House valuations are always an emotive subject. But it needs to be said. Estate agents' house valuations can end
up being unrealistic..please don't fall into this trap.
the property market softens this becomes an even more
important point to be aware of.
Think about the scenario.
The house seller wants the best price. The agent wants to win the
work. What do you think is likely to happen?
This is not an attempt to "blame" UK estate agents. You should just
be aware that the natural tendency is for some estate agents' house
valuations (or market appraisals)to end up higher than they should be. It doesn't always
happen. But it will pay dividends if you are cynical about pricing and
clear about the difference between an asking price, and a selling price.
Temptation is a
You may be tempted to choose the agent that comes up with the highest
valuation - under no circumstances should this be your only criteria or
your automatic choice. At the very least you should be asking your agent
to justify their valuation. Ask him or her what comparables are
available to justify the numbers? "Comparables" refers to examples of
comparable properties. Properties like yours which have sold for the
price indicated by the agent's valuation.
Don't over-cook the
numbers for a quick sale..
This is especially true when you're looking for a quick sale. Always
separate your final selection from the actual valuation figures. If you
do need a quick sale then over-inflating the numbers will always work
numbers don't stack up for good reason..
Sometimes a reasonable amount of comparables is unavailable.
Sometimes the local demand-supply situation changes dramatically. This
is the bedrock of all house valuations. As the UK housing market slows
down, so will demand (on average). But there will always be pockets of
the UK, London is a good example, where demand outstrips supply unless
the housing market is in very bad shape. This is particularly true for
genuinely affordable first time buyer properties.
Show us the money..
A real life example illustrates the point well. A lady in London contacted me about her sale which had just fallen through. In
this case it was a sale to a friend. Fortunately the chain wasnít long.
As part of her research the seller had a number of house valuations
completed by local agents - always good practice. Two estate
agents' valuations came in at £250,000 but she didnít like this number
so she asked a third agent to value the property.
When the third agent completed their valuation they came up with the
figure of £275,000. As it happens the Hometrack report for this
particular property showed the most likely selling price was £240,000.
In fact the £275,000 valuation was well outside the Hometrack range.
The seller probably communicated her disappointment about the first two
valuations to the third agent, leaving herself exposed to having the
third agent arrive at a much larger number in the hope of getting the
The result? This house languished on the market for months on the
books of an agent in South East London when in fact most properties had
offers on them within three weeks..
And the morale of the story?
It really pays to have some understanding of
house valuations and to do some of your own research into a
likely house valuation for your property.