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House valuations and UK estate agents..

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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.

As 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 terrible thing..

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 against you.

Sometimes the 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 work.

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.

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