You might be pleasantly surprised by how much your home has increased in value since you bought it, or perhaps you have unrealistic expectations about the sale price you can achieve. Either way, you need an accurate house valuation before you sell your house.
If you’re wondering, “how much is my house worth?”, this guide is for you.
Should I Get My Property Valued?
There are several reasons why someone might need to get their property valued. If you’re planning to sell, buy another property, remortgage, make significant home improvements, transfer ownership, release equity or rent out your home, finding out how much your property is worth should be the first thing on your to-do list.
- Selling. One of the top reasons a property does not sell is that the asking price is too high. A home priced accurately from the first day of being on the market takes less than half the time to sell than one initially priced too high and then reduced. So getting an accurate valuation is key to a quick house sale.
- Buying. If you’re selling one property to buy another, you’ll need to know how much your current home is worth to help you set a realistic budget for your next purchase.
- Remortgaging. When the fixed term ends, the borrower can choose to stay with their current lender or switch to a different provider. A new lender will need an accurate valuation (which they will arrange and carry out) of the property before they are willing to offer a loan.
- Renovating. Before making any major home improvements, it’s a good idea to get your home valued. Once the work is complete, you can have the property valued again to determine your return on investment. An estate agent may be able to give you an idea of how much your planned works will add to the property, if at all. This may affect your decision about whether to undertake the renovations or not.
- Transfer Ownership. If you decide to give your property to someone else, for example, your child, you will need to value the property before ownership is transferred.
- Renting. Getting an accurate valuation will help you to set a fair and competitive rental price for your home. Rents are typically around 6-10% of the property’s market value.
- Equity Release. You can release the capital that is tied up in your home without moving. To determine the amount of equity you have accrued, you will need to get your property valued.
How to Value a House
Most homeowners get their property valued by an estate agent. Inviting at least three agents to conduct a valuation is a good idea as estimates can vary significantly.
During the valuation, the estate agent will need access to your entire property and any outside space. They will probably want to know when you bought the property, how much you paid for it, whether you have made any significant alterations, and any problems, such as an ongoing boundary dispute. They will probably give you a valuation verbally and follow up with a brief report via email. Property valuations are generally free, and there should be no obligation to use that agent to sell your home.
There’s no need to rely solely on estate agents to determine how much your house is worth. Do a little research yourself:
- How much have nearby houses sold for recently?
If one of your neighbours has recently sold a house that is similar to yours, check out how much it went for by searching one of the major online property portals such as Zoopla or Rightmove. Search up to ¼ of a mile from your home and zone in on comparable properties to yours — the same number of bedrooms, similar garden space and condition etc.
- How quickly are properties selling?
Look at how many properties are marked as “sold” and how many have been on the market for some time. This will give you an insight into the current market and the type of properties that are most in-demand in your area. If properties similar to yours have a high asking price and have not sold, this could be a sign that they are overpriced.
- Is it a “hot” or a “cold” property market?
Use the Land Registry’s UK House Price Index to research selling prices in your area and nationally. Halifax publishes house price information which is typically updated more frequently than the Land Registry’s Index. Both of these websites are excellent tools for getting an overview of the market. There’s no point setting a sky-high asking price in a cold market where there are few buyers. Pop your postcode into The Advisory’s “PropCast” to view a heatmap of your locality and find out if you’re living in a property hot spot.
- Does your property have any of the current must-have features?
Buying trends continually evolve. Since the first coronavirus lockdown ended in May 2020, estate agents have reported soaring demand for larger homes with space for a home office and a garden or proximity to a local green space. There has also been a growth in the number of city dwellers seeking country homes. If your home offers buyers any of these, you might find that your property is worth more than you think.
How Accurate Are House Price Calculators?
There are hundreds of online house price calculators, but how accurate are they? They may give a general idea of your home’s market value, but they are unlikely to be accurate. It’s much more sensible to contact a property professional who will find out all the information about your property and research the current market before quoting a figure.
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What Factors Affect a Property Valuation?
Many factors can affect the value of your property. This is why automated calculators are not reliable.
- The location — no two buyers are the same. One may be seeking a city pad, another a rural retreat. Either way, the location of your property has a big impact on how much a buyer will be willing to pay for it. What local amenities are there? Are there good transport links and employment opportunities? Does the local area have good schools and plenty of green spaces? What is immediately surrounding your property — some people will be put off by a lounge view of the local chicken farm!
- Space — demand for spacious properties has risen sharply in the past year. And it’s not just about the number of bedrooms a property has. Is there room for a home office? Is there plenty of storage, for example, built-in wardrobes? What outdoor space is there?
- Condition — a run-down property will be worth less than one in top condition and presented immaculately. First-time buyers are particularly attracted to homes that are ready to move straight into, and they’re generally willing to pay a higher price for this convenience.
- Home improvements and renovations — if you have made significant improvements to your home, this may boost its value. Adding an ensuite bathroom, installing a brand new kitchen or converting a loft are major changes that will probably result in a higher valuation. However, not all home improvements will add value, and any value they do add will vary depending on the location, the current market and who your target buyer is. For example, adding a garden office five years ago may have added little value to a property, but now, a buyer may be willing to pay more for this feature with more people working remotely.
- The housing market — currently, the property market is buoyant. Homeowners are typically selling fast and for a good price. But this won’t always be the case. When properties take months to sell, achieving anywhere near the asking price is a struggle. You may also live in an area where the local market is slow, even if the national market is moving quickly. The current health of the market plays a big part in how much your home is worth.
How to Add Value to a House
You might decide to boost the value of your home before selling. Before undertaking any home improvements, get your property valued and do some research into the potential return on investment of any changes you plan to make. Not all home improvements add value, at least not enough to cover the cost of completing them and turn a profit. If you’re only doing the property up to sell it, there’s no point spending the time and money making changes that won’t add value.
Whether your planned changes will add value to your property will depend on:
- The standard of the work completed
- Buyer demand for such changes
- The current market — is there a ceiling price for properties on your road?
Home decor, layout and use of space are highly personalised choices. What you love, a potential buyer may hate. So think carefully about any improvements you do make. A shiny new kitchen could attract buyers and entice them to make a higher offer, but not if they hate the design. Some changes will almost always add value, for example, creating an additional bedroom. But again, it depends on how this is achieved. If you shrink the existing master bedroom to squeeze in a box room, this could reduce rather than increase the property’s value.
Can I Sell a House in Negative Equity?
If your property is valued at less than the remaining balance on your mortgage, you are in negative equity. For example, if you have £100,000 remaining on your mortgage and the property is valued at £90,000, there is a shortfall of £10,000, and you are in negative equity.
It is possible to sell a house in negative equity, but you will need sufficient funds to cover the difference between the remaining balance and the sale price. The first step is to speak to your mortgage lender. They have the right to stop you from selling your property if you are in negative equity. They may agree to let you pay off enough of the loan to make the balance less than the property’s value.
Alternatively, you could boost the property’s value by improving it or wait for the market to heat up and prices to rise.
What to Do if the Home You’re Buying Is Down Valued
According to research by Bankrate UK, an online mortgage comparison site, 46% of buyers have had the property they wanted to purchase down valued since March.
A down valuation is when your mortgage lender values your property at less than the price you have agreed to pay for it. For example, you have made an offer of £250,000 on the house you want to buy and the seller has accepted this, but your mortgage provider values the property at just £240,000. The property has been down valued by £10,000.
Why does this matter if you’re happy to proceed with the agreed price? Your mortgage lender will not lend you the amount you applied to borrow, so you’ll need to have the cash to make up the shortfall. Furthermore, you will be paying more than a surveyor has decided that the property is worth. If this doesn’t bother you and you have the cash to top up your mortgage, there’s no reason why you can’t go ahead with your purchase despite the down valuation. However, you may choose to negotiate your original offer down before proceeding.
The Current Property Market and Predictions for 2022
House prices hit an all-time high in August this year, with the average sale price reaching £262,956. However, over the final months of the year, the rate of house price rises is set to slow down gradually.
The stamp duty holiday, which drove a huge amount of demand since it was introduced in July 2020, has ended. As has the government’s job retention scheme which has kept people employed and earning furlough pay during the pandemic. Without these supports, it seems likely that the pool of buyers will diminish in 2022. The boom period is over, and the property market should return to its pre-COVID pace. This will mean that properties take longer to sell, and they will sell for less.
The buying trends that have emerged since the end of the first lockdown in May 2020 won’t change anytime soon. A growing number of businesses are adopting a fully remote or hybrid way of working which means that more people will need a workspace at home. People who are spending more time at home will also value gardens and access to nearby green spaces. These preferences will continue to affect the market value of properties — if you are selling a house with all of these “must-have” features, you will probably be able to cherry-pick the best offer. Conversely, if you own a small home without a garden or any of the features that appeal to today’s buyers, the value of your house is unlikely to rise dramatically.