There is an adage that something is worth what someone else is willing to pay. That is as true of residential property as any other thing.
So your first consideration is that there is no such thing as an accurate valuation - there are just different ways of guessing how much someone else might pay.
There also might be some factor that increases the attractiveness of your home for one potential buyer that increases his or her willingness to pay more than someone else. That might be location or decoration, or the potential of a certain room for a certain purpose or something else that you have not considered.
Even if you aren’t planning to sell soon, a valuation can be important when remortgaging and for other financial products.
Many people assume that getting a valuation has to be costly, but it doesn't need to be. You can follow the same steps as your estate agent might, and come to roughly the same figure.
Here are the simple steps to follow to get an idea of the value of your home.
Historical sold prices
The key metric to take into account when valuing your home is the historical sold prices of similar properties in the area.
Since these are the actual figures that other properties like yours have sold for, they provide a good indication as to how much you can expect someone to pay for your property. You don't need a professional to find this information since it is freely available.
There are a variety of online price checkers available that will give you the sales history of homes in the area. Do be aware that there tends to be a time lag of around 3 to 6 months (because the data comes from the Land Registry and it takes time for the Registry to be updated after completion) and that the market can shift up and down.
You should be able to find a property that was sold on the same street or on a street nearby, and this sold price will give a good indication as to the value of your chosen property.
House price index
Regional markets can provide a clearer picture in comparison to national market trends.
One way to account for these regional variations is by taking a look at the house price index.
This data is published by the Nationwide Building Society, and it looks at mortgage valuations rather than Land Registry registrations.
This means that the data is usually more up to date than historical sold prices, but it is aggregated so you won't find the sale price of a particular property.
You can easily download the house price index data to evaluate these trends. The data provides a general idea as to where the market is trending on a regional basis.
Local area factors
There are a number of local factors that can have a significant bearing on the price of a property.
Some of the most pertinent factors include; proximity to school catchment areas, local crime rates, flood risks, amenities, and public transport links.
These are vital factors to consider and can differ even between properties that may be nearby. Local crime data is available online and can easily be viewed.
Perhaps one of the most important aspects to consider in the valuation are the specific features of the property itself.
The tenure will play a role in the value of a property since freehold is worth more than a leasehold. A short lease of under 80 years can also have an impact on the value.
Certain modifications to the home, such as a loft conversion or an extension can increase the value, and the general condition of the property will also be considered. If major repairs are needed, then this can reduce the value by the amount of the repairs.
Other aspects, such as the number of bedrooms, en-suites, windows, and any special views, will also have an influence. An energy-efficient home that has solar panels installed can usually fetch a higher price. Essentially, anything specific that separates the property from similar ones on the same road can adjust the value.
Finally, you will also need to consider whether there are any legal issues such as a roof terrace or an extension that may not have been cleared. Once, you weigh up these factors; you can get a better idea of how the property compares to those on the same street, and come up with an estimated value.
Ideally, your final figure should be cross-checked with a professional third-party valuation.
The easiest way to get a third-party valuation done is through an online tool like Zoopla. These tools tend to provide an average based on a number of factors, with previous sales history being one of the biggest factors. These tools are a good start, but the information they provide is fairly limited.
Going to a local real estate agent will help you get a thorough valuation of your property. They know the area well and they will be able to give you an updated valuation that is reasonably reliable.
However, not all real estate agents will value a property in the same manner. However, most will just look at historical sold prices in your street and adjust slightly given their expectation of the current market.
Also bear in mind that if you are possibly interested in selling, an estate agent will likely inflate the proposed asking price in order to make it seem like he or she can find a buyer willing to pay more.
This is why it is wise to get a few quotes from local estate agents and then calculate an average figure.
If you’re looking for a valuation that can be used for legal purposes (such as remortgaging), then you will need to get a formal surveyors valuation.
Surveyors don't have any magical tool to determine exact prices, but they are more likely to consider more factors (but just those listed above) than an estate agent.
In other words, even the valuation given by a professional valuer is a number that has been calculated with a lot of subjectivity.