UK Property Investment Forum & Blog

Last time we looked at the main reasons as to why it was so vital we get proper valuations on property, and now we will have a brief look at some of the factors involved in getting a valuation as accurate as possible. Saying that, this is a very detailed process and knowledge and experience are key to understanding this in depth. So to give you an easier way to undertand this, we will briefly explore what some of the well-known online automated valuation websites like ‘hometrack’ or ‘PropertyPriceAdvice’ and ‘Zoopla’ look at when estimating their valuation on property. Please note that online property valuation tools need to be treated with caution because none of them are 100% accurate.
For example, ‘PropertyPriceAdvice is another AVM (Automated Valuation Model) provider (similar to the ‘Hometrack’.How do they value property? Like ‘Hometrack’ the company’s economists use a version of the statisticalapproach to valuation on property called “hedonistic regression”.
Simply put, hedonistic regression is a way to value a commodity by calculating the sum of all its parts (or characteristics).In the case of a property these parts would be:
• Location of the property
• Age
• Type (i.e. Detached / Terraced / Semi / Flat)
• Number of bedrooms
• Number of bathrooms
• Number of reception rooms
• Quality of the kitchen
• Parking facilities
• Outdoor space
• The general condition of the property
That’s not an exhaustive list but I hope you get the idea.Their online property valuation and market data will provide you with:
• An estimation of your home’s current market value.
• An estimation of how much major home improvement projects would increase the value of your property.
• The number of property sale in your postcode area over the last 3 months.
• A list of schools within a 2-mile radius.
• A list of GP’s, dentists and pharmacies within a 2-mile radius.
• Your local crime rate.
As with any AVM, exercise caution (and a large helping of sound personal judgment) when using them because of the possible inaccuracies that they may present you with. One small gripe with this service is that although the online property valuation can be reasonably accurate, on occasion we’ve found the “how much an improvement project can add to the value of your property” information to be (in my opinion) a little unrealistic.
Certainly never rely on them solely for setting your sale price!!
At the end of the day, nothing beats research, research, research ….from your own efforts called due diligence, but to help you, I can point you in the direction of this really useful website which asks people what are their challenges in valuing property and then provides them with practical valuation, information and tips to help property buyers and sellers. Also, for UK Smart Property Buyers, it gives you the essential 5 Keyfacts you should know on Land Registry Prices.
So please check this website out by clicking on the link below:-

http://www.smartpropertybuyers.net/#/house-valuation/4558039778l

Good luck with your due diligence and hope you find the above website helps clarify how to go about getting an accurate valuation on your property…to buy or sell! A good tip is to use the holiday break to do this research as you have time to look at it more thoroughly. I shall try to do the same, and in the meantime, wish you all a very happy Christmas or seasons of the year, and a very happy prosperous new year! All for now…till the new year begins!
Sudeshna

P.S We welcome and will reply to your comments.

Since purchasing, selling or refinancing a UK residential property [and particularly your home] is probably the highest financial investment you could be involved with, it’s good to have crystal clear steps to execute when you want to know the value of that house. When it comes to selling your home there are few more emotive issues than the valuation of your property. Investors in property too have to fully aware of the valuations of the properties they are interested to buy, if they are not to make expensive mistakes with inflated or misleading valuations on property. The current property climate makes the valuation even more important as prices seem to be fluctuating and in some areas of the country, falling. It depends of course upon what you are using the valuation for. Agents will value your property in line with current market trends but their opinion is just that, opinion. It is chartered surveyors that can give a true valuation on property that is accountable, which is usually at a price. This valuation on property is usually required in mortgage deals as banks try to seek a cast iron sum for the lending of funds.

What is clear that in the UK the property market is currently slowing, while this may be untrue in areas such as London and the Southeast; in other parts of the country, prices are definitely falling. It is believed that the property market is in the worst state for a decade and hence a valuation that was legitimate six months ago may not be representative of a valuation in the present situation, subsequently up to date valuations are important. The reasons for the property market slowing are wide and diverse but what has been labelled the global ‘credit crunch’ is a definite factor.

While a valuation may place a figure on a property there is only one factor that determines price; that is what the buyer or investor is willing to pay. Sellers today are currently in a buyer’s market; supply has simply outweighed demand, meaning that the market is currently saturated with property choices. In this climate a valuation that is too high can seriously damage selling potential. It is believed that last year it took twenty percent longer to sell a house than in previous years, showing that the power is currently in the hands of the buyers.

The situation is not all bad for the property market however; seemingly the amount of first time buyer activity is increasing; in the past this has been seen as a precursor to resurgence. Property is once again becoming harder to come by as sellers realise that their valuation may be less than they are willing to accept, also fear and the media coverage of the ‘credit crunch’ have led to a loss of confidence and hence more people unwilling to put their property up for sale. This may be a good thing for the market generally as supply will once again hold sway over demand.

The process of making a valuation can be considered both art and science, making valuation resources extremely useful. For sellers the correct pricing is vital for a successful sale. If a property is undervalued a fast sale maybe assured but the money lost will be a painful infliction. Oppositely if a valuation is too high a property may sit on the market for a considerable amount of time, increasing the chance of sellers becoming frustrated and accepting too low a price to the advantage of a buyer or investor.

Automatic systems for valuation e.g. hometrack, zoopla, Rightmove are becoming increasingly popular for sellers and investors. The benefits of these systems are clear; with a database of thousands of property valuations the comparisons made can be infinitely more useful than those of an estate agent. The systems will give a base figure and then with some detective work it is possible for you to make an accurate estimate. However it is not always a benefit to go automatic, an agent’s unique knowledge of an area can be invaluable. As in most spheres, while technology may be advanced, the human factor should not be discounted.
Clearly the valuation of your property is a vital constituent of the sale; this is especially true in today’s climate. The automated systems present at the moment may not be perfect but do make a brilliant starting point for an assessment. While the human element cannot be forgotten, as this technology becomes more advanced, sellers, and investors will increasingly be making their own estimates. Whether these will be worthwhile and accurate remains to be seen.
It is therefore of immense value to have a system that combines the automated and human elements in one, and I would highly recommend checking out the ‘ Smart Property Buyers’ which provides practical valuation information and tips to help property buyers and sellers to work out that all-important valuation on property.
Please click on the link below to check them out at:-

http://www.smartpropertybuyers.net/#/house-valuation/4558039778l

I hope you have a much clearer picture of why valuation on property is important, but in part 2, we will explore some of the actual details of what goes into an actual valuation and factors that determine it. Check out my next blog to learn more on this!
All for now….
Sudeshna

P.S We welcome and will reply to your comments.