How do you know a house is worth the price?

[MrsWhirling]

I know this isn't a straight forward question, but how do you know? We're looking at s house in the morning, which on paper is perfect. It has an oddity, in that for a sizeable house it has a tiny garden due to the shape of the plot. This is ok with us. When looking at what sold nearby, I saw that a similar house sold a year ago for £75,000 less. It's London, so I appreciate are rocketing but it seems a huge difference. Any advice would be appreciated x

I would look around for similar properties and see what they are all up for. Here's a page that will tell you more.

www.investopedia.com/articles/mortgages-real-estate/08/fair-price-on-home.asp

Is it the same size house as the nearby one? Is it in the same condition? Eg in our road, two houses which would appear similar at first glance - from the outside and ground floor plan - sold for approx £400k difference. In fact, the more expensive one was slightly bigger footprint, had a loft conversion inc second bathroom (the smaller one was unconverted but too small a footprint to squeeze a bathroom on loft floor), had had a downstairs loo installed, and, crucially, had already been renovated to a high standard. The cheap one was a probate and skip clearance job, had no central heating, needed a new roof, rewiring, new plumbing, etc.

Whereabouts in London? Some areas still going up (eg Lewisham), some starting to come down (eg Balham, K&C...)

What % is 75k? If 75k on a £2.5m house, probably reasonable. If on a £250k one, probably less so. OTOH, if it's a £2.5m house it's probably in an area that's topping out due to stamp duty, if £250k, it's probably in an area where everyone's now looking because it's cheap!