All the online tools available to sellers today make it difficult to identify the true price of your property.
However, there are hacks to intelligently assess the value of your home and determine market competition, as well as ensure that you get the best price if you use a we buy any house service, speaking of which, make sure to read our we buy any home reviews.
Keep reading to get the inside scoop on the UK property sellers market.
House Value Calculation
How accurate are value estimators and house price calculators?
There’s no such thing as a free lunch! Many prospective sellers are drawn in by the idea of a free house valuation, known as an AVM.
However, these are based on a myriad of factors that are considered by an intelligent algorithm to determine an approximate value. Often the figure is higher than expected, a relief in the eyes of sellers, but not to buyers!
To get a more specific idea regarding the value of your property, consider the following:
- Looking at similar properties and what they have recently sold for
- Look at similar properties that are failing to sell
- Interviewing local estate agents
- Examining other facts and evidence in the market
This will save you from the temptation of asking for more than a property is worth. Setting your sights on the figure calculated by an AVM can mean that sellers sit on the market for too long. Often this comes coupled to a reduced market price and a long drawn out selling process, which is stressful for all involved!
Often, this disadvantages sellers because it limits their ability to negotiate a selling price assertively. There is also a high probability of underselling, particularly if you are keen to get the property off the market.
How much is my house worth today?
When considering this, keep in mind that the most important factor determining property value is what a buyer is willing to pay for it. No more, no less! The best way to get an idea of this is to compare your property to other similar homes currently for sale.
Place yourself in the shoes of the buyer – when you were looking to buy, what were your considerations?
- What was your budget?
- What kind of property did you need?
- What area were you looking to buy in?
Buyers will always put in offers on the properties that meet their needs and give the greatest value for money. Essentially, this becomes one big comparison shopping exercise! Once you understand that prices are driven by competition, you will realise that market value is not static.
Instead it changes constantly based on competing properties entering and leaving the market.
However, a buyer’s offer price is not static either. In the property market, prices are haggled and can be influenced by a good sales agent. The golden technique is to create an air of excitement and competition about your property. This encourages buyers to pay more and emphasises the importance of selling with the right agent.
Common myths about value
There is no relationship between cost and market value. To clarify, ‘cost’ refers to the amount you paid for the property, as well as any capital improvements made by you to the house. Whilst ‘market value’ refers to the amount buyers are willing to pay that will generate a sale in a reasonable time. This is because value is determined by what an individual gets out of a home, not what money is put into it.
Undeniably, improvements usually do add value to a home. However, it is important to remember that this value can be subjective. What adds value to you may not necessarily add value for a buyer. In fact, the major factors that affect the price that a buyer will offer is as follows:
Location and size in particular are the determining factors for the value of your property. On the other hand, amenities and condition play a major role in determining the ‘saleability’ of your property compared to other similar homes.
How to intelligently research open market value
When determining a property price, it is crucial to perform fact based research. This is the greatest insight into the minds of buyers. A good starting point is as follows:
- What similar homes have sold for, both historically and recently
- What homes you are competing against
- What similar homes are failing to sell
Easily accessible tools for this kind of search include Rightmove and Zoopla.
Begin by looking at nearby houses – within 0.25 miles in urban areas and 5-10 miles in rural areas. Look for properties with similar numbers of bedrooms and amenities.
Remember, it is also possible to find specific prices that someone paid for any home in England and Wales via HM Land Registry.
This is your competition, and their asking prices should fall into a relatively narrow range. It is important to take note of any anomalies in prices, chances are these properties are overpriced or that something is wrong with the property! Keep in mind, property valuation is just applied guesswork.
The issue with free evaluations from most estate agents
Free estate agency evaluations have created an environment that confuses both buyers and sellers. Sellers will usually choose the estate agent that gives the highest number for their property value, in the hope of maximising the amount they will get from selling their home. Unfortunately, this means that most estate agents offer an inflated sense of property value, and then lack the competency to sell at this price.
Therefore, it is important to stay aware and remember that estate agents have no control over property value. In fact, the market is the only thing determining its value! However, overpricing is a tried and tested tactic that wins business.
To avoid this, give the agent permission to tell you the brutally honest truth. Let them know that you are not basing your representation decision on who will give you the highest price.
The Bottom Line
There are a range of tools available to sellers to help determine the approximate value of their property. Just bear in mind the key takeaway message, that the most important factor determining property value is what a buyer is willing to pay for it!