When you are considering:-
It is worth knowing that there isn’t a ‘set price’ that you can achieve. A property is worth what the seller is willing to sell it for and what a buyer is willing, and able, to buy it for.
Normally sellers will turn to a local estate agent to value their home. The first ‘property price’ will be the advertised ‘marketing price’. This tends to be a combination of what the seller wants for the property and what the agent thinks is the right price to generate viewings.
For example, the seller might want £200,000 for the property, so they might agree a marketing price of £210,000 to accept £200,000. Or they might want to generate more viewings in a tougher market, so advertise the property for £199,000 in the hope of two potential buyers competing for the property to secure a price of £200,000 or more.
So the first ‘value’ of a property is the ‘marketing price’.
Next, the price depends on what someone then offers and can afford to pay. For example, if someone offers £200,000 for a property but they can only buy it if they sell their own property first, then someone else who has a mortgage already agreed offers £180,000, the property is actually worth £180,000, not £200,000.
So the next price for a property is ‘what someone offers and can afford to pay.’
Once an offer has been received by someone who can afford to pay it, the next ‘hurdle’ of property prices is what the seller is willing to accept. So if the seller refuses to sell for £180,000, then the property’s sales value is £180,000, but as no sale is achieved, it’s value to the seller is only what they will sell it for – so the £200,000.
Mortgage lender’s valuation
Next, unless the person making the offer is a cash buyer, we have to consider what the lender thinks it’s worth. This depends on the various data sources they use:-
So for the seller the property is worth £200,000, but the only offer we have is £180,000. To achieve this price the buyer needs the lender to agree to fund it.
They will check sold property prices, other properties they have mortgaged nearby and will then ask a surveyor to carry out a ‘valuation’ on their behalf.
The surveyor may say the property is worth £180,000 but needs £10,000 work doing on it to fix say damp and roof problems. So they may agree with the £180,000 but recommend a revised price of £170,000 to take into account work required.
Once the lender and the surveyor have checked out the property and the seller has had some time to think about selling and moving on at a lower price, then it’s down to the seller and buyer to agree a revised offer.
For example, in our case, the buyer may still offer £180,000 and despite the seller wanting £200,000 they may accept this offer. Or the buyer may revise their offer to £170,000 to reflect the work required.
Final agreed price
Once a revised offer has been put forward, the seller may say they will accept the £180,000 offer or they may turn round and say they will accept an offer of £175,000, making this the ‘final agreed sales price’.
So for anyone hoping for ‘one figure’ of what their property is worth, I’m afraid it doesn’t exist.
What you are better off working with from the start when pricing a property for sale is ‘what is the minimum you would and can accept’ through to ‘what you would like to get’ and if buying a property, work out ‘what you would like to secure a property for and what the maximum is you will pay for that property’.
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