Changes in the way people and businesses use property – accelerated by COVID-19 – along with advances in technology and an increasing requirement for consistent, digitally literate valuations have seen more and more professionals using valuation software.
RICS' Valuation Review also offered specific and related recommendations to make valuation more transparent, explicit and analytical – something valuation software and applications can support.
Engagement with the valuation industry to provide insight for this article suggested that although technology can support valuation, an overreliance on it without an underlying understanding of valuation technique and process can lead to potential problems.
RICS Valuation – Global Standards (Red Book Global Standards) is being updated this year, incorporating coverage of valuation modelling and data included in the 2024 International Valuation Standards (IVS) effective from 31 January 2025.
RICS will also need to think more widely about how to integrate tools such as valuation software into future guidance.
To get a clearer idea of the benefits and risks associated with such software, I consulted valuers, valuation users, software providers and technology specialists. Together, they suggested there are four main types of product commonly used in the profession:
The use of these types varies globally and by size of valuation firm. The cost of software can mean that smaller firms may prefer to develop their own spreadsheet templates, but this is not always the case. Some large, global software providers have a significant market share in some instances. There are also specialist products for specific sectors and valuation purposes.
While I consulted a number of valuation software providers, RICS does not endorse particular commercial products; rather, it seeks to remain engaged with the software industry to understand the opportunities and challenges in this field.
Valuers may need to bear the following in mind when using valuation software and related applications. Many of these principles also apply to valuation analysis more generally.
Valuation software and applications such as spreadsheets are viewed as helpful by many valuers and users of their services, making the process clearer and more efficient.
However, such software is only a tool in the process, and not a replacement for the knowledge and skill of the valuer. Combining the efficiency of the machine with the skill of the professional and the standard defined process will achieve the best result.
What principles do you think are most important in using valuation software? What is missing from those discussed above? Please contact me if you have any suggestions.
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