Valuing your property is the single most important responsibility your agent has. The price on your property controls who looks at it, who decides to put in an offer, how smoothly the process goes, and how long you sit on the market for. Nothing is more vital.
But like any craft worth learning, valuation is more of an art than a science. And that means you’ve got three categories of people out there: those who are truly good at it, those who are only good at looking like they’re good at it, and those who are downright abysmal and can’t hide it.
The middle one is the most dangerous, by far.
There’s so much more to valuing a property than picking a number out of the sky – but you wouldn’t know it based on some of the things I’ve seen.
So, here’s how it works, how it shouldn’t, and what happens when you’re in the wrong hands…
Valuation: no “magic formula”
As fantastic as it would be, a magic “formula” or “cheat sheet” for valuing properties does not exist.
There is no mystical calculator where you can plug in the barcode for a four-bed Georgian townhouse in so-and-so a postcode and it prints off a neat little price sticker. The person who invents it will never live to see a house they wouldn’t be able to buy cash in hand.
It’s a complex balancing of inscrutable factors, which can only be accurately interpreted by an agent who’s well versed in the local culture, economic factors, property market (past and present), as well as human psychology.
Your agent should already be familiar enough with your type of property and its neighbourhood to be able to put its unique selling points in context. First, he’ll check out the latest sold prices of properties similar to yours in your area to get a base number.
Next comes the fancy math. How close are you to good schools, bus stops, train stations, commute to work, shops and amenities? Are the things to do around your area suitable for younger families (parks, soft play places) or older couples (dinners and theatre), and does your property suit this kind of customer? This is vital to working out because what might look like your home’s advantages to you (quiet, out of the way) might turn out to be buyer poison (they want exciting nightlife).
Other factors at play include renovation and maintenance required. Presentation, clean & tidy and if a room needs repainting, you’re better off giving it a lick of a neutral colour to spruce it up before a potential buyer weighs up the pros and cons against their already stuffed to do list.
If you’re weighing up the pros and cons of installing a new kitchen or bathroom, consider that you may not earn back the cost of your investment – but you may be paying for a quicker sale. Remember never assume, every buyer is different, but, if possible, it’s a good idea to take care of all major and minor structural work. Leaky windows, squeaky stairs and loose knobs are all Sunday jobs that fall by the wayside: if you do these before you start marketing, it may just be one less issue pre-offer!
Valuing a property is a holistic process, and only when all these other factors have been thoroughly mulled over, we will then start discussing sq footage. Remember: areas and measurements help to understand area pricing but shouldn’t be the overriding and deciding factor.
The ugly side
Unfortunately, there may come a time when you encounter overvaluing, which is when an unscrupulous agent inflates the value of a property to put a smile on your face. It never ends well.
They do it because they want to win you over. Plain and simple, they are lying. If you go elsewhere and receive a valuation from another agent, they look like the bad guys. And even if you can sense something is wrong, there’s always a little voice tugging at your sleeve and whispering, “Maybe, just maybe… I can get that much for it!”
You won’t. Ever. And once you’re tied in, that’s it. Your house is doomed to languish on the heap, getting no viewings because buyers wince at the price, and every week that passes makes it look more like something’s wrong with it. Finally, after a few calls, your agent convinces you to agree to lower the price. You’re miserable at this point, so you tell him to hard sell to anyone who takes a passing fancy. Eventually a buyer comes on the scene, and tells you they’ll put in an offer, with a big old “if”.
Suddenly, you’re running around making extra repairs and renovations, fixing things and negotiating contracts to the nth degree to secure this last chance at a desperate sale to the wrong person – all because your agent overvalued.
How it should work – and does at Space Station
A better scenario? Your agent is upfront with you, tells you their valuation and discusses how they arrived at the figure. An enthusiastic, motivated buyer is found, we negotiate mutually agreeable terms, the buyer puts in an offer, it’s a yes, shake hands and sign on the dotted line.
That’s how it works at Space Station.
We will always tell you straight what your home is worth, but more importantly we get to understand your key objectives and with you devise a marketing strategy. We won’t pull the wool over your eyes when it comes to valuations, because that’s the best way. No one wins when a property is overvalued.
In fact, an article in the Times earlier this year accused many well-known high street estate agents of chronic overvaluing, based on an analysis of Zoopla listings showing how many properties had their asking price cut before selling.
They claimed overvaluing took place in order to “mislead” and “dupe” sellers into paying high commission. Of course, you and I know that commission is usually only paid on sale price rather than asking price. In my professional opinion, we all know what’s happening. Agents are overvaluing because it seduces sellers and is a poor way of winning business.
So, if you consult other agencies as well as us, you can bet the quotes will be pretty close to each other. But if you find one that seems a bit ridiculous in comparison, once you’re over the initial giddy thrill and you realise all those zeroes are far from guaranteed, their flimsy offers start to look like what they are: bare-faced lies.
“Business at any cost” usually means at the seller’s cost. In our opinion, over valuation is the very worst misrepresentation. At Space Station, honesty is our only policy – especially when it comes to valuations.