CONSUMER BEWARE – WHEN A VALUATION IS NOT A VALUATION

CONSUMER BEWARE – WHEN A VALUATION IS NOT A VALUATION

The National President of the Australian Property Institute, Philip Western in a statement earlier today provided comment in response to RP Data's most recent release of its Automated Valuation Model (AVM) product via Facebook.

"This product has a place in the market, but to advertise to the consumer, in the first instance, in such a way that they are led to believe that they can obtain a free valuation from RP Data, is a practice which should be investigated by regulators, including the respective Fair Trading Offices around Australia", said Mr Western.

While RP Data labels this a 'free valuation', on closer examination the following points can be made:

  • It is not a professional opinion and does not involve an independent assessment of the current market value of the property;
  • It is based on quantitative information only, and does not include or take into account any qualitative information;
  • Does not take into account the actual condition of any property, and does not set out the positive and negative features of the property, or give an independent opinion of such features;
  • Does not consider, take into account or give an independent assessment of the rental return of the property;
  • Does not consider, take into account or give an opinion of market conditions;
  • Does not suggest improvements that would add value to the property
  • Does not involve an inspection of the property; and
  • Cannot be relied upon by the customer.

"AVMs have a limited place in the lending institutional environment dealing with portfolio and mortgage situations, however I have real concerns when such a product is made available to the consumer under the guise of a valuation.

"It is important for the public to recognise that what they are getting is a 'Statistically Generated Assessment (SGA)' and that it is not a valuation completed by an independent professional valuer", said Mr Western.

Mr Western also indicated that in making what is likely to be the largest and most important investment decision of their lives when purchasing property, people should obtain independent professional advice in order to make informed decisions. This should include valuation, real estate and legal advice.

For further information contact: Mr Philip Western, National President Australian Property Institute, 02 9299 1811