Nowadays, you can find offers on real estate sales portals to simulate a property’s valuation value for free. In just a few minutes, any user or homeowner can fill in a few simple details and get an estimate of the price of their property. In some cases, the user also receives recommendations from real estate agents who can help market the property.
Naturally, those who find themselves in a potential sales situation may need the help of professionals who have all kinds of resources, knowledge and skills to determine what the market values are in a given location.
And it is exactly at this stage that the question arises: if a simulation of a property’s value is available free of charge, why is it justified to hire a paid Real Estate Appraisal service?
To answer this question, let’s explore the differences between requesting a valuation from a certified appraiser or obtaining a free simulation from a broker.
Specific technical knowledge
Expert appraisers have specialized training in real estate appraisal. As technicians, they know and apply the appropriate methodologies, standards and techniques.
Brokers may not have the same level of technical knowledge in valuation. Their experience stands out in the promotion of properties and in the negotiation process.
Detailed analysis of the property
An expert appraiser considers factors in his analysis that may not be present in a simulation provided by a real estate agent, making a detailed on-site inspection of the property. This includes checking areas, quality of construction, materials used, finishes, state of repair and other factors that affect value. Experts also consider intangible assets such as location, view, appreciation potential and the property’s unique characteristics. These factors can significantly influence the value, but may not be considered in a broker’s simulation.
The free simulations offered on portals don’t require a visit to the property, which means they don’t take into account the property’s unique characteristics (good and bad)!
Detailed and well-founded reports
Appraisers produce detailed reports with clear justifications for the value assigned. These reports are essential for real estate transactions, financing and legal disputes.
More complex situations, such as properties with lease agreements in place, valuations for shareholdings, properties where the registered areas are not in line with what is observed on site, or others, are also taken into account by the appraisers.
Impartiality and independence
Appraisers are independent and impartial, as there is no personal interest in the outcome of the appraisal.
In the case of mediators, they may have a relationship with one of the parties involved, which could affect their objectivity. This possible lack of objectivity is due to the fact that mediators may be more susceptible to a quicker sale at the expense of a higher market value.
Professional responsibility
Valuers have a professional liability for errors or omissions in their reports. To this end, their professional indemnity insurance covers damage caused to clients as a result of incorrect valuations.
Ethical and legal liability
Expert appraisers also have an ethical responsibility for their reports, and must follow the ethical standards and transpose the legal regulations in force applicable to their professional practice. In this way, appraisers guarantee a more specialized and detailed approach when determining the value of a property.
Guarantees of fair negotiations
Both buyers and sellers can use appraisal reports as a basis for negotiations: a seller can adjust the sale price on the basis of the appraisal, and a buyer can negotiate on the basis of objective information.
It is recommended that whenever there are doubts, and in order to be sure that the market value that has been determined complies with the rules and defends the interests of both parties, the choice should fall on valuation rather than value estimation.
Standards and regulation of the activity
There are two international institutions that regulate the activity of real estate appraisal and their members: RICS (Royal Institution of Chartered Surveyors) and TEGoVA (The European Group of Valuers’ Associations. At national level, this regulation is carried out by the CMVM (Real Estate Securities Commission). To guarantee the best valuations, you should always opt for an expert valuer with at least one certification from one of these bodies.
Above all, it is important to understand the main differences between appraisal and simulation, the risks you may incur by using these simulations for inappropriate purposes, and which situations may justify the use of a certified appraiser.
An informed decision can make all the difference to the outcome of your investments!
Opinion article by Tânia Fragoso, Head of Valuations at Worx, published in Magazine Imobiliário on June 5, 2024.