Mastering Property Valuation: How to Accurately Assess Market Value in Estate Agency

Understanding the value of a property is a complex and often subjective endeavour, but it’s a crucial element of the real estate market. Many believe that a property is worth what an estate agent values it at or what a seller hopes to receive. However, the real value of a property is what a buyer is willing to pay for it. This principle is rooted in the basic economic concept of supply and demand.

Imagine you list a property for £250,000. If potential buyers are eager and willing to pay more, the property is evidently worth more in the current market. Conversely, if there’s little interest and it feels like you can't give it away, the price is likely too high. Having been an estate agent for two decades, I can attest that predicting a property’s selling price with absolute certainty is impossible. A property listed for £250,000 could sell for £248,000 or £251,564—there's no way to be sure. The key is to set a price that will generate interest, viewings, and ultimately offers. Without these, selling the property becomes a distant dream.

The reason for this unpredictability is that property value is inherently subjective. One buyer might see a house as a bargain, while another might think it's overpriced. To price a property effectively, you need to gauge the current market sentiment and strike a balance—low enough to attract interest but high enough to satisfy the seller. The market, not the estate agent or the seller, ultimately dictates the price.

Price is the most significant factor in selling a property. You might have the most stunning marketing materials and virtual tours, but if the property is overpriced, it will sit unsold. Conversely, a poorly marketed property priced 20% below market value will attract a flood of interest. Therefore, setting the right price is critical.

When preparing to value a property, various methods can be employed. My personal method is thorough and doesn’t rely heavily on advanced technology, though such tools can certainly make the process easier.

Start by asking the homeowner how long they have lived in their current property. This question isn’t just conversational; it helps you track the property’s historical sale price online, particularly if it was purchased in the last 20 years. Websites like Rightmove offer a ‘Sold house prices’ section where you can find this information. Print this report even if the specific property isn’t listed, as it will show all recent sale prices in the street.

Next, use your Rightmove Plus account to access the ‘Best price guide’. This tool provides extensive data, including withdrawn listings, which can offer insights into the street’s property market over the past 20 years. Print this report as well. These documents will form the basis of your market appraisal.

While historical data provides a foundation, it’s essential to understand the current market. Generate a new report in your ‘Best price guide’, using the property’s postcode and a suitable radius—starting with half a mile. Select the relevant property type, such as a three-bedroom house. Initially, set the date range to the past three months to capture the latest market conditions.

Your goal is to identify two or three properties worth more, a similar number worth less, and several comparable properties priced similarly to the one you are valuing. This comparative approach helps position the property accurately within the current market landscape. If your initial search yields too few results, expand the radius or extend the date range. Conversely, if there are too many results, tighten these parameters. Aim for around twenty to thirty comparables.

Having properties priced both higher and lower than the one you are valuing is crucial. Higher-priced comparables help temper the seller's expectations, illustrating that buyers can get more for their money elsewhere. Lower-priced comparables are less frequently used but can be handy to show the value gap.

Print the detailed reports for the most relevant comparables to discuss during your appraisal. This comprehensive data supports your valuation and fosters a more informed discussion with the homeowner.

Additionally, check your local council’s online planning application portal. This portal is a goldmine of information, showing past and current planning applications related to the property or its vicinity. This can provide context about the property's development history or future potential. Printing relevant plans can impress the homeowner and add depth to your appraisal.

Each estate agent might have their unique method for gathering comparables. The approach I’ve outlined here is one that has consistently worked for me. While technological advancements can streamline this process, it’s beneficial to understand the basics before relying on tech solutions. This ensures you can always deliver accurate valuations, even without advanced tools.

Understanding the value of a property involves balancing historical data, current market trends, and strategic comparisons. By following a structured approach, you can set a competitive price that attracts interest and offers, leading to successful sales. This method not only helps in accurate valuation but also builds trust and credibility with homeowners, paving the way for successful transactions.