The everyday buyer could easily just do a search on domain or realestate.com to find comparables and it’s ideal to find them in a similar sort of location, ideally the same street and you want a similar sort of house, you obviously you don’t want to compare a house to the unit for example, ideally same sort of construction and age would be would be ideal” Nigel 18:05

“An agent who is on the ground looking at properties who understands the street, the neighbourhood, the suburb, is in my opinion the best person to provide good comparable sales” Nigel 19:23

“That’s what the buyer’s agent is doing, you’re out there doing all that due diligence and operating in the buyer’s best interest to make sure that you find one that’s perfect for them” Nigel 24:02

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