Property valuation: AI detects trends, humans identify the specifics

A few clicks, some details about the address, year of construction and living space: and there it is – an estimate of the property’s value appears on the screen. The owner of a detached house is surprised: is it really that simple to determine the value of her home these days? But is this figure accurate? After all, the kitchen has been recently renovated, the garden is lovingly tended and, from the living room, the view stretches far into the countryside. What does the computer know about all this?

AI recognises patterns – but not every detail

Artificial intelligence (AI) is also transforming the property sector. But not all automated valuations are based on AI: many digital valuation models use statistical methods, such as the hedonic method. They analyse large amounts of data, compare the sale prices of similar properties and take into account factors such as location, size and year of construction. This enables the value of properties to be estimated quickly on the basis of data. For property owners, simplified online valuations provide an initial point of reference. The accuracy of the result depends on the model, as well as the quality and comprehensiveness of the data.

But every property is unique – and represents much more than just a set of data. The condition, the view or the standard of finish can also be factored into valuation models. What is crucial, however, is whether these characteristics are recorded comprehensively and accurately. What is the actual condition of the building? What impact do natural light, the view and the layout of the rooms have? What potential uses does the plot offer? And to what extent is the immediate neighbourhood sought after by potential buyers? “An algorithm can only capture these specific features to a limited extent,” explains Sabrina Siegl, an estate agent and experienced valuation expert in Bern. “The experience, a trained eye and proven market knowledge of a property professional remain crucial.”

Market value and selling price are not the same thing

Anyone wishing to sell a property or transfer ownership within their family needs to know its current market value. Also known as the ‘market value’, this corresponds to the estimated price that could be obtained under normal market conditions. A professional and independent property valuation takes into account not only comparable sales but also the property’s condition, location, fixtures and fittings, and potential. However, the actual selling price achieved may differ from the estimated market value. Current demand, the marketing strategy and the expectations of potential buyers are, amongst other things, key determining factors. A sale price that is too high may deter potential buyers and delay the sale process. Conversely, setting a price that is too low means forgoing part of the proceeds from the sale.

It is the combination that makes the difference

A rigorous property valuation therefore combines data-driven analysis using digital tools with the experience and knowledge of the regional market held by property professionals. An on-site visit allows the information gathered to be verified and the property’s specific features to be put into perspective. A technical review of the model’s results helps to ensure a realistic estimate of market value and provides a solid foundation for the sales strategy. “It’s not just about calculating a value, but about properly assessing the property, identifying its strengths and positioning it optimally in the market,” emphasises Sabrina Siegl, a property valuer: “AI recognises patterns. Humans understand the property.”

Personalised advice for peace of mind

Whether you’re looking for a professional property valuation, or buying or selling a property: the team of experts at thomasgraf ag will be delighted to offer you personalised advice in Bern, Zurich and Zug! We are a certified member of the Swiss Chamber of Estate Agents (SMK). Thanks to our close collaboration with TRIONINVEST, an asset manager and family office service provider, as well as with the financial services provider hypolino ag, we offer you combined expertise in property and finance, extensive industry experience and a strong network.