Mon 19 Apr 2021
The purpose of the following commentary is to raise awareness around the accuracy of sales valuations. Knowing the following could save you thousands of pounds in your equity when it comes to trading, what for most people, is their most valuable asset.
For several decades various channels have recorded house price sold data, from the Governments HMRC Land Registry to banks / building societies and property portals such as Rightmove and Zoopla. All produce House Price Indexes, some of which is publicly available and some of which is available for the property trade, usually by way of annual or monthly subscription. Some private entities have developed algorithms that blend house price sold data with price on market figures, so as to provide marketing price comparables.
Whilst ‘desktop’ valuations based on house price growth algorithms provide useful benefit when considering marketing price suggestions they should not be the only consideration relied upon as to do so, as the following example clearly demonstrates. Insight provided by house price indices and algorithms does not take into account renovations and extensions you may have done since you bought the property.
I was very recently invited to pitch for the business to list and sell a home in the countryside. My opposition was the UK national country house brand. I will refrain from divulging the company as the purpose of this article is not to point score but simply to flag the very real risk of taking inaccurate pricing advice from an estate agent that is inaccurate and way off the mark.
Returning to the example. I was second into the potential customer, the other agent going first. My sales valuation was around £145,000 more than the other agent. The vendors quite rightly queried the significant difference between my thoughts and the other agent. Was it that I was deliberately overvaluing in order to win the instruction….NO, the difference in value was explained because the potential seller had significantly extended the property and undertaken high quality costly renovations, all of which would have had the net effect of improving the properties appeal (wider buyer market) and value. The other agent had failed to ask the right questions and therefore failed to identify the value improvements, sticking firmly to the price suggested by projected inflation.
So the learning from this is that when you invite an estate agent to give you sales valuation advice if they don't ask you what improvements, alterations and renovations you have spent money on, then do brief them in, otherwise you may well find that the numbers they quote have no bearing on reality.
The end to this story is that I won the instruction to sell, could have sold it multiple times over with the property selling at over £150,000 more than the national brand country house agent had suggested. Result, happy vendor for me and I suspect my vendor may well voice their displeasure with the senior management of the other agency once they have moved.
Martin Cunningham - Director - Living Property Sales & Auctions
'Living Property - Professionally Looking After People & Their Property Matters'
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