Property valuation: How to make sure your home goes on sale at just the right price
It involves not only the state of the market, but also factors including the property’s condition, the level of demand, and – of course – location.
Some vendors instinctively want to try their luck but Peggy Su, regional director of RE/MAX, warns that overvaluing a property is the most common mistake to make and could cost a vendor dear.
“If a home is perceived to be overpriced it will be overlooked by applicants and will sit on the market for longer than necessary,” she warns. “An inflated listing price will also make comparable homes appear to be bargains when actually, they are just priced correctly. Overpricing the property will help to sell your neighbours’ home instead of yours.”
Property valuation is not an exact science. However, there are ways to make sure your home goes on sale at just the right price:
1. Study sales prices in your area
Study sales prices in your street and its immediate surroundings, concentrating on the last six months. The information is freely available on property websites such as rightmove.co.uk and will give you a reasonably up to date idea of the state of the local market. Concentrate on selling prices not asking prices, says Terry Holmes, director of Beresfords estate agents, as the latter can be wildly inflated.
2. Be aware of price differentials
Don’t assume you will get as much for your home as your neighbours got for theirs only last week. Pricing in London is volatile and capricious. It is perfectly feasible for homes that sit side by side to be worth significantly different amounts.
For example, in Egerton Crescent, Chelsea, routinely described as London’s most expensive road, houses at the centre of the crescent are worth the most.
Jake Russell, director of Russell Simpson estate agents, says this is because their squared-off roofs mean they have larger top-floor rooms than homes in the rest of the crescent, which have mansard roofs.
The price differential could be as much as £1,000 per square foot, with one of the flat-roof houses selling at £4,000 per square foot and one of the mansard-roof homes for £3,000 per square foot.
3. Location premiums
Homes close to excellent schools or transport links will sell at a premium, says RE/MAX’s Peggy Su. If they are also in good condition, with a high specification – eg with sash windows and/or engineered wood floors - they might also top local ceiling prices.
4. Know your square footage
Estate agents base their valuations on the square footage of a property rather than the number of rooms. If your one-bedroom flat is larger than average, buyers will pay more for it. On the downside, if it is a bit poky, a bit run down, or suffers from a blight such as being on a busy road or near the railway tracks, you’re going to have to trim your expectations.
5. Value-added extensions
If you’ve invested in your property you can expect to get some of your money back, especially if you have added floor space. “It goes without saying that a property that has been improved and/or enlarged will achieve more than a basic like-for-like neighbouring property,” says Beresfords’ Terry Holmes. However, he warns that not all improvements equal price uplift.
“Be careful of improvements that are too tailored to what you want. I once saw a house where almost all the small garden was taken up by a gym outbuilding. Or if you’ve opted for an extreme colour when refitting your kitchen, you could well put people off. Nobody will want to pay top price for something they can’t live with.”
6. Make sure you shop around for your valuation
Get valuations from at least three agents. Ask them to provide examples of what similar properties have sold for – they will have even more up to date information than the online portals.
7. Consider each valuation carefully
Don’t necessarily go with the highest valuation you receive. In a market characterised by an extreme shortage of stock, some unscrupulous agents are in the habit of wildly overvaluing to woo vendors. Then after a few weeks, they suggest dropping the asking price. If a valuation seems too good to be true, it probably is.
“Remember that the first six to eight weeks are the optimum selling time - after that there is a danger your property could become stale and overtaken by fresh new stock,” says Giles Cook, head of residential agency at Best Gapp estate and letting agents.