The methods by which Estate Agents arrive at a valuation are a combination of research, experience, knowledge of the current market, and intuition. At very least, you can match the agent on research, and you can find out lots about the current market… though you will need to use the internet to get the most accurate picture.
The more information you have, the more likely you will be to choose an agent who is being honest, diligent and realistic in their valuation.
Researching Past Sales
It is now extremely easy to find out exactly what the houses near to your have sold for. You may need to exercise a little local knowledge to know which houses are most like your own, because price information is sorted by street, and of course not all streets contain identical homes. But the information for all house sales is available online, usually within three months of the sale being completed.
The information is held by the Land Registry. Their excellent website is at www.landreg.gov.uk. This site allows you to map out market trends by area, and can be useful in reading the current state of the market.
It’s usually easier to find information about your immediate location via a site like www.nethouseprices.com, or www.ourproperty.co.uk. You may need to register to use these sites, but generally you can find about the most recent sales in your area just by typing in your postcode.
This is exactly what an estate agent will do. It gives a pretty good indication of the price range that your kind of property might expect, between a highest and a lowest figure. Of course, if nothing has sold recently, then the information might be less useful, but if there are a number of sales within the last 3-6 months, you already have a guide range from which to value your home.
Reading the Current Market
House-hunters that might be interested in your home, will also be interested in similar homes that are for sale at the same time. If you are selling a two-bed home, for instance, try to find out which other two bed homes are currently for sale in your area, and how much they are on the market for. The most effective research tool is the internet site at www.rightmove.co.uk or http://www.zoopla.co.uk, but any of the internet sites will do. Act like a buyer, and see what else the buyers will be looking at.
Your home will be vying for the attention of buyers against these other, similar properties. You – and the agent – should consider what else a buyer can get for their money, before agreeing a marketing price that gives your home a good chance of selling for a high enough value.
How the agent decides a value
Remember, in both cases, the agent’s information will be slightly more up-to-date. The agent is likely to know about the most recent agreed sales, even if they have not yet gone through to the land registry. The agent should also know about other recent valuations, or properties about to come on the market. Even so, the information that you have will give you the same broad price band that the agent has to work with.
Then, the agent will consider where your home fits into that range of possible prices. If your home needs extensive renovation, the agent will consider its value at the lower end of the scale, subtracting the cost of the works needed, and an intangible amount for the disruption that such works would cause, from the highest achievable price. If your home is perfect, and has a neutral finish and a minimalist amount of furnishings, then your home may be valued at or even slightly above the ceiling price for your locality.
The agent will also weigh their understanding of market trends – particularly important if prices are falling, because the higher prices of an earlier time may no longer be realistic in a down market. Finally, the intuition of the agent, based around the many properties that they have seen in their careers, will be added into their consideration.
When the agent advises on price, they should consider both a realistic sale price, and the marketing price likely to achieve that. Some homes can be priced slightly over the expected sale price, safe in the knowledge that suitable buyers will be attracted, but with room for negotiation. Do not assume, though, that this is always the best policy. Pricing high can mean putting off potential buyers from ever viewing. Sometimes, it is better to fix a lower price, and then to ask for it in full.
Balancing time and money
Even once the agent has offered an opinion as to the value of your home, that is not quite the end of the story. A significant consideration in the marketing price will be your specific circumstances. For some people, a quick sale is essential. For others, there is no rush. The agent should discuss with you exactly what your priorities are. If you need to sell as soon as possible, it might be advisable to have a lower asking price, to make sure that your home stands out from the crowd, and sells as fast as possible. As one industry consultant says, your ten pound note might be worth ten pounds, but you aren’t going to sell it to someone else for ten pounds! If you want to sell a tenner very quickly, sell it for nine pounds and you’ll have no end of takers!
If, however, time is of no concern, then you can take the chance of asking for the very highest price the market might bear. Again, knowing what you are trying to achieve by selling, and communicating that to the agent, is an important factor.
Try to be objective
In some respects, your home is priceless. You can buy a house, but you can’t buy a home. Your home is as it is because you want it that way. It’s full of your stuff, and it is uniquely special to you. Please, then, don’t be offended by the idea that it is not special to house-hunters, and that the Estate Agent who gives you a valuation has to take this into account.
Remember how strange it can feel staying as a guest in someone else’s house. The little squeaks and groans of the floorboards, that are so comforting in your own home, seem alien when you are in an unfamiliar place. Little quirks that you may not even notice – the way you have to lift the handle when opening the lounge door, the dent in the kitchen wall where your kids tried to play indoor cricket, the scratch patch in the carpet where the cat sharpens its claws… all of these are different in your eyes than when a stranger sees them for the first time. Your brilliant, hot-pink bathroom might scream ‘redecoration’ at a prospective buyer.
As a general rule, the more personal character you have in your home, the fewer buyers will appreciate it. When an agent suggests a marketing price for your home, don’t be offended if it is a little lower than something a few doors down that you don’t consider to be as nice. Of course you think your home is better… that’s why you made it that way. But the buyer won’t want to live in your home, they will want to make it into their home… and the agent has to see things as a stranger will see them. It’s very hard to do, but you should try it, too.
Not all agents work to the same policies
There is another consideration at play, and this one is harder to quantify. Different agents operate to slightly different business models. Some agencies price things on the low side. They hope to sell properties quickly, and so turn ‘For Sale’ signs rapidly into ‘Sold’ signs. The fast turnover and apparent success brings them a fast-flowing income and a lot of new business.
Other agencies tend to price very high. They win lots of instructions by promising top-dollar prices, so they get lots of signs up around town. If the sales happen more slowly, and prices have to be reduced to more realistic levels, the agent still benefits from a continuously high profile from all of the boards staying on view for longer.
Such trends may or may not be company policy – it could just come down to the individual experience of specific valuers, even within the same company. An agent may have found one method to be successful, and may stick with it throughout their careers, without even necessarily realising how their own pattern of success is achieved.
Summary – Valuations and marketing prices
The tools and techniques used by agents are honed by experience, but the raw data they use is available to everyone online. Find out what else is on the market comparable to your home, and know how much other homes nearby have sold for. The more research you do, the better idea you will have of a realistic marketing price. If the agent’s valuations differ from your expectations, ask them to justify the price they suggest, and insist on seeing their research. Remember that your needs and circumstances will influence the marketing price, too. If you need to move quickly, you may need to settle for less money to make your home stand out from the others. Be realistic, and avoid the temptation to go with the highest valuation unless you think it is broadly accurate – your home might be worth that much, but it may also be that the agent is trying to impress you.