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What you get for the free version |
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The free version of the Hometrack valuation offers much the same data as valuation costing £14.95, except for the comparables and the Land Registry data, and cosmetic elements like the title page and the three pages of standard text and conditions of use. The free version of Hometrack offers: ● details of house types and average prices in your area; ● price trend data; ● market activity data in your local area; and ● a list of “Hometrack approved” local agents. Only two of these were located within the map of the area. |
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What you get for £14.95 + VAT |
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Page 1 Title page Page 2 Local map; list of comparable properties and prices in postcode Page 3 Details of sale price compared with asking price; data on “time to sell” and “viewings per sale” plus info on buyers and instructions in area Page 4 Details of house types and average prices; price trend data Page 5 2001, 2002 and 2003 property sales data from the Land Registry Page 6 Current house prices in the county (even if the property is located on the edge of a county and bears more relation to an adjoining county) Page 7 A list of “Hometrack approved” local agents, not necessarily within postcode Page 8/9/10 Standard data identical in all reports (how Hometrack collects and handles data, plus conditions of use) |
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Three tests for Hometrack |
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“Standard house” 1930s four-bedroom semi, Exeter suburb (60 of these on same road) ● Professional valuation £365,000 ● Hometrack valuation £115,000-£400,000; (based on 10 comparables). “Standard house” 1950s studio flat, central Exeter (30 in block, hundreds nearby) ● Professional valuation £76,000 ● Hometrack valuation £43,000-£147,000 (based on 10 comparables). “Non-standard house” 18th century cottage with 19th and 20th century extensions taking it to five bedrooms, in estuary town on edge of Exeter (unique property) ● Professional valuation: £435,000 ● Hometrack valuation: £246,000 (based on one comparable) |
Want to know how much buyers will pay for your house? A new online service from Hometrack, the property consultancy that already boasts a house price index, will provide you with a valuation for a price. But is the figure it produces accurate?
Using Hometrack’s system, a homeowner feeds in the postcode, number of bedrooms and reception rooms, and a guess at his or her property’s value, and the system generates a 10-page e-mail valuation report in return. A typical report, an example of which is on display at www.hometrack.co.uk, is available for £14.95.
The reports provide little information that cannot be found elsewhere for free, except for the comparable prices of similar nearby homes sold in recent months. Hometrack’s spin for home sellers is that this comparable price information allows them to make better-informed estimates on a sale price; the advantage for buyers, says Hometrack, is that they can make more realistic offers.
But this is window-dressing for what Hometrack says is its key aim to sell thousands of reports to mortgage lenders, giving the finance houses huge potential savings when compared with the cost of sending a surveyor to each property. The success of this goal depends on three things.
John Wriglesworth, formerly a property analyst but now a PR consultant hired by Hometrack, is fiercely critical of current valuation processes and valuers. “We’re not aiming to put them out of business, but current valuations are useless. If you live in a barn five miles from a shop, the Hometrack system won’t be appropriate, but it is applicable to 85% of standard properties in homogeneous areas,” says Wriglesworth.
The problem of drive-by valuations
“If a house has dry rot or needs the roof replacing it means little in terms of valuation. A loft conversion won’t make much difference. If you spend £40,000 on a property, you’d never get it back because most values are so homogeneous,” he insists. “Lots of today’s valuations are just drive-by ones, although few valuers will admit it. Get three valuations on a property and each is 5% to 20% different. We’re using data to make it more scientific than getting some bloke around,” claims Wriglesworth.
Few property professionals agree with him. “So it doesn’t matter whether a house is next to a motorway or has a view of fields? Does the same number of bedrooms mean the value is the same whether the house is 3,000 or 6,000 sq ft? There are too many variables in real life. This won’t work,” says David Peters, head of residential valuation at Knight Frank.
Peters, who worked on the valuation of average-price, volume-built properties as well as up-market homes, says only 10% of properties are so homogeneous that they lend themselves to being valued via the Hometrack method.
Even modern houses may not be suitable for online valuation. David Bexon, formerly of Redrow Homes and now chief executive of website smartnewhomes.co.uk, says that many housebuilders now construct 50% of their properties as “non-standard”, using local vernacular styling or materials that may affect the values of individual homes on an estate.
The RICS, which is studying the Hometrack system, says it doubts whether it is sophisticated enough to convince lenders to switch from what a spokesman calls “the more expensive but far more accurate” manual system.
Does the Hometrack system work?
Estates Gazette tested Hometrack by using three different property types in Exeter, Devon. Each was valued in summer 2003 by professional valuers (coincidentally, each working in a Hometrack-approved estate agency). These were compared with the online results produced by Hometrack.
The online statistics were unimpressive, even for two so-called “standard” properties for which there were many comparables. Indeed, the divergence of comparable prices was so wide as to be meaningless. If a user knew the area well he may be able to discount those addresses that were clearly cheaper or clearly more expensive, but “out-of-towners” using the system would be no better informed about prices after reading the report than before. The “non-standard” house had only one comparable, which was valued at little more than 50% of the property under investigation; this was to be expected. But one of the “standard” properties produced a comparable that was valued at under a third of the house being investigated. This would be unhelpful to a user of the service.
Hometrack pays the estate agencies from which it takes data but these companies are not always logical choices in terms of the sector of the market they cater for, or the areas they cover. In one instance in the EG experiment, an agent cited as “Hometrack approved” is the subject of a complaint to the National Association of Estate Agents.
Chris Wood of PDQ Estates, a South West agency that trialled an early version of the service, is damning about the finished product. “I worked on it a lot about a year ago. Basically it gave you lots of comparables but with too little information to make any sense at all. It didn’t differentiate between properties you could easily have one comparable that was three times the price of another,” he says.
And his verdict on the Hometrack offering? “Not worth the paper it’s written on.”
Will lenders buy the system?
Well, actually, the answer may be “Yes”. Countrywide Assured is being courted by Hometrack to use the system and others may follow suit with rival services.
“There will have to be more information on physical condition of the property and a finer grain of variable, but it may be useful. It will also depend on how much the borrower wants compared with the likely value of the home,” says Bernard Clarke of the Council of Mortgage Lenders.
He adds an important caveat. “Lenders will always want the right to inspect a property before the loan. For a lot of properties, there will always be the need for a physical visit”.
