Why do estate agent valuations vary so much?

netlang

I am just about to put my house on the market. I have had 7 valuations from different agents (I have not told any of the EA what the others have valued at) 1 x 399,999; 1 x 450,000; 2 x 475,000 and 3 x 499,999.

This is a difference of £100,000 between highest and lowest! The agents are obviously just guessing and do not really know what the house is worth. (Ultimately, it will be what somebody is prepared to pay for the house)

I thought I might take the average of these caluations which will equate to £471,428 or do you think it would be better to ask the higher valuation and see what offers come in?

I have checked nethouseprices.co.uk but no house like mine has sold since 2002. I live in a very sort after road which is non-estate.

devils_advocate

AS I previously posted: (saves me typing it out again!)

An agent's valuation of your house is not a market valuation of your house; its a marketing valuation. Its sole purpose is to market the agent's services to you, the seller. If an agent doesn't persuade you to sell your house through them, they won't get any commission, and therefore they won't stay in business. So they have to clinch the deal, and get you to instruct them, as opposed to the other agent round the corner.

Especially in todays flat markets, the fact that they then can't produce any viewers at that price or offers from viewers at remotely near that price will then probably get the seller to change agents. So what, from the agent's viewpoint? They haven't got any commission from the non-sale, but at least they got a chance of it, and whilst it was their chance, nobody else had the chance.

So that's why agents always ask sellers if they've had any other agents valuing the property. Its not that they don't have a clue about what local propety has sold for, and they want to copy someone else. If the seller excitedly says "yes, and they vaued it for (insert 15% over what the agent thinks it will sell for)" the agent knows that the instruction will probably go to the agent who comes up with the biggest valuation. If the client says "yes, but it seems an awful lot" , the agent knows the client may not be as price sensitive. The good agents, that is the ones who sell the most properties relative to the competition, will always spend a lot more time talking to the potential seller than looking at the colour of the wallpaper in the master bedroom.

Sellers, next time you have an agent round to do a valuation, think about it.

HTH

nelly_2

cos their unqualyfied guessers

lush_walrus

EAs work on comparables, same as surveyors do. When valuing a house, they mentally compare how your house stands against something simular they have sold recently. There is no exact science to it, therefore if a property is particularily different to other houses in the area, or as in your case its been years since one simular did sell then valuing it is pretty difficult.

A good EA will value it realistically, rather than as stated above (at least my staff are trained that way). Simply because if a property is valued higher than the market value then you are stuck with something on your books that will never sell and will just result in hours of calls from the vendor who is perplexed that their property hasnt had any viewings. Complete waste of everyones time, a desperate EA or one with little experience will value high in order to make sure they get the property so that they have things on their books.

But, as I say as yours is unusual then perhaps yours has created a few difficulties in setting the price right. What you do will depend on how fast you want to sell.

Your options are:

1. As you have stated and put it up for sale at a mid price, with the EA you find most capable of selling (and tell them that is the price you want to market it at, regardless of what their actual valuation was).

2. Chance your arm at the higher valuation, but be open to offers, plus side is that you never know you might get it. Downside is that if you are in a hurry then you could waste time and people looking for property will become acustomed to seeing yours on the market.

3. Do some checks for yourself, not on nethouseprices.co.uk, as that is more statistical, but on something like rightmove, or check on the local EAs websites. Look not just for houses on your street, as you have already seen that there arent any. But imagine yourself as a buyer looking for a house like yours and see what is available, ie what your competition is. Stick to looking in your town or village, as value can vary hugely even though a village is neighbouring. Think about location, is it in an area as desirable as yours? Size, are room sizes simular? Garden, are the gardens simular sizes? Etc. If you find a house that is on the market for £420,000 that has a smaller garden, but a good location, simular size, simular condition etc then you can guess that your house will be worth more than that. If on the other hand you see a smaller house which is in perfect condition, good location etc, then if yours needs modernising, it might not be worth very much more as people do sacrifice size over quality. And so on, valuing is not an exact science its about predicting what a potential buyer will see in your property and whether they will stretch to such and such amount for yours as it has an extra x in comparison to y that they have just seen.

lush_walrus

nelly wrote:

cos their unqualyfied guessers

Not particularily helpful comment to make and if thats completely true, then so are surveyors, so are buyers, so are developers and so are everybody involved with property.

AndrewSmith

I agree with LushWalrus.

@ Nelly-

where do you think surveyors get their valuations from?

They visit local estate agents to obtain comparable evidence of recently sold properties. This is how it is done without exception.

Does this also make a Chartered Surveyor an unqualified guesser?

nelly_2

AndrewSmith wrote:

I agree with LushWalrus.

@ Nelly-

where do you think surveyors get their valuations from?

They visit local estate agents to obtain comparable evidence of recently sold properties. This is how it is done without exception.

Does this also make a Chartered Surveyor an unqualified guesser?

Depends if they have any qualifications of any value and if they are guessing?

Jorgan_2

Giving a market appraisal of a property is not a science, there is no formula to be used so it comes down to opinions. A good Estate Agent will use comparable evidence to come up with a price, adjusting location & condition of properties accordingly. Use the advice given by Lush Walrus on looking at your property as a buyer would, but remove your rose tinted spectacles before doing so. As for the comments of "cos their unqualyfied guessers" I find this very helpful - not. Many Estate Agents may have not qualifications but qualify by years of practice. I personally have 14 years in Estate Agency, have passed the NAEA technical award in Estate Agency and am part of the Obudsman for Estate Agents which has recently been given OFT Approved status. I think that makes me qualified to give market appraisals of property.

lush_walrus

nelly wrote:

Depends if they have any qualifications of any value and if they are guessing?

Nelly, most surveyors do not have any form of qualification and a lot of people who started as surveyors swap into EA and visa versa.

I'm not quite sure where this assumption that only qualifications = capability to carry out a job. I'm very curious to know actually which professional qualifications you actually carry for your particular job, as going by your input on this thread I would assume that your view would carry through to yourself.

Personally I do have professional qualifications as an architect (which is what I work as) and NAEA technical award in Estate Agency (which is for my business). but I would hazard a guess that at least 80% of the population carry out their daily work without any form of professional qualifications to do it, and yet most seem more than capable of carrying out their daily duties. Its very sad to see such an unhelpful input in a thread which is requesting help.

netlang

Thanks for all the helpful comments here.

I have thought long and hard about what to do so I have decided that experience is the greatest teacher. Therefore, I have instructed an agent with over 30 years experience in my local area with a negiotater who has been selling houses in my area for around 20 years. They seem pretty confident the house will sell with an asking price of £499,950 and if I am prepared to accept an offer of between £460k and £480k.

The ball is now firmly in their hands so I will monitoring their performance based on the written and verbal promises they made at their sales pitch.
I will let you know the outcome.

Fingers and toes tightly crossed :eek:

nelly_2

lush_walrus wrote:

Nelly, most surveyors do not have any form of qualification and a lot of people who started as surveyors swap into EA and visa versa.

I'm not quite sure where this assumption that only qualifications = capability to carry out a job. I'm very curious to know actually which professional qualifications you actually carry for your particular job, as going by your input on this thread I would assume that your view would carry through to yourself.

Personally I do have professional qualifications as an architect (which is what I work as) and NAEA technical award in Estate Agency (which is for my business). but I would hazard a guess that at least 80% of the population carry out their daily work without any form of professional qualifications to do it, and yet most seem more than capable of carrying out their daily duties. Its very sad to see such an unhelpful input in a thread which is requesting help.

He said CHARTERED surveyor as if the chartering was some sort of well ernt thing.

The op has had massively varying valuations. 5/10% is fair enough but the difference between 400 000 and 500 000 sugests to me a pack of utter amatures.