A lot of people don’t realize just how tech-driven the modern day real estate market truly is.
Yes, it’s true that certain things like valuations and appraisals still require a lot of time and energy from a certified professional. Someone will need to come out to a home, inspect it and use all available information to make a best judgment determination about what that property is worth.
Yet at the same time, software-based solutions have freed up a lot of their precious time – all so that they can focus on those matters that truly need their attention.
Case in point: valuation software. It’s something that dramatically eases the workload of these valuators in a wide range of different ways, all of which are worth exploring.
To get a better understanding of why valuation software is so beneficial, it’s important to learn about the sheer volume of effort that goes into a real estate valuation in the first place.
Determining the fair market value of a piece of property ahead of a transaction is always hard, as not all homes are created equally. A large number of things must be considered including the location, the size of the land it sits on, the floor plan, the various amenities that it offers and more. So even if you had two homes that appear similar on the outside, you could be looking at two wildly different properties once you really start to dive into the details. Comparable properties (also called “comps) are often used for this reason.
Not only that, but you also have to consider the current conditions of the market when coming up with a value. Supply and demand in a particular area will obviously play a big role. If you took a home and were able to place it in an entirely different neighborhood – one perhaps with a better school district or better points of interest – it would likely impact the value exponentially. All of this has to be factored in when experts decide on the valuation of a home.
All of this is important because lenders will never give someone a mortgage for more than a property is actually worth. Doing so would put them almost immediately “underwater.” Therefore, they want an impartial third party – someone who stands to gain nothing from the transaction itself – to come in and make a determination as to that value. Given the time-consuming nature of this process, anything that professionals can do to complete a higher volume of more accurate valuations is much-needed – and valuation software goes a long way towards accomplishing precisely that.
As stated, the valuation process takes up a tremendous amount of time because accuracy is of critical importance. That, in essence, is why valuation software matters so much – it uses mathematical and statistical modeling to help professionals determine the value of a property as quickly as possible, all so that a transaction can happen in the most efficient way.
The right valuation software solution will typically use tremendous amounts of publicly-available data to help real estate agents, brokerages and other professionals in determining the fair market value of a property. They will include not only property records but also listings from platforms like Redfin and others, all in an attempt to make a determination about the desirability of a particular area.
Then, using technologies like machine learning and other analytics, they’ll examine this information to come up with not only a home’s current value, but also its future potential as well.
In a lot of ways, this isn’t too dissimilar to what a professional appraiser would do – it just happens much faster. The valuation software will consider the number of rooms that a home has, any features like a new kitchen or countertops, new windows and doors and more. Then, the home’s price history will be examined – something that is especially helpful if it has sold recently.
Valuation software is also used in the world of commercial real estate, too. Here, it’s particularly helpful to automate a lot of the time-consuming and manual processes involved with a transaction like underwriting, assessments of collateral and more. Similar factors will still be considered like the age of the property and nearby amenities.
Of course, it’s crucial to note that valuation software is not without its limitations. The quality of the valuation is ultimately only as good as the quality of the data you feed into it and even public records can be out-of-date depending on the property or the area you’re talking about. Likewise, valuation software will not necessarily consider the current condition of the home in question. Still, it’s an excellent starting point and a way to save all parties involved a great deal of time and money in the process.
At AmeriMac Appraisal Management, we’ve worked diligently to serve our clients since our original founding in 2014. Unlike so many others in the industry today, we promise a unique attention-to-detail that clients won’t be able to find anywhere else. When you call with a question or a concern, someone will be on the other end of the line to answer. We understand that everyone’s situation is different which is why we pledge to offer unique service every single time we’re given the opportunity to do so.
Our team has over six decades of combined experience and has been trusted by bankers, mortgage brokers and others in the industry. Our reports are subject to a 63-point checklist for both compliance and completeness – and that is one standard that we will continue to work diligently to adhere to in the future.
To learn more about valuation software and the major benefits it brings to the table, or to get answers to any other more specific questions that you might have, please don’t hesitate to contact us today.