No matter what you think about house prices this year, buyers and sellers need to figure out if the listed price is a fair market value.
Right now, the average asking price is 23% higher than the average selling price, meaning some sellers may be asking too much. In March, the average UK asking price on Rightmove was £365,357, while the average sold price in January was £289,818, according to the Land Registry.
It’s essential to know your home’s value before selling it. If sellers ask too much, their house may sit on the market for a long time, attracting less interest. Eventually, they may have to lower the price multiple times and could end up selling for less than if they had a more accurate starting price. On the other hand, if the price is too low, they could lose a lot of money.
Professional buying agent Henry Pryor says that determining a property’s worth is both an art and a science. The asking price should attract potential buyers. He adds that similar properties’ selling and asking prices can be helpful, but it’s essential to consider what else buyers could choose and how many people are looking for a specific property.
Pryor advises buyers not to take the asking price too seriously, as it’s not always an accurate reflection of value, what the seller will accept, or what an estate agent or mortgage valuer might approve. Instead, buyers should do their research, which includes talking to local estate agents who know the market well.
In the end, the buyer decides the property’s worth, while the seller chooses if the offer is enough. Henry Pryor also shares seven things that won’t determine a home’s value, despite what sellers and buyers might believe.
Table of Contents
1. What You Have Paid for It
When you sell your home, you want to make sure you get the same amount or more money than what you paid for it. However, sometimes you may have to sell your house for less than what you bought it for, even if people always say that house prices go up. This is because the prices may have gone down in your area.
When you sell your house, the buyer decides how much they are willing to pay for it, and you can choose to accept or reject their offer. Even if you paid a lot for your house when you first bought it, the buyer may not be willing to pay that much.
If you bought a new house, the value may have decreased in the beginning, just like a new car. But, if your house has decreased in value, it’s likely that other houses in your area have also gone down in price.
The price you paid for your house may influence how much you are willing to accept, but it’s not the only factor that will affect the buyer’s offer.
2. Your Essential Needs
If you want to sell your house to buy a new one, it’s okay to check how much it’s worth. But if you ask for more money than what people are willing to pay, you may not sell it for that much.
Just because you need a certain amount of money to buy your next house doesn’t mean people will offer you that much. Expensive tastes don’t always mean you’ll get a higher price for your house.
3. The Asking Price of Your Neighbor’s House
When you see your neighbor’s house for sale, it might inspire you to sell yours too, especially if you’re happy with the asking price. But before you do, check if their house is similar to yours in size and condition.
Remember that the asking price is not the same as the sold price. The sold price may be lower, so don’t assume you’ll get the same amount if you sell your house. According to the Land Registry, the average sold price in the UK as of January is £289,818, which is lower than the average asking price of £365,357 on Rightmove.
4. What Your Friends Are Saying
Nowadays, many people have opinions about the property, but they might not know much about it.
Your family and friends might share their thoughts based on their own experiences or what they’ve seen on social media and news. However, their opinions might not be accurate, so don’t always trust what they say.
Even if your friends and family offer advice when you’re selling your house, it might not be relevant or helpful. Remember, they’re not the ones buying your house, so their opinions might not matter.
5. What Real Estate Agents Say
When you’re selling your house, estate agents will give you a valuation. However, some agents might not be honest and might give you a higher price just to get your business.
If you choose an agent based on the highest valuation or the lowest fee, you might not get the best result. It’s important to talk to several agents and find someone who you trust and who gives you an honest assessment.
Some agents might overestimate the value of your house just to win your business. In fact, one of the biggest agents in London only sells one in five of the properties they take on because they give unrealistic prices. So, make sure you choose an agent who will give you a fair price.
6. The Price of Rebuilding
When you insure your house, you might see a “rebuild cost” on the policy. This cost is not the same as the market value of your house. It’s the amount it would cost to rebuild your house from scratch if it was destroyed by something like a fire or explosion.
The rebuild cost is usually less than the market value, but for some older or unusual houses, it might be more expensive.
It’s important to remember that the rebuild cost doesn’t include the value of the land your house is on. It’s only the cost of repairing or rebuilding your house if it was damaged or destroyed.
7. How Much You’ve Spent
Some sellers might think that they’ll make a profit on their house if they’ve spent a lot of money on renovations or upgrades like a new kitchen or loft conversion. However, this isn’t always the case.
Just because you’ve spent a lot of money on improvements doesn’t mean that you’ll get that money back when you sell your house. Buyers might not appreciate the upgrades or be willing to pay extra for them.
Upgrades like a new kitchen or fancy lights might make your house more attractive to buyers, but they don’t always add value to your house. According to Pryor, the value of your house doesn’t include the cost of the upgrades.
Conclusion
In conclusion, buyers and sellers need to determine a fair market value for a property, as the average asking price is often higher than the average selling price. Sellers should avoid overpricing their property, as it may lead to a lack of interest, resulting in the property remaining on the market for a long time.
Similarly, setting a low price could result in losing money. Several factors do not determine the value of a property, including what the seller paid for it, the seller’s essential needs, the asking price of the neighbor’s house, opinions of friends and family, what real estate agents say, the cost to rebuild, and the amount spent on renovations or upgrades.
Buyers should do their research and get a fair assessment of a property’s value before making an offer.
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