An area where we often come across this is when individuals try to value their property themselves by using online resources. There are many websites which list historic sale prices of properties, and it is often assumed that these are an accurate reflection of what a neighbouring property might sell for. Unfortunately, it's not quite as easy as that and some more in-depth analysis is required.
First and foremost, it's all about Location, Location, Location. National builders build specific house types across the UK and, depending on the location, the price of these (essentially identical) houses, can vary by hundreds of thousands of pounds.
While it might seem fairly obvious that a house in Edinburgh's city centre will be more expensive than a comparably sized rural property, there are many other, far more subtle variables which are easy to overlook and which, when taken together, can have a significant impact on the value of a property.
Some of the factors which should be considered when considering how one house compares to a similar one sold in the area, are listed below. Clearly however, each property is unique and there is no 'one size fits all' approach to property valuations:
- Is the property located on the north or south side of the street and which way does the garden face?
- Is it closer or further away from the main road than the other property?
- Consider the property's position on the street, many streets have a "good end" and a "bad end."
- What is the street number i.e. lucky number 7 or unlucky 13?
- If the property is in an estate, is it positioned at the busy main entrance to the estate or at the end of a quiet cul-de-sac?
- Is there potential for the property to be affected by flooding, and if so, to what extent?
- If the property is a flat, how high is the block and what floor is your flat on?; are there any commercial premises in the block?; is the block factored?; is there a lift?; and is there a garden?
- Always bear in mind that school catchment areas are hugely important to many buyers and are usually allocated by post code so properties on the same street may fall into different catchment areas.
- Views are also important but it's important to consider whether there is potential in the future for someone to build or extend their property and obscure your view.
- Consider the surrounding area. Are the buildings all traditional historic housing, new developments, derelict residential houses, commercial properties or green field?
- Consider the condition of the property in relation to others that have sold in the area and try to be objective. Remember that décor is subjective and what appeals to one person may not appeal to another.
- The floor area is important as well as the number of rooms. The floor area of two, 4 bed detached houses may vary hugely.
- Are the gardens similar? For example is one much smaller, is it a different shape, is it landscaped and/or is it secluded?
- Is there on and/or off street parking and is there a garage?
- Consider the material used to build the house. The fact that properties look similar in itself does not tell you that they were built using the same materials. Some constructions will not be accepted by mainstream lenders and a buyer may therefore be unable to secure a mortgage over them.
- Has either property be altered or extended or does it have the potential to be? If so what is the market value of the potential to alter or extend? Might there be development potential in the grounds of one of the properties?
- When did the property sell and has the market changed since then?
- Do not assume that the sale price alone indicates the strength of the market as there may well have been a special reason for someone wanting to buy that specific property. A Chartered Surveyor needs at least 3 comparable sales when providing a valuation to a lender. The expression "one swallow doesn't make a summer " springs to mind.
- Consider the history of the property, good or bad. Has there been a crime committed in the property or has a famous person ever lived there?
This is just a snapshot of the different factors that need to be considered when valuing a property. Sale prices of similar properties alone will not provide an accurate valuation for a property.
It's therefore important to speak to the professionals at an early stage to receive an objective and considered valuation of your property. Trying to use the internet to value your property is likely only to build up unrealistic expectations that will inevitably only lead to disappointment.