How to Value a Property
Whether buying or selling a property, it is crucial to be clear on how much your home is worth or how much you should be paying for it. Then, it can be surprising that valuations can vary dramatically depending on the method used and even between different estate agents. Each method has its pros and cons and can all help you build up a picture of a property’s worth, but is there any substitution for a professional valuation?
The comparable method
When it comes to determining the market value of a home, there are a number of possible methods, including the comparable method, the investment method and the profits method, and a professional valuer will determine the most appropriate.
The most common way is to look at how much similar properties in similar areas have sold for – the comparable method. To do this, it’s necessary to access property transaction databases that contain information, including transaction date, the price paid, property features and size, and use this to reach an informed conclusion on value.
This method has become popular because it’s simpler, being based on data rather than an individual’s preferences. However, it relies on having enough up-to-date data about similar properties to make it accurate.
Online tools - pros and cons
For many people looking to get an idea of the value of their homes, however, their first port of call will be the internet. Online tools can be a useful way to gauge an approximation of how much your home may be worth, and often the only information you need is the address. As should be expected based on the level of information you have to give, these sites should only ever be used as an estimate, and they can come up with very different results compared with a professional valuation – and even compared with each other.
An apparent downside is that they don’t consider the same number of factors as a professional. As they can’t see the property, they don’t know its current state and may not recognise improvements such as extensions and renovations. It may also be the case that sold prices become outdated. As they’re often free, though, nothing is stopping you from doing a few and working out an average to get you started.
Land registry data
If you’re looking for more detailed information, the next step could be to get a feel for how your local area is performing in terms of house prices and sales, and for this, a Land Registry search can be useful. The Land Registry is an online database for house prices in the UK. It’s based on official data on actual sales and records pretty much every residence sold in England and Wales. You can search sold property prices by address to give you an idea of how much nearby properties have gone for and check price trends across the country via the UK House Price Index.
Estate agent valuation - pros and cons
Both of these methods can help you to decide if now is the right time to put your home on the market, and if it is, you’ll likely choose to speak to an estate agent or two. An in-person valuation from an estate agent will give you a much better idea of the current value of your home as a local agent will know how active the market is, what’s in demand, and they’ll be able to see the condition of your property. However, it may be surprising that even estate agent valuations can vary, so it’s essential to proceed with caution.
For example, the agent may overvalue a property to win business. While you may initially be pleased with the idea of a higher price, if the property doesn’t sell for anywhere near it and it takes more time than expected, there’s no benefit to you at all. If valuations do come back significantly higher than expected, don’t be afraid to ask the agent for evidence to back up their price. It may also be the case that the agent builds in some room for negotiation, so the asking price likely won’t be the same as the selling price.
Factors that affect a valuation
While you may be excited by a high valuation, it’s also possible that your valuation will come back lower than expected. But what affects the valuation, and is there anything you can do to improve it?
A comprehensive valuation will consider several factors that you can influence and some you can’t. For example, location will have a considerable impact. Is your home near good schools, transport links, employment opportunities and useful amenities such as shops and green spaces? If so, it will be valued accordingly.
If not, you can improve the condition and even size of your home to increase the value. Size and useable space are essential factors in a valuation. The number of bedrooms and bathrooms are important, as is keeping these well maintained. Garages, lofts and outbuildings also matter, providing additional living and working space that is increasingly in demand.
The best news is that if your valuation isn’t what you expected, you can make a difference by making sure rooms are in the best possible shape and how you present them. Can the shed be an office, or the loft be a playroom? Remember, it’s all about useable space, not just square footage, so make the most of what you have and try to make it appeal to as many people as possible.
If you’re thinking of carrying out more significant upgrades to increase your home’s saleability, look at what is proving popular in the local area. Are basement developments in demand, or are people looking for kitchen extensions and loft conversions?
Of course, the level of activity in the local market and broader economic indicators will also affect a valuation. If there’s a deluge of similar properties on the market in your area or there just aren’t that many buyers, you may not get the price you wanted in the short term. Similarly, if the economy as a whole is slow, the same could occur, so choose your time wisely if you can.
Key questions to ask valuers
When a professional valuer visits your home, it can be tempting to leave them to do their job. Still, it can be useful to speak to them to ensure they fully understand your home and what it offers and reassure you that they will come back with an accurate valuation. For example, you can gauge their understanding of the local market by asking how much comparable properties have gone for recently and even enquire where they get their data for comparable values. You may also want to ask if you can do anything to make your property worth more – remember, they should know what’s in demand right now.
Finally, it’s always worth asking if your valuer is RICS registered for confirmation that you’re working with a qualified and regulated professional.
The benefits of RICS qualified surveyors
Indeed, having an RICS registered professional carry out your valuation brings with it several benefits. Firstly, you can be confident that your valuer is an expert in their field, delivering accurate and high-quality reports that adhere to the Red Book valuation standards. They will also be impartial and objective, avoid conflicts of interest and have the right insurance in place.
The Novello Approach
Whichever valuation service you require – whether it’s a market valuation, a capital gains tax valuation, probate valuation, a shared ownership valuation or any other of our services – you can be sure you’ll be dealing with a qualified RICS chartered surveyor.
You can also be sure you’ll receive an accurate, impartial and expertly put together valuation report that draws on our extensive knowledge of the market to allow you to proceed quickly and with confidence.
We’ll also be on hand to provide any advice or answer any queries at all stages, and we’ll make sure we always respond promptly to help take some of the hassles out of what can be a stressful process.