Professional Valuation advice

stevwarn

Following lots of helpful (Dozergirl) advice from this forum:T I have decided to let my sister buy me out of an inherited house we were jointly left. We have had an EA around who valued the cottage between £120-130k as it needs modernising. Doing my own research using Land Registry figures and Nationwide BS house price calculator http://www.nationwide.co.uk/hpi/ I calculate the cottage is worth £155k. I feel the EA guessed we had inherited the cottage and gave us a low valuation, but can't work out his motive.

Consequently, I feel the best way to obtain a fair price for my sister and I is to get a professional valuation &/or survey. Any advice? How do surveyers calculate the value?

lynnexxxo

EA are usually optomistic in the valuations but as the property market is rather shaky at the mo, there estimation might be a better guide than the Nationwide (when I put my house in and it should now be worth a lot more than i think it is).

I guess that the fairest thing is to get a survey done. But its likely that the survey will be nearer the EA price than your price.

Have you asked your sister what she thinks would be a fair price?

stevwarn

lynnexxxo wrote: »

EA are usually optomistic in the valuations but as the property market is rather shaky at the mo, there estimation might be a better guide than the Nationwide (when I put my house in and it should now be worth a lot more than i think it is).

I guess that the fairest thing is to get a survey done. But its likely that the survey will be nearer the EA price than your price.

Have you asked your sister what she thinks would be a fair price?

I have not directly asked but I guess she would want to pay me as little as possible. She is well off (earns £85k+ per year, no mortgage or debts, owns a business). Don't get me wrong I am proud of her and don't think she will rip me off but she will try for the lowest amount possible to make a few ££'s.

lynnexxxo

Does she currently live in the house? You could get a survey done and if it values lower than you hope them just not tell her
Failing that get another couple of EAs round to value it (free as opposed to having to pay for survey).

Does seem a bit sneaky though although I'd bet the person who left you both the house really wouldn't want to two fighting or falling out over it.

family and money is always a tricky one, good luck

stevwarn

lynnexxxo wrote: »

Does she currently live in the house? You could get a survey done and if it values lower than you hope them just not tell her
Failing that get another couple of EAs round to value it (free as opposed to having to pay for survey).

Does seem a bit sneaky though although I'd bet the person who left you both the house really wouldn't want to two fighting or falling out over it.

family and money is always a tricky one, good luck

You are right I don't want to fight or fall out with my sister over this, I just want it to be fair. She does not live in the cottage, but plans to use it as a weekend retreat. We have just submitted probate forms so we have at least another 6 weeks before we can do anything. I have thought about getting two further EA's valuations then averaging the 3 valuations for a fair price. But I feel a professional valuation is the best option, what do you think?

moneysavinmonkey

stevwarn wrote: »

Following lots of helpful (Dozergirl) advice from this forum:T I have decided to let my sister buy me out of an inherited house we were jointly left. We have had an EA around who valued the cottage between £120-130k as it needs modernising. Doing my own research using Land Registry figures and Nationwide BS house price calculator http://www.nationwide.co.uk/hpi/ I calculate the cottage is worth £155k. I feel the EA guessed we had inherited the cottage and gave us a low valuation, but can't work out his motive.

Consequently, I feel the best way to obtain a fair price for my sister and I is to get a professional valuation &/or survey. Any advice? How do surveyers calculate the value?

The nationwide house price calculator just gives a best estimate given average hpi values... won't take into account local area fluctuations + the specifics of your property and has probably not got the latest HPI data (ie prices falling) Same for Land Registry figures - these are a few months out of date as they are based on completed sales.

Local EA has visited the property, knows the area, and knows the local buyers. I would give much more weight to their value so you will probably have a job to convince you sister it is worth 15% more than their top valuation.

Why not get a couple more EAs round to estimate (don't tell them it is an inheritance this time) and take an average of these. If you want you can pay for a professional valuation but they don't have anymore information than the EA so I'm not sure it would really be worth it.

moneysavinmonkey

Just had an additional thought, although I don't know about these things so I may be way off the mark but does the property not need to be accurately valued for the purposes of inheritance tax anyways?? Would that be paid for as part of probate?

stevwarn

moneysavinmonkey wrote: »

Just had an additional thought, although I don't know about these things so I may be way off the mark but does the property not need to be accurately valued for the purposes of inheritance tax anyways?? Would that be paid for as part of probate?

The IHT form states that the applicant needs to take 'reasonable steps' to value the property and a professional valuation is not required. You can also tick the estimate box as an extra precaution. If at a later date the property sells for more than the estimate and this puts the estate over the IHT level then you legally must inform them. In our case the property was estimated at £150k and the estate is well under the £300k limit, and given that the EA values it at £120-130k we should not need to pay any IHT.

moneysavinmonkey

stevwarn wrote: »

The IHT form states that the applicant needs to take 'reasonable steps' to value the property and a professional valuation is not required. You can also tick the estimate box as an extra precaution. If at a later date the property sells for more than the estimate and this puts the estate over the IHT level then you legally must inform them. In our case the property was estimated at £150k and the estate is well under the £300k limit, and given that the EA values it at £120-130k we should not need to pay any IHT.

I see.. so the for the purposes of inheritance task the property value was estimated at £150k.. presumably then this was a reasonable guess at the upper limit the property would achieve - there would be no point in underestimating as that would involve more work if the property was sold for a greater amount. making your £155k seem unrealistic.

Also bear in mind, that by selling your half to your sister you are avoiding a lot of costs so she is actually saving you some money! Ie you don't have to pay estate agents 2% , convayancing costs should be reduced etc. If your sister is is particularly canny she might figure this into her calculations when decided how much to pay you!

stevwarn

moneysavinmonkey wrote: »

I see.. so the for the purposes of inheritance task the property value was estimated at £150k.. presumably then this was a reasonable guess at the upper limit the property would achieve - there would be no point in underestimating as that would involve more work if the property was sold for a greater amount. making your £155k seem unrealistic.

Also bear in mind, that by selling your half to your sister you are avoiding a lot of costs so she is actually saving you some money! Ie you don't have to pay estate agents 2% , convayancing costs should be reduced etc. If your sister is is particularly canny she might figure this into her calculations when decided how much to pay you!

Good point, if she did I would say to half that saving too! As with any valuation I guess the value of any property is what someone is willing to pay for it, hence the over inflated market that we are in IMHO.