How to value your home in 4 easy steps
The following steps will help you get the most accurate valuation of a property you own or intend to buy without spending any money.
Step one - check historical sold prices in the area
A property is ultimately worth what someone wil, pay for it. However, a wealth of sold price information is registered at HM Land Registry which can help you estimate a property's value.
This data is available in the public domain and shows you the actual selling price of any property in England and Wales.
When a conveyancing solicitor has completed the conveyancing process the sale information is formally registered at the Land Registry.
The Land Registry data is a great starting point although it has the limitation of lagging behind the market insofar as the delay from offer to registration could be 3 to 6 months.
There are a number of online tools that all query this data from the Land Registry and then present it in a user-friendly way. Use our house price checker here.
Ideally you will be able to find a similar property on the same street, or in the immediate locale, that sold recently.
If you cannot find a recently sold property on the same street, find one on a comparable street or one on the same street that sold less recently and adjust the price as in Step 2.
House price checker
Step two - Apply most recent % change in value
The House Price Index is a set of data is published by the Nationwide Building Society, that gives a more up-to-date picture of regional price variation.
This data is based on mortgage valuations rather than Land Registry registrations. As a result the data can be 3 to 6 months ahead of the Land Registry.
If you were unable to find a recently sold property on the same or a similar street, the Nationwide data shows quarter on quarter percentage house price changes from 1973 onwards.
The date is not as granular as it is only compiled on a regional basis. It is nevertheless a good indicator of general market movement in the area.
Step three - adjust for factors that add or detract from a property’s value
There are a number of things that affect the property’s value.
The following is a list of those factors that may be applicable, even when you are comparing with a nearby property.
For example school catchment areas can have a big impact on prices, and the catchment area perimeter will often run between two properties.
- Local crime rates
- Risk of flooding
- Local transport links
- Local amenities
In addition there are a number of things to consider about the actual property when assessing its value:
- Tenure - freehold properties will be worth more than similar leasehold properties. Share of freehold properties are usually worth about the same as freehold properties.
- Length of lease - if the property has a short, or relatively short lease, this can have a significant impact on the value of the property (see: Should I buy a property with a short lease)
- Modifications to the home – has the property been extended, had the loft converted or been renovated?
- Condition of the property - is the roof in need of repair, are there concerns over subsidence etc.?
- Decorative order
- Layout of the property - e.g. number of bedrooms
- Size and condition of the garden
- New kitchen or bathroom?
- Position and view - does the property have a special view?
- Windows - what is the appearance and condition of these? Is there modern double glazng throughout?
- Energy efficiency - solar panels, for example, can add value (see: What to check when buying a house with solar panel)
- Risk of flooding - has the property ever flooded or is it at risk of flooding? (See: Are you about to buy a home at risk of flooding)
- Central heating - is this working, serviced and up-to-date? (How to avoid buying a house with costly heating problems)
- Conservatory - a conservatory can add significant value
- Are there any legal issues - e.g. concern over the legality of a roof terrace or an extension?
Once you have estimated the impact of any of the above factors you should have an idea of the property's current worth.
From here you can cross-reference your calculation with third party valuation.
Step four-get third party valuation
Get an online valuation
There are certain tools available online, such as Zoopla, that offer a specific valuation on your property. Many of these tools are limited as they can only query and package up the data from the Land Registry. The key objective of these tools is usually to generate leads which can be forwarded to estate agents.
Get a valuation from an estate agent
In theory this approach should give you the most up-to-date and incisive valuation of a property. Estate agents are on the coalface and have a broad perspective of the property market - from acceptance of offer through to completion.
However, estate agency is highly competitive and there are a number of reasons why estate agent valuations can differ considerably.
The best approach would be to obtain three or four valuations and taken average. If if one of these valuations is wildly different from the others you should consider disregarding it when calculating average.
If the agents valuations are significantly different to your estimated valuation, you should ask them how they can substantiate their valuation.
Formal surveyors valuation
If you need a valuation that can be legally relied on, for insurance purposes or when buying another party’s share in a property, you could get a full valuation from an RICS surveyor.
The surveyor will give you a professional valuation that is not commercially compromised by a desire to handle the sale of your property. As such a surveyor’s valuation is objective and independent.
A RICS valuation will cost around a hundred and £50.
How can Quittance help?
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