Selling? A property has no precise value
As the traditional autumn market is just starting, where despite all the Brexit machinations, many sellers will be getting their properties valued, a good number with the view to putting them on the market.
Let us start with the elephant in the room for most sellers. It is impossible for anyone to tell you precisely what your property is worth, albeit some would have you believe you can.
For example, Chartered Surveyors need to fill in a box on a valuation form for a lender giving a value, but it is not necessarily its actual value. They have a industry recognised methodology, take comparables, use a formula to arrive at their conclusions, but it does not mean its correct, but they must hang their hat somewhere and not take weeks to do it.
So, what do we mean? Well, the value of a property is what someone is prepared to pay for it, and that varies from person to person depending on what is driving them, and that could be a mixture of timing, experience, luck and need. The couple that just lost out on the house next door and want their children to go to the local popular school for example will pay more than the couple with no children who have just started looking and are new to the town. So with this in mind you have to prepare before going on the market. The surveyor is not exposed to such market forces.
Ok, so what do agents do when they come and value the property, they say they are giving us a valuation?
They are giving you their opinion only, the term "valuation" is an industry label for the process, and then there is the politics to win your instructions used by a minority.
Different agents in your town will have different experiences, both personally as a measure of their career, and then the one afforded them by their agency. Personal variations would be how old they are, how long they have been an agent, how long they have worked in the town, how many valuations they have done, how much pressure they are under, and there are others. There are some amazing agents in every town, who really know their onions, know the people, the locality, the history, work hard, know their industry. And then there are some pretty poor ones who have been there 5 minutes and don’t have a clue, and anywhere in between. Same with any industry.
Their company will attract different experiences for them. So some independent boutique independent agencies have an expertise in certain pockets of town, others specialise in a certain property types, others are nationwide agents with big marketing machines designed to attract thousands of buyers and then there is the one man band that has worked in the town for 30 years, knows everyone and doesn't need many buyers because he knows that if your house comes on the market, that Mr & Mrs Stokes from 45 Chelverton Terrace will buy it. Agents and agencies have an enormouse influence over what price your property will sell for, ignore the propaganda that they just stick it on the portals and the rest is written in the stars. That could not be further than the truth.
A combination of these experience drivers will lead agents to having a different confidence about what the property might sell for and could lead to quite different valuations (we will have to keep using this word for the sake of illustration). In extreme cases, on individual properties these variations can be as much as 25%, where agents simply get it wrong, don’t have those experiences to be confident about is potential value, not their fault, they just don't see what you own very often. We had a property valued last year by 4 well known agencies, none were the same, 3 were within 8% of each other, one was 20% lower than the average of the other 3, only 1 was truly confident about what he was saying. Body language alone on these appoitments can also be a really good indicator as to who knows what they are talking about. Now the variation on modern studios in a town centre will be less than a five bed pile in the country, and are easier to get right, but judge these variations in % terms not £s. 1% to a 1 studio seller is the same currency as 1% to the country house owner.
Then there is the politics of over valuing. A minority of agents, even some big brands on your high street, have a good idea what your property may sell for and then deliberately add up to 20% on the basis they convince you it’s too good an opportunity for your to turn down, but turn it down you should. In today’s market you want to get the launch of your property right first time and price reductions create various issues for buyers, but we will save that for another blog.
So, in summary, if you start with the following mindset it will equip you well in your decision which agent to use and what price to go on the market for.
My property has no specific value, I need to better understand what the realistic potential price range is it could sell for, ignoring any attempts to tempt me with eye watering prices. I need to better understand which few agents I can rely on to provide those accurate assessments based on their expertise and experience of the local market and then finally which one agent I believe is best placed to deliver the best price the market at that time has to offer.