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The Property Valuation Process And You

Aug 1, 2008
When you ask estate agents what the hardest part of their jobs is the most common answer is making a valuation. This is because there is a great deal of work to valuing a property requiring detailed knowledge of local property prices and market conditions. In addition, this is a difficult process because homeowners often have their own idea of the value of their property and when a figure is produced that does not match these expectations, an emotive situation can often follow.

Many homeowners find that an accurate valuation is somewhat of an eye-opener to the true value of their home. Ultimately uneducated guesses are just that, uneducated. To achieve a realistic figure for a property valuation the process must include a large cross reference of similar properties in the local area; even then however it is rarely one hundred percent accurate. As the property market sees prices changing on a monthly basis, the process of arriving at an accurate figure is made even more difficult.

At the moment in the UK property market the emphasis is shifting from the seller to the buyer. This is down to the fact that the properties up for sale have outstripped the demand for these properties. This does not however mean that there are less buyers out there, as the credit crisis hits mortgage lenders plenty of people who are willing to buy have now found themselves unable to get a large enough mortgage to do so. If the credit situation does revive however, an increase in first time buyers may well settle the market to a more stable state.

While many people may not be selling any more, the numbers of those building extensions is increasing. The reason to expand is usually to gain more space although those wishing to add value to their home are also undertaking the work. If you decide to do this and must re-mortgage a valuation will have to be undertaken by a qualified surveyor. Valuations from surveyors are the only type accepted by mortgage brokers, this is because an estate agent's valuation is based on what the property could achieve on the open market while a surveyor's gives an idea of the true worth.

When either an agent or surveyor is making a valuation there are a number of factors that are taken into account when estimating a figure. The first consideration is the current market conditions and how well property is selling in general around the country. If property sales are slow it is likely that prices will have to drop to achieve a sale.

Secondly a valuation will include looking at the property's condition overall, while taking into account specific maintenance issues. Understandably if your property needs considerable building work, the valuation will be smaller. Finally the process involves looking at similar properties in the area and determining from them what kind of price is acceptable for the property in question.

When all of these factors have been considered the eventual price can be arrived at. Naturally homeowners often overestimate the value of their home; this is understandable although it is always important to be realistic. Hopefully this explanation of the valuation process will give homeowners a better understanding of how property prices are calculated.
About the Author
Real estate expert Thomas Pretty looks into the property valuation process and why it is important to understand this as a homeowner.
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