How do you know what a property is worth?

[Helenluvsrob]

Can you get a valuation before bidding on a property? If so how?

Context. Buying a flat with DD for her in another town. She's seen " the one" . I've viewed it too. It is nice. However it's been on the market a year. Its priced at 85k. Last flat in the building ( slightly smaller foot print and ground floor but has a bath) sold for 70k recently .

Seller had a sale that fell through at mortgage at 83k and this is apparently the lowest they'll go. I'm wondering it it fell through as actually it's not worth 83K!

We've started a bit lower but bid up to 75k at the moment. We are cash buyers, no chain etc

DD would have us offer the 83k I'm sure but it's more than we really have to put to it ( after all she's got to be able to afford to pay us rent on the share we own IYSWIM). I'm not emotionally attached and think, it's a nice flat but really is it actually worth 83k? estate agent of course tells us it's a great bargain etc but that's his job- ad that we could make 10k in 4 yrs etc etc ( I doubt it, just don't want to loose money)

So how do we find out what it's worth ?

(current tennent now on a rolling monthly contract)

You could try Zoopla.co.uk. You get an estimate of the current price of the property on there.

One Zoopla estimates are wildly inaccurate. Is there anything comparable which has sold more recently in the area than the cheaper flat in the same block? Is this flat in much better condition than the one that sold at £70k?

It's worth what someone will pay - if you think the vendors are unrealistic to want £83k then back up your judgement with some stats and see what they come back with. If they say £75k isn't enough don't mess about increasing your offer bit by bit, ask outright what they want in order to take it off the market. If you feel it's too much, say so and why.

Also find out what they paid for it and when. Are they potentially in negative equity if they don't get the top end for it?

wowfudge that's a thought I should be able to find out what they paid shouldn't I.

If it was bought after 2000 the price they paid will be on right move and zoopla

It's only 'worth' what someone is prepared to pay for it!!

Zoopla is wildly inaccurate, I wouldn't rely on it. I would ask another EA (not the one handling the sale, obviously!) to give you a view. Make the offer you are comfortable with, leave it on the table and then walk away. A ground floor flat (without outside space) may be worth less (security, light levels etc) than a flat on upper floors and it will depend what's happened to the market in the area since the previous flat sold - but if this has been on the market for a year, it's probably because it's overpriced. Stick to your guns (unless you really want it, in which case you may have to move a bit higher than you wish!)

PM me the postcode and I will look it up for you with the records I can access.

Zoopla doesn't reflect what a seller may have done to the property since they bought it. It doesn't show what condition the house/flat was in when it was bought last.

Rightmove does have the old details if it was on with them. It is under "house prices" and then "sold prices" just put in the postcode.

I think house value comes down to several things, what someone is willing to pay, how long they intend to stay, what they intend to do to the property renovation wise. Do you want to feel like you bought a bargain? Will any other property match up to this one? If she lost it how easily could your DD get something similar?

The person who bought our last house (cash buyer & it was an investment property for them) got a good deal because we had found our forever house so just wanted ours sold. We didn't have any sentimental attachment to the property and the person buying it didn't either. Purely business.

My FIL has recently sold his house. Next door sold for X he wanted Y. Yes next door was a steal because it was a probate property and the adult children wanted closure. That was a very difficult thing to get FIL to accept. That next door, which is identical & in the same condition decor wise etc sold for tens of thousands less than you want for yours. You won't get your asking price.

He didn't get the asking price, more toward where next doors sold but that is a hard thing to swallow. He is downsizing but if you are buying bigger/better then you want as much money as you can get.

I agree about not pussyfooting around, ask them what they want to get it off the market.

Thanks all. We don't have to have " got a bargain" just not be utterly fleeced and left with a flat that we wont get the money back on if we were to sell in 3-4yrs which we might.

I'm putting a " business" head on as I'm not having to live there. DD loved it and feels it's the best flat she's seen etc ( but it's still not been snatched out of our hands....). Other , cheaper flats don't measure up in her eyes, mostly as regards location, so maybe that's the premium, but maybe she actually can't really afford that? I'm not being harsh but she's going to be earning ( all be it as a PhD student). We've paid her rent and living expenses this year for her MA. She needs now to be " helped into the real world" - hence us buying a part of the property and renting it to her and the usual rent for something of that cost.

Helen, do you know what the current tenant's paying per month and when their tenancy started?
If so you can work out the potential yield, which will tell you what the market value is for a prospective investor.

Then factor in its desirability to you as a family and the other options available to you from what's currently on the market.
That way you can arrive at the property's worth to you.

It's apparently rented at £525/month according to the ad

Zoopla and Rightmove are both based on the Land Registry edited data set : which excludes around 10% of transactions - particularly those that are low value

It a guideline but no more

I use the Land Registry house price tool here

There are two ways of using this tool:

Search House Prices tab: Look up the area you are interested using the postcode and look at what similar flats in the area sold for recently.

Price Calculator tab: Find out what price the particular flat sold for last time it was sold and using the Search House Price tab (see above) then type that into the Price Calculator page along with the date of that last transaction and the area it is and the calculator will give you an updated value as if it sold today based on the increase/decrease in local house price index.

Be warned asking prices are based on a) what people need in order to move house and b) what agents tell people in order to encourage them to choose that agent to put their house on sale with.

In our area houses typically come on the market at 50% above the market value they eventually sell for. House prices in my area have not risen for ten years according to the Land Registry index for our area but people still believe they have risen 20 - 30% or more.

Betatest
But look at the list of transactions excluded from that tool .....
www.gov.uk/guidance/about-the-price-paid-data#data-excluded-from-the-house-price-index-and-price-paid-data

The first one incorporates most of the high value sales in London in recent years

The third one includes all respossessions and private treaty sales

The fourth one covers shared ownership, buy to let right to buy and more

Hence why I distrust the remainder of the set as a guide

Talkin - I agree but as long as the OP is buying a 'normal' owner occupied property that does not fall into those categories the index should still reflect the general trend in prices in that area and the market forces that should apply to the property she is interested in.

The thing that I take care of in using the Land Registry is where a property was bought as a wreck and done up for resale by the previous owner. Then the index method I describe above will not reflect the increase in value accrued in the process of doing up a property.

I recently bid on a property bought from an institution 20 years ago and has not been done up in all that time. The owner is asking 30% more than my estimate from Land Registry data and for that reason it has not sold in 2 years. The index shows it is overvalued and the market appears to agree - the owner refuses to accept offers.