Working out a house's "value"?

QTPie

Just a philosophical question, but...

...If you find a house that isn't on the market that you like, is there any way (without getting an estate agent involved) to determine a reasonable value for it?

How accurate is "price per square foot" multiplication (if you have a very recent sold price for an identical house - same location, same design, same situation etc - but very different square footage)?

I guess - at the end of the day - it is down to negotiation: what (if at all) the house owner is prepared to sell the house for and if the potential buyer is able to get close to that asking price... Especially in a funny market like this.

QT

BitterAndTwisted

Too many variables to give even a half-guess.


For the most part, people who buy a property as their home reason with their hearts and not with the aid of a fancy calculator

somethingcorporate

The value of a house is determined at what price a buyer and seller agree. Nothing else matters really. If you have a deluded buyer or deluded seller if their is no place their expectations overlap then the value is only in their mind.

Jimbo1976

If the house is similar to others in the area you could try using rightmove, zoopla etc. These will give you historial sold prices of others nearby

QTPie

Thanks

Yes, agree with all the points and it will probably come down to whether we can get the financing... However we are talking about a LOT of money...

By just going by "square footage" and by (by all intents and purposes) "identical property in the immediate area very recent sold prices", then it seems reasonable. I just wondr how generally accurate this measure is and whether there tends to be a "ceiling" on these. Say you have a £500k property and the next door neighbour (on a similar plot) has extended by 100%, is it likely to be a £1m property?

Just musing.

QT

Itismehonest

No, it isn't as simple as that.
Prices reflect many different things.
For instance, in your example the larger house may have been extended badly or in a way which detracts from the property's original character. It may also be left with much less land which would reduce its' appeal to many people & it's price would reflect that.
There are many reason's why pricing by size alone doesn't work.

QTPie

Itismehonest wrote: »

No, it isn't as simple as that.
Prices reflect many different things.
For instance, in your example the larger house may have been extended badly or in a way which detracts from the property's original character. It may also be left with much less land which would reduce its' appeal to many people & it's price would reflect that.
There are many reason's why pricing by size alone doesn't work.

Thank you.

I guess that I wonder how Estate Agents value property (in this type of situation). Assuming that the house has been extended very well and sympathetically (both to the situation and to he plot).

To me it is juxtaposition between firstly " the logic" of value (by square footage) and the "feeling" of value (ie a property twice the size of a £500k property doesn't necessarily "feel" like it fits within a "£1m price bracket" (extension done well and not encroaching unreasonably on a similar sized plot...)). Does that make sense?

I know that "value" and "asking price" don't always coincide, but I am curious....

QT

R_P_W

It isnt that simple....it depends on so many factors. A property in a crap area isnt going to be worth more than £x regardless of how large it is.

Find out recent sale prices of similar properties in the same area. The asking price can be set at whever the seller wants. The value is what someone is prepared to pay

amcluesent

Rental £ pcm sets a value, then it's location, location, location after which you have intangibles period features, quality of any work done, neighbour's upkeep of their property, schools, local shops, etc.

princeofpounds

I guess that I wonder how Estate Agents value property (in this type of situation).

I'll let you into a secret. It involves sticking your finger in the air and making an estimate.

The edge that estate agents have in valuing property is simply that they tend to pay attention to what is going on, and they can see the most recent transactions that won't appear in the land registry for a few months.

But really they are just making a sensible estimate like anybody else, based upon comparisons.

£/sqft can help you out but it won't work when houses are very small or very large relative to the comparisons, and it might not be 1:1 (because the land is actually a big part of the value, not the house itself). But for small adjustments it will probably work just fine.

And of course at the end of the day it's only an opinion, the accuracy of which is probably +/- 15% at best.

I could tell you a bit more about the way surveyors go about things, which is a bit more sophisticated (for big commercial buildings in particular), but it would be a bit confusing. Essentially they do use statistical comparisons in the same way as £/sqft, they just have a more codified way of doing it (in the RICS Red book)