It is said there are only two kinds of property-value statistic – the kind you look up and the kind you make up! To devise a realistic selling price for your home you will need to examine the former and guard against the latter.

USING COMPARABLES

The ‘right’ selling price is of course the one that buyers are prepared to pay and your task is to calculate a figure that will attract the most viewings, but not one that will lead to you underselling your investment.

Relevant local values

The market cost of property similar in size and age to your own, in the same road or closeby, will have a major influence on the value of your home. These are the ‘comparables’ used by estate agents to quantify property prices. To accurately assess local trends you should:

• Invite at least three local estate agents to inspect your property and obtain from them a value opinion (ensure that the agents concerned advertise this service free and without obligation).
• Visit local agents (or get a friend to do it for you if you have recently done the above) and gather together as many detail-sheets as possible of comparable property in the vicinity. Keep all the brochures you obtain as you will need them again later (see Chapter 6).
• Examine local newspapers over a period of at least a month for the advertised sale details of property similar to your own in the neighbourhood. You could also examine past copies, which are usually available at a local library.
• Walk around the area and identify any properties comparable to your own that have for sale boards erected and obtain details from the agent advertised.
• If you have Internet access visit the Nationwide national house price calculator at www.nationwide.co.uk/hpi/calculator.asp – which will assess the approximate current value of your home by adding the average regional increase year on year from the date of purchase. This has been tested by the author using several properties as examples and has been found to be extraordinarily accurate.

Upon completing this research you will have a number of property values from which you should choose six that closely match your own in terms of size, location, the number of bedrooms, age and condition. From these you can now record three figures:

• 1.the uppermost value
• 2.the lowest value
• 3.the mean average.

Contrast these with the figures supplied by agents providing you with valuations. How do they compare? The agent’s figures may be more reflective of the current market situation, particularly if it is a buoyant up-and-coming region of town where prices are rising rapidly. On the other hand estate agents always over-value in the hope of attracting new clients and also to encourage growth in local house prices, as a result of which their percentage-based fee will also gradually rise. But remember that it may be unusual to achieve the actual asking price at the point of sale.

If the margin between the highest and lowest figures above is only slight then you can safely aim just above the mean average as a competitive target value for your home. However, if the disparity is significant then a closer examination of other influencing factors is warranted.

ADDING TO THE VALUE

There may be elements amongst the higher-priced group that are influencing the price. Examine the details to assess whether they:

• are positioned amongst other well-maintained and attractive homes
• are in an area which is locally known to be in high demand
• have a garage
• have a larger or landscaped garden area
• have a master bedroom with en-suite bathroom or shower
• have a conservatory that blends rather than contrasts with the architectural style of the building
• are south-facing or are an end-terrace or enjoy improved views due to the location on the road
• have full upvc double-glazed windows designed to be in keeping with the style and age of the property
• have a newly fitted, modern kitchen with quality fittings and appliances, or a fully-tiled bathroom with up-to-date suite and separate shower cubicle
• have an alarm system and exterior security lighting
• are well maintained and have been newly decorated throughout.

Compare your home with the above list. The greater the number that apply then the higher up your property should be placed in the valuation margin. Consider too that some elements can detract from the value. These are likely to include:

• a property in a poor state of maintenance and repair
• a badly designed extension that causes the property to appear incongruous with others in the neighbourhood
• a conservatory or extension that has taken up most of the available garden space
• a property with one or more rooms that are internal, ie with no exterior wall or window for natural light – many recently built city apartments suffer from this and it is worthwhile exploring how practical it would be to remedy the situation
• an old fashioned and outdated kitchen or bathroom
• the lack of a secure garage or the space to build one
• a property close to a railway, a motorway or busy road, fast-food outlet, factory, school playground, or similarly detrimental location.

Taking all of these into consideration you should now be able to finalise a realistic and exact valuation. Write this down together with notes to remind you how you arrived at the decision. Bear in mind that the results of this exercise may only be relevant for a short period of time, particularly in a buoyant property market. You should reappraise local prices at least once every three months to test the validity of your determination.

OTHER INFLUENCE

The national economy

When interest rates are low and the national economy forecast is bright and confident, property prices generally rise faster than the rate of inflation. If, however, the country is facing a period of economic uncertainty or a widening recession or it is anticipating a gloomy Budget from the Chancellor, property prices generally become stagnant or, even worse, they devalue. Keep up to date with the national news to assess how the country’s economy is performing and take heed of what respected professionals in the field predict.

A unique or unusual property

If your home is a listed building or one of historic interest, or if it has been individually designed or is otherwise unusual, it may be very difficult to find comparable properties in the area against which a valuation can be gauged.

To obtain estimates of value you may have to widen your search to other towns or even to other counties and, if all else fails, you should rely more on the free advice given by national high street estate agents who may have experience or knowledge of similar properties they have sold elsewhere in the country.

An old property in disrepair

Depending on the extent of the disrepair it may be worth having a survey undertaken to assess what work will be needed to make it acceptable to would-be buyers. This will help in two ways:

• 1.It will confirm the current condition of the property and you can use the survey report to obtain estimates for any remedial work required. Once you know the costs involved you can either undertake the work yourself, which will bring the valuation back up to the local comparable level, or you can deduct the cost of the work from the identified local level for the purpose of assessing a more realistic sale price.
• 2.You can show the survey report to potential buyers to prove the limit of the disrepair. They will then be more confident about making an offer, being aware of the repairs and funds needed.

There is a major drawback to obtaining a survey report in advance. If it uncovers severe damage or recommends urgent repairs, you will be legally bound to disclose these facts to the potential buyer before a sale is completed. Consequently, armed with this knowledge, the buyer is likely to offer a reduced price to compensate him for the added cost of repairs or, even worse, he may withdraw from proceeding with the purchase.

FINALISING THE SALE PRICE

Whatever valuation figure you have arrived at can be considered the saleprice . .. but this is unlikely to be the selling price. Bear in mind that it is common practice for offers to be made at less than the advertised price and negotiations will likely result in a selling price of about 5% below. Use this calculation when considering the finances required to fund any new purchase you may be making and, only if absolutely necessary, hike your valuation up slightly to compensate.

Always remember that raising your valuation artificially can result in a poor volume of viewings and a sluggish sale. You may have to wait for the right buyer to present themselves and then be prepared to negotiate aggressively.

TO SUMMARISE

• Obtain free valuations from local estate agents but bear in mind that these figures may be inflated above the acceptable local level.
• Find out what comparable property is selling at in your area and seek to value yours so that it is competitive within the margins.
• Fine-tune your assessment according to the condition and amenities on offer.