Now that the door has been opened, virtual property inspections have gone from an option of last resort to a window into the future.
The pandemic has done interesting things to the property market. As budgets have tightened, available housing stock has dwindled while prices have continued to soar across Australia. Meanwhile, borrowers have taken advantage of low interest rates by seizing the opportunity to refinance. And with many city dwellers moving out of the cities to make the most of remote working, there’s been no let-up in demand for valuations nationwide.
Even without the impacts of COVID-19, there’s no doubt the property valuation industry was already primed for digital transformation. The pandemic has simply accelerated the use of new technologies to deliver valuation services with an increased focus on ‘virtual’ inspections.
Continuity in a crisis
The first thing businesses and industries look for in a crisis is continuity. How quickly can they reshape their service models so they can continue functioning – while at the same time finding ways to improve the customer experience?
The Australian Property Institute (API) deserves commendation for getting on the front foot. With valuers and lenders seeking guidance on business continuity, the API consulted with industry and in March 2020 published the ‘Valuation Protocol – Guidelines For API Declared Time Of Crisis and/or State Of Emergency Impacting Physical Inspections of Real Property’ (Valuation Protocol). The Valuation Protocol outlined alternatives to physical inspections, which can be completed on the industry-approved, API PropertyPRO report template.
Key to the API’s guidance was their assertion that “Nothing in this protocol intends to change minimum valuation expectations or reduce the standards by which Valuers must carry out their Valuation. Nor does it alter any individual commercial arrangements between Valuers and Instructing Parties/Clients.”[1]
The Valuation Protocol specified a hierarchy of accepted approaches, with full physical inspections at the top. Alternatives included external inspections, partial external inspections and virtual inspections, utilising a range of tools, including existing and contributed data and real-time virtual tours given by the occupier of the premises.
The implementation of the Valuation Protocol indicates that the API was confident valuers were ready to respond appropriately, while also providing the impetus for valuation firms to start or accelerate efforts to develop software that would enable virtual inspections.
Adopting the new protocol
Prior to the pandemic, some valuation firms had already developed proof-of-concept solutions for virtual inspections. The onset of the crisis created the need for full implementation of these digital inspection models at short notice. Along with CoreLogic, these early adopters helped drive consultation between the API and the industry to put agreed solutions into practice.
Meanwhile, CoreLogic was also working on a prototype process for digital valuations. We launched the ValConnect Upload Portal (ValConnect Portal) in April 2020, soon after the release of the Valuation Protocol. The ValConnect Portal lets the occupier securely upload photos via a link sent to them from valuers. This service was made available to the industry via ValEx at no extra charge, with a view to ensuring all firms were still able to service clients within the CoreLogic ecosystem.
While Victoria, unfortunately, hasn’t had much time without lockdown restrictions, New South Wales had several months of relative freedom when physical inspections could restart. But when the state was hit by the COVID-19 Delta variant and went into lockdown again, virtual inspections resumed.
But thanks to the systems and processes many valuation firms had put in place during 2020’s state of emergency, this time round they were ready to embrace virtual inspections.
Where to from here?
Since the 2021 restrictions began, the responsiveness of the valuation industry and the API have enabled an almost seamless adoption of virtual inspections. The challenges have also highlighted the industry’s agility and readiness to adopt new ways of working.
The valuation industry has essentially been trialling a ‘proof of concept’ on valuing properties without full physical inspections – an approach that may have been unlikely before the pandemic. And while many firms have benefited from the efficiency gains of virtual inspections, others are reporting delays. It is likely that these delays stem, at least in part, from the challenges of completing virtual valuations within a framework that’s optimised for full physical inspections.
This experience has taught us that, in many cases, properties can be valued appropriately without a full physical inspection. The next logical step is to re-engineer the valuation framework to optimise the virtual experience.
With vaccination rates rising and lockdown restrictions easing in New South Wales and Victoria, it’s likely that the API will declare an end to the current state of emergency, which currently applies nation-wide. This will also bring an end to the Valuation Protocol. And while some sectors of the industry are likely to favour the return to full physical valuations, it’s beyond dispute that virtual valuations have proved to be a feasible alternative in many cases, and may become just as common as traditional valuations – as long as we can get the framework right.
[1] Page 3 of the Valuation Protocol.
© Copyright 2021.RP Data Pty Ltd trading as CoreLogic Asia Pacific (CoreLogic) and its licensors are the sole and exclusive owners of all rights, title and interest (including intellectual property rights) subsisting in this publication, including any data, analytics, statistics and other information contained in this publication. All rights reserved.
The data and information (including commentary) provided in this publication (together,Information) is of a general nature and should not be construed as specific advice or relied upon in lieu of appropriate professional advice.
While CoreLogic uses commercially reasonable efforts to ensure the Information is current, CoreLogic does not warrant the accuracy, currency or completeness of the Information and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the Information.
CoreLogic Australia