Every homeowner wants their property to be valued highly. If you choose the ‘traditional’ route of selling your house via an estate agent on the market, then this will typically involve them visiting your property and carrying out a valuation. The price they decide to list your house for is significant, because it can determine the quantity and quality of offers you receive.
Estate agents are typically very experienced at carrying out property valuations, because they do it on a weekly basis, and this means that they consider a number of different factors (some of which you may not have thought of) when reaching a final figure. So, what exactly are these factors that determine the value of the home? Read our blog below to find out.
How does an estate agent value your home?
Almost every estate agent needs to visit your property in-person before they can reach a definitive valuation. They will arrange a date and time to come along, and during this visit, they will inspect your entire house so they have a clear understanding of what features it does (and doesn’t) have.
To reach a definitive figure, an estate agent will use their knowledge of the current property market; what similar houses in the local area have been selling for; any potential buyers they have ‘on their books’ who are looking for this type of property; and problems which may rear their head further down the line.
Keep in mind that while the four factors listed below will impact your house’s value, the biggest consideration is the size and features of your property. A 4-bedroom detached house will almost always sell for more than a single bedroom flat; and therefore, the condition of your house, the features it possesses and the potential it has for extension(s) can perhaps mean more than anything else.
Knowledge of the current market
A house’s value is significantly impacted by the current market conditions. If the economy is going through a recession, then most people have less cash readily available, and this can negatively impact the amount of money potential buyers are willing to spend on a house. Likewise, if interest rates are hiked up by the Bank of England, then this can reduce the affordability of a mortgage, too. These considerations can decrease the current value of your house.
On the other hand, if the economy is booming, then people have more money to spend, and this may increase your property’s value. If there are lots of people who are looking to move into the local area, then this will increase your valuation too, because people are willing to pay more to move there.
What similar properties in the area have sold for
An estate agent from a local business should have an excellent perspective on how much properties are selling for in the area. Since they are dealing with multiple transactions every week, they can use similar deals in recent months as a reference point for your house.
For example, if you are selling a 3-bedroom detached house – and the estate agent has sold a property of the exact same description, on a nearby road, only a few weeks prior – then they can use their local knowledge and experience to indicate the price that your house might sell for in the current market.
Any potential buyers they have ‘on their books’
Many estate agents have a database of people who are currently looking to purchase a property. This might include individuals who have recently attended a viewing in the local area, or people who are keen to sell their house but have not yet found a new place to move to.
In this instance, the estate agent is able to contact these people and find out if they would be interested in your property. They can also gauge the budget of these people, and how much they would be willing to spend on a property like yours, to inform their valuation.
Problems which may rear their head further down the line
An estate agent’s property expertise can give them a perspective on potential future problems which you (the homeowner) may not know about. For example, if there is due to be new developments on your street in the forthcoming months which could increase light or noise pollution, then this would probably decrease the value of your home.
As another example, if your property is located right next to a school – and this school has not performed well in a recent Ofsted inspection, which is due to be released in the next few weeks – then this might reduce its value, too. Factors like these are taken into consideration by estate agents.
Can I get a valuation completed online?
While most high-street estate agents prefer to visit your house in-person to complete a valuation, it is possible to get your property valued online.
Online valuations use much of the same information that is listed in the section above. The price of similar houses nearby, the market conditions, and the size of your property can all be determined through online data.
You should remember that each online valuation tool can give you a different figure, just like separate estate agents can visit your house and reach a different conclusion on its value. These days, online valuations are reliable – but like with all valuations (in-person or not) you should take each one with a pinch of salt and ask multiple sources for a figure to get a clear sense of the average.
Will an estate agent exaggerate a property’s value?
Some people hold the opinion that estate agents can occasionally inflate a property’s value, so the homeowner looks more favourably upon them compared to other agencies, and therefore chooses them to sell the house. Inevitably, this value will have to come down once offers do not come in at this increased price.
The regularity of this taking place varies for each town, company and individual estate agent. Many are hugely reliable and will not exaggerate your property’s value at all, while others (like in any industry) may be slightly more lenient. This makes it increasingly important that you get multiple different valuations, rather than relying on just one, as this will reassure you that the figure you’ve been quoted is accurate.