Explaining property valuations so that you can sell your home for more
If you're considering selling your home, you will undoubtedly have wondered what it could be worth. How much is your current home going to sell for?
If you're considering selling your home, you will undoubtedly have wondered what it could be worth. How much is your current home going to sell for?
You need to know this because the equity you hold in your current property will mainly dictate the budget you have to buy a new property. Simply by transferring the equity from your existing home to a new home and increasing the mortgage slightly, you could buy a higher-value property. Or you may have savings to add to the purchase price to keep your mortgage amount the same.
Either way, there are many ways to calculate your moving budget. Still, it will almost always rely on the value of the property that you are selling.
During steady housing markets, it can be reasonably easy to guestimate the value of your home. You may have remortgaged, or perhaps your neighbour sold a few years ago, so you have a general idea of the ballpark value.
But, when the market is rising at a fast rate, as we have seen in the last couple of years, how on earth are you expected to know?
Often people will grossly underestimate the value of their property, assuming that it is only marginally higher than it was when they bought it. Or, after watching endless news reports extolling the increase in property prices, they may vastly overestimate. Assuming that they're suddenly multi-millionaires even though they haven't lifted so much as a paintbrush in the property since moving in.
So, if it's so easy to miscalculate the value of a property you own and live in, how does an estate agent do it? And how can you, after learning what they do to value a property, use that knowledge to your advantage and ensure that you maximise the value of your home?
The first place to look is recent sales of similar properties. This could be similar locations, postcodes, or equivalent in style and size. Initially, the agent will consider your property; let's say it is a 3-bed semi with a garage. Then, they'll look at all recent sales of 3-bed semis with a garage in that location. Once they have this list of comparables, they look in a little more detail, comparing the pros and cons of each property. They will consider how this affects the price achieved and estimate what could be reached for your home.
For example, perhaps your 3-bed semi has a better view or is newly decorated. Or maybe the comparable property has a brand-new state-of-the-art kitchen. How would these factors affect the price a buyer would be willing to pay for a property?
The agent would also consider the time the comparable property took to sell. Perhaps there was an almost identical property, but it took months to sell. Here, the agent would likely recommend a slightly lower marketing figure so that you don't take months to sell.
With this list of comparable properties, the agent will consider the prices achieved, the timescale they took to sell, and the market interest levels now compared to when those other properties were sold.
A value will become apparent with a bit of tweaking here and there.
Say your neighbour sold a few weeks ago, very quickly, for 500k. But your property is 'better' than theirs because you have a nicer garden or a new bathroom. You could likely market your property for more than 500k, particularly in strong market conditions.
And it is this massaging, testing, tweaking and adjusting of potential values that pushes the property market up. If every seller thinks they could try at just a little more than their neighbour did, the overall value of the properties in the area will increase. And so, perhaps other neighbours in the street will also try to sell, but they attempt a few thousand more than you did.
But, the key point is not the techniques used to establish a property value. Really the strategy to market a property is what will maximise the value.
If the marketing is terrible, no one will know that your property is for sale, and therefore sadly, no one will view it.
If no one views, then you won't receive any offers. The only option will be to reduce the price in the hope that someone sees it as a good deal and then comes to view it.
This method is reactive and unplanned and could cost you thousands of pounds in lost potential.
With a structured marketing plan in place, your agent can ensure that as many people are aware of your property, bringing in as many viewers as possible. You will receive good offers quickly and not resort to a price reduction.
Be sensible, and don't over-egg it with your pricing. But there is no point in having a perfectly calculated marketing price if no one sees it.
Get a strategy in place and execute the plan to the letter. If the price is right, the viewings will come rolling in. If it's too high, the viewing figures will be lower, and you know it has been a little bit too keen.
There's no problem with pivoting and reducing the price if the property is simply not getting interest. The problem is if the property is not marketed fully before lowering the price. You haven't given it a proper go, and you could be leaving money on the table.
So, in conclusion, your agent will assess the market and your property and estimate a value based on where it sits with the comparable properties in the area. But if there is no marketing strategy, it doesn't matter how accurate their valuation is. The key is to choose the agent with a plan that can demonstrate how they execute that plan and how it translates into a sale for you.
Get in touch today to find out more about how we sell homes for the highest possible price in the shortest amount of time!