A recent headline in a national newspaper sums up the common mistake many people make when trying to determine the value of their home.
Here’s the headline. Can you spot the problem?
“Cliffside home fails to sell at auction for £250,000 – despite being worth more than FOUR times the price.”
The headline ignores a fundamental property rule: a home is only worth what someone is willing to pay for it. It’s only worth a million pounds if it actually sells for that price.
As it turns out the home in the article is just a few metres from a rather steep and very scary cliff-drop (the result of coastal erosion).
So the £1 million ‘valuation’ is based on what a similarly sized home in the area might sell for – if it didn’t have a serious material defect.
It’s a valuable (admittedly pretty extreme) lesson for anyone looking to list their home.
Many people come to the market with a valuation in mind, based on vibes or neighbourhood gossip.
The owner will often say: “But the house across the road sold for XXX amount, and it’s the same as ours.”
While it’s useful to consider what similar properties in the area sell for, this information should be used as a guide only, because:
Size isn’t everything. The home across the street may have the same footprint but with more modern décor, a better outlook or greater kerb appeal.
Markets change. Right now, we’re in a buyer’s market, meaning property hunters are much more cautious. Prices remain resilient, but it’s a different place to the seller’s market of a few years ago.
Getting an accurate valuation
Speak to three reputable agents and be wary if one agent gives you a valuation that blows the others out of the water.
They’re likely to be telling you what you want to hear to win the instruction. They know you’ll have to drop the price eventually.
There are lots of articles in the press right now about the importance of accurate pricing.
That’s because homes that are overpriced and require a price drop take longer to sell (Rightmove puts the delay at 91 days).
So don’t waste your time with agents who are playing games. Instead, work with an agent who is ambitious but also honest.
Also, think carefully about how you present your home – a clean, clutter-free home is more appealing to buyers.
Sensibly priced, well-presented and professionally marketed homes are definitely selling right now.
But it’s important to be realistic and proactive.
If you’d like a free property valuation and update on the local market, call us today.
