We know that everything changes under the sun but the internet has changed everything we know. The real estate industry, traditionally reputable for slow to response to technology has also been drawn by the waves of change. From Airbnb achieving enormous value, to the growing influence of space sharing models like WeWork and a myriad other inventions, change has never been so disruptive. The disruption, however has generally been in a good way but there is always a downside to technology.

As an agent, developer, prospective buyer or just an interested party, the list of real estate tasks you can do online has swollen bigger than ever. You can do search, list property, get a buyer or a seller, network with clients and colleagues, compare services, and more.

You may also perform some calculations, rather key into algorithms that bear the burden of the math for you, to the delight of many. Things like calculating mortgage rates, returns and property valuations are now the preserve of algorithms, and this is a key milestone in the digitization of the industry but it is not all perfect. Imperfection has its place.

Property valuation is an art as well as a science, and where art is involved, some aspects are more intricate and only rarely can they be accurately depicted numerically. Thus, a wholesale dependence on computer generated property valuations may prove to be illusory for an investor and here’s why.

Information is power but only when it is correct. Availability of information does not always infer knowledge and much less, experience. For one, information can get outdated or it can prove to be incorrect, both undesirable effects. In the case of property valuations, take for instance the ground floor value of a multi-storeyed office block. There is no chance that the value would be similar to another on the 30th floor for instance, because of the difference in elevation, views and other factors.

Valuation of property is an exercise that take into account many variables, both quantitative and qualitative. Most software however, cannot factor in all the parameters in calculating value. The result is at best, always an estimate of the value of the ground floor office block, which is then replicated for the entire building.  The greatest potential for distortion however lies in the fact that some people trust these numbers without a second thought. In reality, the numbers generated by those algorithms can only be best estimates that require further interpretation from trained minds.

In addition, computer programs are operated by people and computers have always operated on the principle of GIGO. When an algorithm contains inadequate parameters or is fed with wrong information, the results no matter who trusts in them can only confirm the error.

In essence, even though an online property company may have a reasonably large database of valuations to compare with, every data needs expert interpretation. There are fundamental elements to consider; if the database gives a property with access to a pristine river front or a beautiful landmark equal value with a similar property without access to the irreplaceable aspects of nature then the mass of code may be said to be in breach of value.

Furthermore, algorithms since they cannot exercise judgement, must regularly embrace the deceptive ideal of holding all other factors constant. However, all the other factors are rarely held constant. At the height of negotiations between a willing buyer and a willing seller, the value of a certain property may be just be what the seller or the buyer agree that it is based on specific internal aspects of the property. This value may depart so far from the market either upwards or downwards.

Perhaps with advancements in artificial intelligence, algorithms may in future be able to more accurately depict the value of property. However, the current values unless guaranteed by a valuer should be taken for their worth; estimates with a potential to fluctuate.