But what is the right price? When it comes to the value of a property, there are three things to bear in mind.
1. The valuation is simply an estimation of what someone else might pay for it.
2. This does not necessarily bear any relation to how much you paid for it, how much money you've spent on it since then, and how much you need out of the deal.
3. Getting the price wrong can damage your chances of a sale.
With that in mind, the following guide explains how properties are usually valued and then takes a look at how sellers should approach the current property market.
How Properties Are Valued
The most common method of valuation is by using comparables: you find a range of homes similar to your own and look at the price that they have sold for recently and the price that they are being advertised at currently, and position your own property accordingly.
There are various sources of information which can help you determine what your home is worth.
1. Sold Prices
The Source: To find sold prices you can either pay to consult the Land Registry Database, or use our free search for sold house prices.
The Drawback: Sold prices data will tell you where the market has been, but not where it is now. And the stats, when published, are several months old so don't expect what was achieved back then to be achievable now.
2. Similar Property For Sale
The Source: You need to become an expert on the prices of similar properties in your local area via estate agents’ windows and property portals.
Compare locations, room sizes, facilities and state of décor to come up with a realistic comparable price for your own property.
The Drawback: Taking your valuation figure from the asking price of similar properties in your area can be misleading because the asking price you see may bear little resemblance to a price achieved.
In addition, making a dispassionate comparison can be difficult because most of us think our homes are great.
3. AVMs (automated valuation models)
The Source: Systems such as the Home Track valuation system provide an online valuation and report, for a cost, on any property in England, Wales & Scotland.
The Drawback: Although this system is widely used by professionals, it works best on very standard homes with local comparables, and can’t provide a confident valuation for properties that are more unusual.
And it returns a price range rather than an exact value, and this may be of limited use in the current market.
The Current Market: Listen To Your Agent
While it’s certainly a good idea to do your own research, it is vital that you ask a range of estate agents’ for their opinions.
Although there is often suspicion of estate agents' valuations, with claims that they value too high to get clients or too low to make quick sales, a good agent should have the insider knowledge that will make their estimate more accurate.
James Brooks, manager of Kinleigh Folkard & Hayward in Streatham, says that when estate agents get property valuations wrong it's nearly always because they haven't sold comparable properties recently and they don't have the data to work on.
"Visit three estate agents and ask to see examples of similar properties they've sold to back up their valuation," says Brooks.
"No estate agent can be 100 per cent accurate, but if they've sold similar properties they should be able to give you a range."
And, whatever you do, particularly in a falling market, don’t be tempted by an estate agent who seems to be overvaluing.
"Our remit is to be optimistic - we don't want to undervalue and lose you money," says Brooks. "But high valuations based on thin air are meaningless, and, at the moment, waiting to sell can cost you money."
This, however, is a message seller's are often reluctant to hear. Katherine Wells, Sales Manager at Kinleigh Folkard & Hayward in Clapham, comments: "Pricing is so important and sellers now have started to take this on board, however some still don't want to hear this.
"It's a fallacy that some Clapham properties are holding their values. Some owners don't think the value of their property has dropped, in reality the market has fallen across the board since the start of the year."
The Current Market: Worth Putting It On At A Bit More?
We've seen a big shift from the days when testing the property market with a ceiling-breaking price was common. You might be tempted to do this now, but it's not advisable in the current housing market.
However optimistic you are about the long-term property market, in the short term house prices are sliding and the longer you're on the market, the less your house will be worth.
Of course, you may strike it lucky, and woo a prospective buyer into paying over the odds with your impeccable interiors and the aroma of coffee.
But don't forget that your sale could fall through if your buyer's mortgage valuer doesn't agree with your high asking price.
Given this, the best way forward is to find out what the experts say, back it up with your own research, and choose a realistic price.
The Current Market: What About Going In Low?
Unthinkable a few months ago, undercutting the market by pricing below the competition may not be such a bad idea, and, bearing in mind that anything you buy might also be reduced, it could be a financially astute move.
In order to drum up interest some sellers are being advised to ask for 95 per cent of the perceived value, making their house look like a bargain compared to their neighbours'.
James Hyman, partner at Cluttons estate agents in London, goes even further, suggesting that that a ten per cent drop in house prices across the board would provide property buyers with a safety net and be good news for the housing market.
"It’s no longer about location, it’s all about value," says Hyman. "Buyers are shopping around for properties where willing sellers have already priced in incentives."
Hamptons International estate agents claim to have evidence that if the price is right, the buyers will flock.
Their figures show that in the prime London residential property market price drops of approximately 15 per cent over the last six months have led to increased viewing levels of 12 per cent up on last year.
They recently published a list of ten properties with significant price cuts – the biggest was a whopping 20 per cent on a two-bed flat in W14.
Phil Tennant, Regional Director, says: "We have seen that where clients have taken our advice on realistic pricing, there is a sharp increase in offers for those properties."
How Do I know The Price Is Wrong?
A valuation is always going to be, at best, an educated guess, so it's vital that you review your house sale progress regularly.
• Ask your estate agent what the average sale time is for properties of your type, and make a note of the date so that, if you have still not sold, you can have a meeting to discuss price.
• Meanwhile, look at your property compared to similar examples on the property portals to makes sure that it’s still priced competitively. Ask yourself, if you were the buyer, which house would you choose?
• When you have a viewing ensure that whoever conducts it asks for feedback. If you’re hearing that it’s overvalued, do something about it.
• And if you go for two weeks without a viewing request an urgent meeting with your estate agent to discuss a price review.
And Finally ... Be Realistic And Sell
Whatever you do, don’t stick your head in the sand and just hope for the best.
As one estate agent, who will remain anonymous, confided half of the properties on his books are priced at a level that makes them unsaleable in the current market.
So remember, getting your valuation wrong can only cost you time and, as the property market falls and your house languishes, money.
Whereas if the price is right, all you’ll have to worry about is arranging a mortgage, booking removals, packing, change of address cards, notifying utilities, settling children in a new school, measuring for curtains…
Nikki Sheehan
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