New Millennium = New Data Valuation Tools
How much is the house or flat you are thinking of buying really worth?
How much is the house or flat you are thinking of selling really worth?
Unfortunately, the only sure way to find out how much any property is worth is to find out the maximum each potential buyer would actually pay. As legendary Hollywood producer Samuel Goldwyn is reported to have said, "In two words, im possible."
But these days, it is easier than ever before to get a pretty good idea of the value of many properties. We can find out how much 9 Elm Avenue or Flat 6, PurposeBuilt Villas actually sold for - assuming it changed hands since 2000.
If a property was sold after 1 April 2000, the actual sale price is publicly available.
In addition, powerful computer programs have been developed over the last decade and constantly refined. These programs use actual sale prices and other variables to crank out valuations that are more accurate than anything previously available. Automated Valuation Systems (AVS) have transformed the world of property valuation.
Valuations are free on some sites (such as propertypriceadvice.co.uk) and not free on others (such as Hometrack, which uses its own sophisticated programs). Many sites also provide additional market information - reports on local schools, crime rates and the like.
In the Conveyancing Jungle
Electronic valuation programs tend to provide prices within a price range - it is worth £XXX,000, give or take 10 per cent. TEN PER CENT!
Ten per cent is not peanuts.
If you are six feet tall give or take ten per cent, your height is somewhere between 5’5” and 6’7” (ten per cent of 72 inches is 7.2 inches.) If you are within that range, you might be average. Then again, you might be extremely short to unusually tall.
A property valued at £500,000 plus or minus ten per cent ranges between £450,000 and £550,000. Closer to the national average for England and Wales, if a property is valued at £150,000 plus or minus ten per cent, the low end is £135,000, and the high end is £165,000.Buyers who pay too much, or sellers who sell for too little, can be worse off by £15,000.
Average prices in Greater London are at least £100,000 higher than the national average. Sloppy pricing in that region is even costlier.
Valuation - Science or Science Fiction?
In the good old days – up to about 1999 – properties were valued primarily by chartered surveyors and estate agents who primarily relied on “comparables.” They would find similar properties in that area and note their asking prices. In rare instances, actual sale prices would have been available.
The closer the match with one or more comparable properties, the greater the confidence in the estimate. But properties are almost never exactly comparable, and valuations were (and still are) approximations.
Not exactly comparable, not entirely confident
No matter how similar in appearance, properties are rarely identical.
For example, a builder may construct two houses that are exactly identical in every detail as physical houses - as bricks and mortar - but if they are on opposite sides of a road, they will not be identical as properties. If these two houses are on a road running east to west, one will have a south-facing garden and the other north-facing. That single difference alone can affect the value of each property.
End terraces, mid-terraces, semis and detached houses significantly differ from one another.
Furthermore, within each category, seemingly similar properties can vary in small but significant details. For example, two adjoining mid-terraces may be exactly alike except that one has a tree and the other does not. So one property may get more light, or run more risk of subsidence, than the other.
The condition of each will also be a factor. Properties with older boilers or newer wiring will not be precisely comparable to otherwise identical homes with newer boilers or older wiring.
Sellers take note…
Three estate agents value your property: Mr. Low values it at £175,000, Mr Medium says £200,000, and Mr High says £225,000.
Don’t assume that the one in the middle, the apparent compromise figure, is the accurate one.
Each agent may be giving you his honest judgement, including Mr High; on the other hand, Mr High may have inflated his real estimate to get your business.
Actual House Prices...
For all intents and purposes, the Land Registry records the actual sale price of all residential conveyances and has records of sale prices dating back to 1 April 2000.
If, for example, you are interesting in buying a property but don't know if its last sale price is listed by the Land Registry. But you can easily find out. Go to the Land Registry website, key in the full post code, and find the specific property in the list that is provided. The entry will indicate if the register contains actual price data. If it was last sold before 1 April 2000, the entry will indicate that it does not contain that information.
If if does contain price data, you can purchase the information for £3 or obtain it for free from a number of other sites, such as upmystreet and nethouseprices.com.
Actual House Prices...Sort of
If 50 Elm Avenue, Sample, Sampleshire, SA1 4SA was sold for £249,999 on 1 June 2005, the Land Registry entry will most likely provide £249,999 as the sale price. In a few instances, however, the price listed with the Land Registry may not be entirely accurate. The Land Registry itself provides this qualification: "The price paid/value stated information has been entered in the register since 1 April 2000. It is based on information contained in the transfer or application form lodged with us. It has not been verified by us and may not represent the full market value of the property."
Search: Zero In on Your Target
Property-price websites will ask you to key in a full or partial post code, road name, or area. Our example is 50 Elm Avenue, Sampleville, Sampleshire, SA1 4SA.
If you provide the first part of a post code—SA1 in our example—you will get an area too broad to be helpful with a specific property. 50 Elm Avenue may be an ex-council flat in an area with pricey detached houses, or vice versa. The average price in SA1 will probably be well off the mark for most properties within SA1.
On the other hand, the full six-digit post code - SA1 4SA - may be too narrow. If 50 Elm Avenue in Sampleville is anything like my road, the full post code might cover only one side of a long road with many houses. And my side of the road has had far fewer sales than the other side since 2000.
Price valuation sites enable you to obtain prices within a geographic range that you specify. You can get prices for properties only on a specific road, or you can widen it to, say, all properties within a quarter of a mile or more.
The wider the area you choose, the greater the likelihood that you are including properties not comparable to the one you are interested in. If you ask for properties within a quarter of a mile of your target property, the site will include properties in all four directions. It will cover an area with a diameter of a half mile. Property types and prices on one end of that circle are likely to differ considerably from other neighbourhoods within that same circle.
You can narrow it down by limiting the search to the road you are interested in plus one or two adjacent roads.
Links: Actual Prices
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Links: House Price Valuations
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