Property Valuation; A Difficult And Lengthy Process
http://article.nanolive.com/articles/141709/1/Property-Valuation-A-Difficult-And-Lengthy-Process/Page1.html
Thomas Pretty
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Published on 09/5/2008
A look at the process behind making a property valuation and why homeowners often overvalue the worth of their home.
The majority of estate agents will agree that the most difficult part of their job is making accurate property valuations. This is because the valuation has to take so many factors into account that the margin for error is large. The agent must use the type of property, its location and condition as well as the current market conditions when arriving at a figure. Understandably there is an element of guesswork in this process. Added to this however is the customer; the property owner always has their own idea of the worth of their home and when they find out the true value, it can be an emotive experience for both parties.
Once the homeowner is given a valuation that is accurate, they are often left feeling besmirched. This is because the property owner rarely has the detailed knowledge to make a valuation, the result in is an uneducated guess. To find an accurate figure the cross section of the market required is large. Homeowners can rarely take into account enough similar properties to find the appropriate figure, an agent, with years of experience is far better placed to find the true value of a home. That said, agent's valuations are not considered to be the most accurate, surveyors will conduct a valuation that will arrive at the true worth of a property, an agent's figure normally refers to what the property could achieve on the open market.
The UK property market is currently in a state of flux. In the past decade the power has been in the hands of the sellers as there were a larger number of buyers than sellers. Unfortunately with problems arising in the American credit market that have spread to the UK the number of buyers has dwindled. This is because they cannot secure mortgages and hence buy property. The risk is that if first time buyers completely dry up, the market will stagnate and nobody will be able to sell their homes. Understandably this sort of situation will considerably affect the valuation figures given by both agents and surveyors; subsequently they will be lower than they have been in the past.
As a result of this drop off in the number of buyers many homeowners are choosing to expand rather than move. This can be helpful in improving a valuation figure as it adds space and hence worth. In many cases however a remortgage will be needed in order to secure the funds for an extension. If this is the case than an agent's valuation will not be sufficient; mortgage brokers only accept valuations from qualified surveyors.
As previously stated there are a number of different factors that must be taken into account for the valuation to be accurate. Firstly they must consider how the current market conditions will affect the figure and in general how property throughout the country and local region is selling. Secondly the valuing person will have to take a detailed look at the condition of the property, issues such as subsidence and poor roof quality will naturally affect the eventual figure at this point. Third and finally the valuation process will compare your property to other properties in the area that are similar, studying the prices they achieved at sale and taking an average of the sample.
It is only when all of these are combined that an accurate figure can be arrived at. Owners always overestimate the worth of their home and the eventual figure can be a true eye-opener. It is hoped that this information will give the reader a better understanding of the valuing process and how the price of property is calculated.
Once the homeowner is given a valuation that is accurate, they are often left feeling besmirched. This is because the property owner rarely has the detailed knowledge to make a valuation, the result in is an uneducated guess. To find an accurate figure the cross section of the market required is large. Homeowners can rarely take into account enough similar properties to find the appropriate figure, an agent, with years of experience is far better placed to find the true value of a home. That said, agent's valuations are not considered to be the most accurate, surveyors will conduct a valuation that will arrive at the true worth of a property, an agent's figure normally refers to what the property could achieve on the open market.
The UK property market is currently in a state of flux. In the past decade the power has been in the hands of the sellers as there were a larger number of buyers than sellers. Unfortunately with problems arising in the American credit market that have spread to the UK the number of buyers has dwindled. This is because they cannot secure mortgages and hence buy property. The risk is that if first time buyers completely dry up, the market will stagnate and nobody will be able to sell their homes. Understandably this sort of situation will considerably affect the valuation figures given by both agents and surveyors; subsequently they will be lower than they have been in the past.
As a result of this drop off in the number of buyers many homeowners are choosing to expand rather than move. This can be helpful in improving a valuation figure as it adds space and hence worth. In many cases however a remortgage will be needed in order to secure the funds for an extension. If this is the case than an agent's valuation will not be sufficient; mortgage brokers only accept valuations from qualified surveyors.
As previously stated there are a number of different factors that must be taken into account for the valuation to be accurate. Firstly they must consider how the current market conditions will affect the figure and in general how property throughout the country and local region is selling. Secondly the valuing person will have to take a detailed look at the condition of the property, issues such as subsidence and poor roof quality will naturally affect the eventual figure at this point. Third and finally the valuation process will compare your property to other properties in the area that are similar, studying the prices they achieved at sale and taking an average of the sample.
It is only when all of these are combined that an accurate figure can be arrived at. Owners always overestimate the worth of their home and the eventual figure can be a true eye-opener. It is hoped that this information will give the reader a better understanding of the valuing process and how the price of property is calculated.