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The House Hop Guide to Selling



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The House Hop House Valuation Guide


There are four simple steps to valuing your house.

But, if you think they are just a job for estate agents, think again:
Which? give the example of a seller who was told by two estate agents that his house was worth less than £250,000. He sold it soon after for £320,000.

That's why it's important not to think of these steps as extra work. They are things every seller should be doing — even if they are using an estate agent — to ensure they get the best price.

Why is valuing your home important?

Consider the results of an under cover investigation published in 2005 by consumer affairs magazine Which?

Reporters found that estate agents' valuations varied wildly and described them as "a lottery". In four out of every ten properties the highest and lowest valuations varied by at least 25%, while in one out of every seven the discrepancy was over 40%.
The thing to remember is this: if you don't know how much something is worth, how can you know whether you're selling it at the right price? If you don't know you could lose thousands without ever realising it — that's why it's so important to do your own valuation.
Here are the four steps to accurately value your house:
i) check "sold" prices in your area
ii) get a price report
iii) check out the competition
iv) compare a range of valuations

i) check "sold" prices in your area
This can be done very quickly and for free online.

Simply go to a site such as nethouseprices.com or houseprices.co.uk and type in your postcode. You will get a list of which properties have recently sold in your neighbourhood and how much they have sold for.

You can then look to see which properties are similar to yours, how much they sold for and when.
The information comes from completed transactions recorded by the Land Registry and so lets you look at actual sale prices rather than asking prices.
Nethouseprices.com is the more useful of the two sites. As well as the sales in your postcode it also gives you the chance to look at sales in neighbouring streets without having to do additional postcode searches.

ii) get a price report
Price reports are available online and take just moments to download.

Free reports are available from housepricereports.com, while for £19.95 you can get a report from hometrack.co.uk. Hometrack is the UK's leading provider of automated valuations and provide automated valuations to 90% of UK mortgage lenders.

Online valuations are also provided for free by Zoopla.co.uk, however, these are not accompanied by a report.

The hometrack report will give you a property valuation for your home as well as information about prices and trends in your area. The houseprice report gives information about prices and trends, but will not give you a property valuation.

We still suggest you use both, however, since while the hometrack report is more comprehensive, the houseprice report contains a useful colour coded map plus plenty of demographic information — and it's free!
using housepricereport
  • type in your postcode or street
  • select a property similar to yours
  • generate the report

The demographic information in the report could be very useful if you're looking to move to a new area and want to find out more about it.

using hometrack
  • click on "Online Property Valuation"
  • fill in your property details
  • generate your report
  • hometrack allows you to view a sample report before you order

iii) check out the competition
Search Nestoria for properties similar to yours to get an idea of how people are valuing them.

Nestoria is a "second generation" property search engine that aims to show all properties listed online in the UK. This makes it unlike the old property search engines, which only list properties if estate agents have paid for them to be shown.
You could stop here, but if you have time we recommend that you arrange to view a few of those properties listed that appear most similar to yours. After all, this is your competition.

This will allow you to make objective comparisons, which will help you decide whether to adjust your asking price.
iv) compare a range of valuations
Most people go to estate agents for a valuation, but remember — this is just an estimate. For an official valuation you will need a qualified surveyor.

estate agents
That's not to say you should never get a valuation from an estate agent. The rule of thumb is to ask for three valuations.

Getting estate agents to value your home also gives you a chance to ask them questions to get a picture of the state of the local market:
  • Find out from them how long it is taking properties like yours to sell, the average number of viewings it takes and what percentage of the asking price is being achieved (note that if you order a hometrack report it will contain this information).
  • Do take everything you hear with a pinch of salt, however (though you can probably give it more credence if the agents all say the same thing).

If the estimates are similar and they correspond to what you have found in your research then all well and good. If not, however, then remember the findings of the Which? investigation (that estate agent valuations are "a lottery") and judge them in the light of your own research.

qualified surveyors
Banks never lend on a property without first getting a valuation report from a qualified surveyor.

Valuation reports are available from RICS (Royal Institute of Chartered Surveyors) qualified surveyors for around £250-300.

Having gone through steps i) to iii) above you should have a pretty good idea of what your house is worth. We recommend, however, that you make the relatively small investment needed for a valuation report because you never know what a trained surveyor may spot that you have missed. This extra knowledge could stop you from underselling your house by thousands.

Your minimum price and your ideal price

Having gone through steps i) to iv) you should know exactly what your house is worth. From this you can decide on the minimum price you're prepared to accept and the ideal price that you're aiming for.

This is very important as it will give you a real advantage when it comes to negotiations - you will have emotional control:
  • You can negotiate calmly, knowing that you’ve done your homework and that you won’t be selling for less than your minimum price.
  • Since buyers don’t expect to pay full price you can set your asking price to give you a cushion that’s a little above your ideal price (see below).
  • This cushion gives you your initial negotiating room, after which you still have a “reserve” — ie, the difference between your ideal price and your minimum price.

Stamp duty

Also, be aware of the impact of stamp duty (SDLT) thresholds. Stamp duty rates are currently as set out in the table below:

Purchase price SDLT rate

Up to £175,000 (until 31 December 2009)* Zero
Over £175,000 to £250,000 1%
Over £250,000 to £500,000 3%
Over £500,000 4%
(HMRC)

Unfortunately, as your property moves into a higher band the buyer will pay the higher rate of tax on the entire price.

It's unlikely, therefore that a buyer will agree to a price that is just above one of the stamp duty thresholds.
If, however, the value of your property falls a little below one of the thresholds you could price it just above. This allows you to bring the price down in order to save the buyer thousands in tax. Everyone is happy!
* Note that the temporary SDLT threshold of £175,000 for residential property transactions does not apply to:
  • the assignment of an existing lease which has less than 21 years to run
  • the grant of a lease for a term of less than 21 years
In these cases the normal thresholds of £125,000 (£150,000 if the property is situated in a disadvantaged area) apply.

Leave room for negotiation

Buyers expect to pay less than the asking price. So, now that you've decided on your ideal price you need to add a little extra to give you room for negotiation.

Properties typically sell for around 95% of the asking price, but this varies according to market conditions. Accordingly, we would suggest you add around 5-10% to your ideal price to get your asking price. Don't be tempted to add too much, however, or you risk missing out on a sale altogether.

Finally ...

... don't underestimate the importance of setting your price below the nearest round number. If you've decided on an asking price of £200,000 then set it at £199,950. This may seem like a transparent ploy, but as human beings we can't help but react to it. Why do you think the supermarkets still do it?