Scheduling a property valuation is the only way to learn exactly how much your home is worth – an essential piece of information whether you’re buying, selling, or taking out a mortgage. A precise appraisal can tell you whether you’re getting your money’s worth or not and allow you to prepare a thorough financial plan for the future.
However, regardless of how obviously essential it is, many homeowners tend to delay the process or go around it if they can for fear of getting an unfair valuation. Though that’s a risk at times, all you need is an experienced real estate agent to tell you precisely and realistically how much your house is worth.
Estate agent valuations are unbiased, accurate appraisals that can help you fetch the most suitable price for your property. Find out what they are and what you can expect from them.
What is an estate agent valuation?
Let’s start with the basics – what is an estate agent valuation exactly?
Put plainly – it’s the process of a professional real estate agent examining your property and providing you with a realistic estimation of its worth.
The agent will usually approach the examination from the point of view of a buyer, looking into every aspect of the property that could add or remove value.
Most commonly, house prices in the UK are dependent on the square footage of the property. However, your real estate agent will take into account a multitude of other factors. They’ll look into the property size, age, location, number of rooms and room layout, the existence of additional amenities, and more. They’ll inspect both the interior and exterior, assess the overall condition of the property, and then offer an estimation that’s in line with the current market conditions.
Who can do a property valuation?
When valuing a property, you can choose to do so in one of several different ways:
- Online valuation tool – online valuation tools like the one on Property Price Advice use neighbourhood and market data to offer a value estimation based on recently sold house prices in your area;
- Real estate agent – an agent can perform an online or an in-person valuation and even offer advice on what you can do to make your home more appealing and increase its worth;
- Chartered surveyors – chartered surveyors thoroughly inspect your property, assessing its condition and potential faults that could cause future problems.
Though only chartered surveyors can present a detailed valuation report, it’s not always necessary to have your appraisal done by them. It all depends on why you need the valuation in the first place.
Is an estate agent valuation the same as a surveyor valuation?
While they perform similar tasks, ultimately providing you with an accurate, current value of your home, surveyor and estate agent valuations have their differences.
As briefly mentioned, chartered surveyors will perform thorough property inspections. They assess every nook and cranny of your home, looking into any potential structural issues, faults that could lead to significant damage in the future, and your home’s energy efficiency ratings, to list but a few of the key elements. Additionally, they perform thorough research on the local area, examining the surrounding properties, transportation links, future development plans, and more.
Real estate agents don’t usually go into so much detail. While they look into many of the same factors as chartered surveyors, their appraisals largely depend on the overall condition of the property and the current market. Moreover, they use local market knowledge to give you a realistic estimation and help you fetch the best price for your property in your area.
Still, you can expect to receive largely similar appraisals whether you book a chartered surveyor or an estate agent.
What is the purpose of an estate agent valuation?
The purpose of an estate agent valuation is to inform you about the realistic value of your property based on the current market trends.
With an estate agent valuation, you’ll gain insights into the home’s best features, potential problem areas, and improvement options.
However, more importantly, you’ll protect yourself from scams and frauds – whether you’re buying or selling.
An estate agent offers an unbiased valuation that simultaneously helps the homeowner receive the best price for their property and it helps the home buyer find the best property for their budget. Homeowners won’t risk losing money on their houses, while home buyers won’t risk investing in property that objectively isn’t worth it.
What is the difference between a mortgage valuation and an estate agent valuation?
As previously discussed, estate agent valuations are comprehensive assessments of your property’s worth based on its condition, size, age, room layout, and more. Mortgage lender valuations aren’t so in-depth.
In essence, a mortgage valuation is more focused on confirming whether a piece of property is as valuable as you claim it to be and whether it’s worth it for the lender to provide you with a mortgage.
Suppose you’re interested in a piece of property that has significant structural issues or is located in an undesirable location. In that case, you might not receive a mortgage because a lender deems it risky, for instance.
Alternatively, if you’re looking to buy a piece of property priced at £200,000 and the mortgage valuator deems its value at £160,000, you might only be able to lend £160,000.
Most commonly, mortgage valuations are done by individuals who work for the mortgage providers, so their valuations could be slightly biased in their favour.
What else can an estate agent valuation be used for?
Most commonly, estate agent valuations are used when you want to buy or list your property for sale or, alternatively, when you want to take out a mortgage. However, they have many other uses as well:
- Probate valuations – after the original homeowner has deceased, a probate valuation may be needed for calculating the inheritance tax;
- Matrimonial valuations – matrimonial valuations might be needed during divorce or separation proceedings to determine the separation of assets;
- Insurance valuations – an insurance valuation is needed to determine the insurance value of your property if it is damaged beyond repair;
- Tax valuations – in case you are subject to the capital gains tax, you’ll need a tax valuation to determine how much you owe in taxes;
- Retrospective valuations – you might need to undergo a retrospective valuation for tax purposes to determine how much your property was worth at a specific date in the past;
- Expert witness valuations – when involved in a property dispute or litigation, an expert witness valuation might be needed for court proceedings.
These are just some of the instances where a property valuation is necessary. Regardless of your needs, it’s in your best interest not to delay the process and schedule the valuation as soon as possible.
How does an estate agent value a property?
An estate agent could take many different approaches to value a property. Most commonly, they’ll use one or a combination of the following methods:
- Sales comparison – delivering a value estimation based on the prices of recently sold properties in your area with similar characteristics;
- The cost approach – delivering a value estimation for properties that have been improved. It’s based on the expectation that a reasonable buyer wouldn’t pay more for the property than they would for developing a comparable building;
- Income capitalisation – delivering a value estimation for income-generating properties based on the difference between the property’s net income and the investor’s rate of return;
- Gross rent multiplier – delivering a value estimation for income-generating properties based on the amount of rent-generated income it could realistically produce;
- Cash-on-cash return – delivering a value estimation for income-generating properties based on the difference between the property’s net operating income and the required cash investment.
Though your real estate agent could follow any one (or a combination of multiple) of these approaches, the end results should be largely similar. You should receive a realistic valuation that’s in line with the current real estate market trends.
What happens at an estate agent valuation?
An estate agent valuation is a simple procedure that’s not much different from a regular showing. The estate agent would examine the property from the point of view of a reasonable buyer, examining the rooms and spaces and looking into any details that could increase or decrease the value of the home, such as cracks in the ceilings, outdated HVAC systems, recently-rennovated bathrooms, and more.
While it’s not usually necessary for the property owners to be present during a regular showing, it’s critical that you are there when the estate agent conducts a valuation. They might have questions about the property that cannot be answered without the owner present.
Moreover, the valuation is an excellent opportunity for the owners to learn what they can do to increase the value of their property. The agent could offer advice on the best changes that could provide the greatest return on investment, whether that’s renovating the bathroom and kitchen, converting the cellar, or even converting the garage.
How long does an estate agent valuation take?
Since estate agent valuations aren’t as in-depth as chartered surveyor valuations, they’re relatively short, lasting between half an hour to two hours. The length of the valuation largely depends on the accessibility and the size of the property – the bigger the property is, the longer it will take.
Whether you’re scheduling a virtual or an in-person valuation, you should make sure to set aside enough time for the agent to look over the property and receive answers to any questions they may have. As a general rule of thumb, your agent should tell you approximately how long the valuation will take when you’re booking the appointment.
How accurate are estate agent valuations?
As a general rule of thumb, estate agent valuations are very accurate. Experienced agents perform thorough research on the neighbourhood, recently sold house prices, and the overall market conditions before they even take a look at your property. Then, they examine every aspect that could add or remove value.
However, you should still be aware that the ultimate value of a piece of property largely depends on the buyer and their personal preferences. Some buyers might offer to pay significantly more for a home with an outdoor pool, for example, while others will only consider it a nuisance that decreases the value of a property.
Is an estate agent valuation free of charge?
Whether you’ll need to pay for an estate agent valuation or not depends on the agent. Most real estate agents will offer a free valuation to entice you to buy or sell your property through them. Others will charge a valuation fee, usually only once you make the sale/purchase.
On the other hand, chartered surveyor valuations come with a hefty fee, usually in the hundreds of pounds, if not more.
Is an estate agent valuation binding?
Though an estate agent valuation is often highly accurate, it’s not binding. Your agent is only providing you with their educated guess on how much they think your property is worth. Different agents might even provide different estimations, even when the appraisals are done on the same day and under the same conditions.
Still, it’s in your best interest to go with your agent’s valuation as they have unique insights into the market conditions and work hard to provide unbiased appraisals.
For how long is an estate agent valuation valid?
An estate agent valuation is typically valid for between three and six months. However, it’s usually best to get an appraisal right before buying/selling a property. The real estate market is highly hectic, especially now after the pandemic, with house prices fluctuating by the hour. While a piece of property might be worth £200,000 today, its price could rise to over £220,000 tomorrow or even fall below £160,000.
Therefore, if it’s been a while since the last valuation, it’s in your best interest to schedule another one just to be sure that you’re getting your money’s worth.
Estate agent valuations can help you determine exactly how much a piece of property is worth. They’re simple, fast, and accurate, helping you ensure that you’re getting a fair, realistic price.
At Property Price Advice, you can get an accurate online valuation within seconds or schedule an agent valuation that provides you with insights into the true value of your property.