Best way to establish fair price

simonc70

First time buyers in a somewhat expensive area (west oxfordshire) getting frustrated at (seemingly) over priced houses and little else priced sensibly.

I am using previous sales as a guide to market value in general, and also more specifically cost per sq ft. This comes in at around £250 on average and nearly all the properties we viewed last year seem to be more like £300-£315per sq ft. One that we liked is valued at 475k but that's nearly £320 er sq ft, totally out of whack with previous sales of a similar area / size etc by around 90k.

Is this a valid way to work out the market value of a property? Are we being unrealistic? Of course EAs are telling us that the price is fair when we raise these facts but can't ever justify it.

What concerns me is that not a single house that we have looked at since April that we said was over priced has sold. The ones we felt were legitimately priced but weren't right for us (very few indeed) have sold. It seems a lot of sellers are just not bothered about selling.

It's really putting us off.

moneyistooshorttomention

We don't tend to operate on a "price per square foot" basis in this country though.

You can see why in some cases quite literally, as there could be 2 identical houses/identical square footage but one was in a nice area and one in area-from-hell. At that point they are going to differ widely in price, even though they are identical.

Add in people have greater or lesser need to sell. Back when I sold my last house, for instance, there was one house that had recently gone for quite a bit "under value" (which worried the heck out of me..though I know the reason was their desperation). There was another that went a bit "under value" (ie they wanted shot quickly, but weren't desperate). Then there was me = wanted rid, but would wait a while for "at value" price if I had to.

simonc70

moneyistooshorttomention wrote: »

We don't tend to operate on a "price per square foot" basis in this country though.

You can see why in some cases quite literally, as there could be 2 identical houses/identical square footage but one was in a nice area and one in area-from-hell. At that point they are going to differ widely in price, even though they are identical.

I think the assumption is that if you were to compare price per sq ft, you'd do is in similar house in the same area, naturally.

And this should be a good indictor should it not...

Bluebirdman_of_Alcathays

simonc70 wrote: »

I think the assumption is that if you were to compare price per sq ft, you'd do is in similar house in the same area, naturally.

And this should be a good indictor should it not...

No, not really.

Whilst there is a very rough trend that bigger houses cost more, once you start micromanaging square feet it falls apart. Two houses could be right next door to each other, have identical sq. feet, and sell for differing amounts. It could be down to how they are presented, how keen the seller is to get rid, or even the purchasing parties negotiation skills.

A house is worth what someone is willing to pay for it.

Tixy

I would just focus on comparing recently sold similar houses in the same area and not try converting to a price per square foot.

inatdeepend

It's not a bad starting point, indeed something I used to justify making a lowish offer previously.

But there are many other factors in play, some more important than others. And I share your frustration, but it's something you learn fast - the market is generally irrational.

lincroft1710

Property valuation is an art not a science.

Hoploz

You can't do it by square foot, but you seem to have a good idea as the ones you thought overpriced have not sold.

simonc70

Bluebirdman_of_Alcathays wrote: »

A house is worth what someone is willing to pay for it.

That's not really true. There is a market value to everything. Of course someone somewhere may want to buy a box of Jaffa Cakes for £100...but that doesn't mean they are worth £100.

Overpaying £100k doesn't, by definition, mean that property is then "worth" an extra £100k, it means that the buyer overpaid on it's worth by 100k. Quite a difference.

LottieLou

As said above 'a house is worth what someone is willing to pay for it' but I do feel your pain!!

I have been looking for a while (in a different area) however, sellers seem to have gotten greedy and we just can't justify some of the prices they are wanting.

Don't give up! As for working out price per square food, some EA's have been advertising that on houses round here!! x

lincroft1710

There is no regulatory body for house prices, a house will sell for whatever price can be agreed between buyer and seller. You could consider putting in what you believe is a "fair" offer on a property, but you run the risk of not being thought of as a "serious" buyer by the EA.