There are many reasons why you need to know the value of your house. You might be renewing your mortgage, moving house or renewing your home insurance. You may want to sell your house and need to know just how much it is worth – or perhaps you don’t want to sell, but just want to know the value of your home in the property market.
If you are selling your house, conducting a property valuation is an essential first step. Valuations gauge how much your house can be sold for, based upon a number of different factors. This gives you a good idea of the correct price range to choose upon, should you decide to sell. Even if you have no plans to sell, conducting a valuation is still a great way to find out how much your home is worth, as well as what improvements you can make should you care to increase the value of your home.
Researching similar houses for sale in your area provides a good idea of how much you can sell yours for. Look at houses and buildings on your street and in your neighborhood, to determine what the going rate is. You can also study how quickly houses and properties sell in your area to know how the property market is performing.
“Valuing a property is about understanding your competition and buyer demand”, says independent property expert, Perry Power.
The value of your property can be influenced by any or all of these factors:
The location of your property can affect its price, so it is important you focus your research on your own neighborhood, rather than looking at national averages. Study market activities over time, as well as current property asking prices. If prices are decreasing, then you might consider lowering your expectations, but if the prices are increasing, you can afford to be optimistic in your estimate.
If your plan is to sell your house, be sure to calculate the market value, so that you will make a fair return on your investment. Market value, replacement cost, capitalisation rate and cash-on-cash return figures will help you determine the value of your house before you sell.
The Land Registry’s calculator gives you a rough estimate of how the price of your home has changed since you bought it and also tells you if the property market is going up or coming down. The Nationwide House Price Calculator will provide a general idea of house price changes in different areas of the UK. These tools do not take into consideration extensions and improvements carried out on the house though, so you need to use them with care.
Kate Faulkner, Property Analyst at independent property advice site, Propertychecklists.co.uk, warns property owners to be wary of using such sites.
“Never look at property price indices for individual property information….they are too ‘averaged’ and by the time we get the data, the market may have turned in the opposite direction”, she says.
It is advisable to engage the services of your local estate agent if you want to get a more accurate estimate of what your house is worth, but be sure to get experienced valuers. They work with a code set down by the Royal Institution of Chartered Surveyors (RICS). The code is based on the following criteria:
This way, you can get a fair valuation.
However, if you are hands-on kind of person and want to try valuing your own property, the following tips can help you:
Another good idea is to take a leaf out of the estate agent’s book and attempt to calculate the cost of your house by working off a similar square footage.
For example, if a neighbour’s 2,000sq ft house sold for £500,000 four months ago, you can divide the price by the space per square foot, to find its true value.
So 500,000 divided by 2,000 equals £250 per square foot. You can then multiply your own space by the value per square foot, to get an approximate value. This is not a foolproof plan though, as it depends on the average size of the house, and these houses have to be similar in square footage in order for the prices per square foot to work. Also, although it can work mainly for houses and buildings, this system cannot work for flats.
There are several websites and online tools that can help you determine the cost of your house. It is more realistic to combine this with your results from land registry prices, as they sometimes tend to be inaccurate.
Zoopla and Rightmove can give you a rough estimation of what your home is worth. The easy-to-use system allows you to type in your postcode before the algorithm gives an approximate idea of sales prices for houses in that area. You can also select any building in a street to get a valuation based on previous sale prices and prevalent market conditions. It helps you look at what similar houses have sold for in similar locations and with similar conditions.
Websites such as these also give you the ability to predict rental incomes and compare the average in that area. I need to point out here, that online tools can only give you a ball-park figure and don’t take into consideration renovations and improvements made to the house.