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Having your property valued correctly is the most important thing you can do when you decide to put it on the market. Your home is likely to be your most valuable asset – but one-third of properties sell for less than the asking price.
New research from Zoopla shows 32% of homes for sale have their asking price reduced – by around 8.4% on average, which can be a big drop if you’re a seller. The average loss for a homeowner is £25,000. The value of a property can be affected by general economic trends and other factors specific to your home.
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Types of valuation
There are several types of home valuation methods. Online valuations use a house value calculator tool. The usual method is to complete a short online form, answering some general questions about your home. You will receive an estimate, based on the information available from the public Land Registry data. Valuations are based on the home’s location, property type and average market price for similar properties in the area. Some sites will send you an estimate in as little as 60 seconds.
The disadvantage is that an online valuation doesn’t take into account the current condition of your property or any improvements made since its last sale. It’s a rough estimate, usually calculated automatically by a computer, rather than a person.
When you’re selling a property, even if you’ve done an online valuation, it’s important to complement this with a valuation and a building survey by a professional surveyor. This will highlight any obvious problems.
What methods are used?
The comparison method is used most often to value a property. It depends on the market being stable and on recent multiple sales of homes of the same size, location and condition. Comparable factors are analysed in order to create an estimated market value.
The residual method can be applied to value a home that has development potential, or vacant land attached that can have its use changed to something more profitable. The value of the land is calculated by estimating the gross development value and deducting the cost of development.
If a house is being sold due to the death of the owner, a probate valuation is often used to determine its value. The government, through HMRC, recommends using the services of a professional surveyor for this, so that the correct inheritance tax can be calculated.
Do flood risks affect the price?
Various factors can affect house prices – such as flood risks, the local job market, nearby facilities and more. In view of the current weather, fears have increased that properties in areas at risk of flooding will drop in value.
The Environment Agency has recently suggested that one in six properties in England and Wales are now at risk of flooding. A survey of homeowners revealed it was potentially damaging on the market value of the property.
In years gone by, people bought homes on flood plains without much thought, as they had not seen the areas flooding. However, in light of recent weather conditions, 95% of 3,000 people whose properties were in “at risk” areas said they would never consider buying a home on a flood plain today. A further 3.5% said they weren’t sure whether they would buy one or not.
What else reduces house prices?
Unemployment figures can have a massive effect on house prices. A study of the 20 local authorities with the highest unemployment rate in Britain revealed average house prices had risen by only £4,100 in six years. In contrast, areas with the lowest unemployment rates had seen a £65,000 increase in house prices.
The housing market analysis by Lloyds reveals this translate to an increase of 25% for areas with low unemployment, compared with just 3% for the areas with high unemployment. Lloyds says there is traditionally a clear link between house prices and the amount of unemployment in a region.
The research also found a link between local amenities and house prices. A lack of shops, in particular supermarkets, can reduce property prices. Lloyds describes this as the “Waitrose effect” – meaning that high-quality supermarkets make an area more desirable.
In a modern twist, low-cost supermarkets such as Lidl and Aldi have now started to boost property prices in the UK as well. According to a consumer survey, owning a home within walking distance of a Tesco supermarket can increase its value by as much as £21,369. Living in close proximity to Lidl can add an extra £5,411 to your house price.
Living in an area where there’s a great school can increase your property’s value. Many families with school-age children will pay more to live in the catchment area of a school rated “excellent”.
How to boost your property’s value
While there’s nothing you can do about the location of your home, there are other things you can do to prepare it for a valuation. A very simple one to remedy is your furnishings. While your fluffy carpet and bright wallpaper looked great in the 1980s, today’s buyers may be turned off by dated furnishings. Similarly, if your paintwork is tired, or your polished wood floor is scuffed, this also looks tatty. Even a simple lick of paint can make a difference.
Make sure your garden is tidy, as buyers’ first impressions count. An untidy and overgrown garden can create a lasting negative impression. If you don’t have time to fix it yourself, hire a gardener for a couple of hours a week to keep on top of it.
If your property has a few cracks in the walls or an occasional damp patch, you may have stopped noticing – but buyers and surveyors will certainly notice. Keep an eye out for any type of faults and have them fixed as soon as they appear, to avoid problems further down the line.
If you hope to move to pastures new, we hope this blog helps you to achieve the best possible price for your current home. Should you have recently completed the whole moving process, we would be very grateful if you could share your experiences on Psydro’s unique online reviews platform, so that others can make more informed decisions. Thanks!