Process optimization with digital real estate valuations

In view of rising real estate prices in Germany for years, many owners and private investors are asking themselves: “What is my house or apartment actually worth now?” Others, on the other hand, may be planning to buy their own home or investment property due to persistently low interest rates and would like to have it appraised in advance. It may also be necessary to obtain a real estate appraisal due to divorce issues or inheritances. There are both traditional sources for this, such as experts, brokers or self-study of real estate ads of comparable properties, as well as online offers that offer assessments using machine data analyses.

Price increase for residential properties despite corona pandemic

The German real estate market is relatively unimpressed by the current corona related economic downturn. The prices for residential properties have continued to rise for years. that Federal Statistical Office reported at the end of December 2020 that prices for detached and two-family houses and condominiums were on average 7.8% higher in the third quarter of 2020 than in the same period of the previous year. In major cities such as Munich, Frankfurt or Berlin, the price increase was even more pronounced.

This development is due, on the one hand, to the low interest rate level and, on the other hand, to the growing popularity of “concrete gold” as an asset class as part of diversified portfolio structuring. With the help of innovative financial products, such as tokenized bonds, retail investors can now also Investing in real estate projects even with small sums by purchasing digital shares on investment platforms.

Real estate valuation: What costs nothing is no good?

However, real estate agents, buyers and investors are currently facing a problem: Personal property viewings and valuations only take place on a very limited basis due to contact restrictions. That is why market players are increasingly using digital solutions from PropTech companies — for example for virtual home visits, as a contact platform for tenants and landlords, or for real estate valuation. However, virtual reports in particular vary greatly in terms of price and quality.

• Free online property appraisal

“Calculate the selling price for your property now. Free & non-binding”. Many property owners and interested parties have probably already read ads like this, which are currently being used to advertise on the Internet. Free real estate valuations are of course an attractive offer at first glance, as a professional brief appraisal can usually cost up to 500 euros, a full appraisal 0.5 to 1% of the market value of a property.

But the bait offers have some disadvantages: This resulted in Practice tests Often inaccurate and widely varying values, on which no valid, economic investment decision can be made. Instead of well-founded reports that show the traffic or market value Section 194 Building Code customers often only receive rough estimates. And: offers from brokers who use free real estate valuations as an acquisition tool for new brokerage contracts based on the customer data entered.

In addition, free appraisals often also raise the question of liability. Because if the property valuation is incorrect, this can have costly consequences, especially in investment, inheritance or divorce issues. In many cases, online providers therefore exclude their liability — meaning that the customer himself bears the full risk.

• Professional offers from experts and reviewers

In everyday language, the terms real estate appraiser and real estate appraiser are usually used interchangeably, but have different meanings in the context. State-recognized and certified real estate experts prepare reports that are recognized by authorities and in court. The term real estate appraiser, on the other hand, also includes freelance appraisers who determine the traffic and market value of a property or an undeveloped plot of land. However, their evaluation is not legally binding.

Consumers should therefore define in advance what they need an expert opinion for. When selling, buying or investing in real estate, you can generally choose between an expert and a freelance appraiser. For legal matters, on the other hand, there is usually a need for a sworn expert.

Appraisers and experts assess a property with regard to the following factors:

• Lage
• Soil reference value
• Construction law and technical status
• Level of development
• Energy index
• Property loads
• market situation

In contrast to free online real estate valuations, qualified experts and appraisers offer high quality standards and correspondingly reliable, objective real estate appraisals. However, these require a personal visit and are associated with high costs. So for a full report, it may well 0.5 to 1% percent of the market value become due.

Real-Time Reports with AI and Big Data

PropTech real estate valuation platforms achieve cheaper and sometimes even better appraisals. Since traditional reviewers and experts are faced with the challenge of collecting decentrally organized data, checking it for reliability and relevance, combining it and adapting it to the specifics of the evaluation object, their work is very time-consuming and data-intensive. Too much information has long been available to process and meaningfully evaluate it without technological assistance. However, these processes can be optimized using artificial intelligence and results can be provided in evaluation and reporting tools for real estate valuation. In this way, objects can be evaluated relatively cheaply, scalably, validly and in real time based on a volume of data updated daily.

Professional online real estate valuations and appraisals based on big data and artificial intelligence are suitable for all market participants: for private (sale) buyers, banks, investment platforms, commercial providers and mortgage lenders, they sometimes offer significant cost advantages over traditional appraisals. However, interested parties should definitely pay attention to the seriousness of the offer and take into account that AI models do not replace expert or expert assessment. This is because a professional familiar with local market conditions personally gets an idea of the property in question and draws up an individual, valid and legally binding report based on his impression and experience.