Artificial intelligence has increasingly been applied to the property and estate industry, including within property valuations. Traditionally, property valuations followed a rigid process: a professional on-site assessment to determine the property's market value, an extensive review of documents such as a land registry extract and floor plans, and a final report for property owners explaining how it was valued.
AI property valuations are creeping in, and while it can't do the on-site inspections humans can, the valuation models are accurately generating property valuations based on thousands of data points. Does that make AI the future of property valuations, or is human oversight still essential?
What Are AI Property Valuations, and How Do They Work?
AI property valuations use advanced computer programs and AI-powered software to estimate a property's market value. With no human appraiser, machine-learning-powered Automated Valuation Models (AVMs) scan thousands or millions of data points at once. The extensive amounts of structured and unstructured data should accurately predict a property's market value, with AI systems pulling information from:
Public tax records
Multiple Listing Service (MLS) databases
Past sale prices
Neighborhood demographics
Crime rates
School ratings
Real-time economic indicators such as mortgage rates and inflation
The benefit is the instant output, rather than waiting days (or weeks), as is common with a human appraisal. The time saved is also a huge benefit for realtors.
Common Data Quality Problems in AI Property Valuations
AI property valuations are only as good as the data they're fed; if that data isn't accurate, it leads to inaccurate valuations. It's not the same as having a human value a property, who might notice a document is out of date or inaccurate, and it's definitely not the same as having someone go to the property and evaluate it based on what they see as well as the data.
If any fields are blank or historical renovation details are missing, for example, models may rely on assumptions or drop the records entirely. AI models also need continuous training. Models trained or evaluated on stale historical windows lose accuracy quickly.
That's why many argue that human oversight and follow-ups remain absolutely essential, meaning that whilst AI can definitely save a lot of time, that final human check remains necessary.
Why AI Property Valuations Still Need Human Expertise
Even if AI property valuation software handles part of the process, human oversight and expertise still matter to check for errors or inconsistencies.
If you think, 'I want to sell my houses,' and you let AI software value two of your properties by scanning thousands of data points, you can get a quote in minutes with free online valuation services. A human can then look at the documents you submitted, check whether any fields were blank, or see if the output is incorrect.
You still save money by not paying for an in-person valuation, and you can start your new property search faster than if you wait days or weeks to submit documents and wait for someone to view your house.
Perhaps, in the future, AI will manage most property valuations. For now, combining AI and human realtor expertise is seen to be beneficial for saving time and money. PropTech is flourishing in other areas of the property market, including interactive maps and automated price estimates.