Deciding the value of a house

[thekaratekid]

Reading the thread about negotiating house prices has got me thinking. How did you come to decide the value which you listed your house at?

When we put ours on the market we had 3 local agents come out to value it. 2 of them said we would be lucky to achieve £290k and shouldn't even consider listing at the £300k mark. We got the impression they wanted a quick sale, for reasons unknown! The final agent said we should list at OIRO £325k (which seemed crazy), but look to accept around £310k (which is the value we wanted). This was summer 2020 btw.

We were really flummoxed about what to do as there was no middle valuation. In the end we chose the final agent but told them we were listing straight at £310k, which we got in a few days. The agent was an "area specialist" and had sold the house before...so we felt quite assured they knew how to sell it.

However, upon discussion with older family members they were shocked we had listed it at the price we more or less wanted to achieve! Apparently they would have all listed it at the massively inflated price and spent ages haggling with buyers over reductions.

What is the done thing these days?

Here in Scotland the norm is ‘offers over’ home report value figure or just under. It’s mad that in England (which maybe isn’t where you are of course) you just pick a number. Then all the stress if the lender undervaluing etc.

Yep in England here...it is pretty much a free for all throughout the whole process. The Scottish system seems so much better and controlled. Is there a lot of back and forth with negotiating, or do you put in your offer and the vendor either accepts or declines?

I think it depends on the market. At the moment an offer is just being sort of acknowledged then as soon as there’s another a closing date is set.

In a slower market there can be the back and forth then a price is agreed on or even first offer accepted if someone hasn’t gone in with a lower offer to start with.

I prefer your approach.

Houses around here have been selling at asking price or more.

My DH didn’t want to view go houses well over our budget. monitoring land registry prices a house we didn’t go and see completed at 10% below asking. We kicked ourselves. If the vendor had priced properly it would have shifted quicker.

You need to do your own research before you get agents round. I think you did the right thing by the sounds of it as you very quickly got offers around what you needed. Too many people are greedy when putting their houses on the market and then wonder why they get no inte rest and are still on the market months later.

The most successful agents seem to list low and create a bidding war round here.

In Scotland you get a survey as the vendor, which is then available to prospective purchasers. You’d typically list the house for offers over an amount slightly under the survey value - eg £395k if valued at £400k. Depending on how many people are interested, you’d invariably either negotiate on any offer received, or hope to go to a closing date if you’d 3 or more realistic buyers.

The problem is that some property will go for 10% over the survey value. Other property might just get survey value, and then you still get the occasional crazy outlier that someone will pay miles over the odds for.

Then survey value is based on recent sales of “similar” properties, adjusted for anything that adds (or reduces!) ££. It all depends and is a best guess. In a rising market, it’s based on sold prices, and those will have been higher than survey value. And will in turn sell for more than survey value - so it just feeds into a meaningless market rise, and vice-versa. It’s only really effective in a fairly stable market. But at least noone gets a nasty shock after they’ve made an offer and get a survey done.

The Scottish system of vendor getting home report done is sensible but the offers over, where properties have been going for 10% and more over valuation is ridiculous. Bitter experience. We offered £305k on a fairly bog standard house valued at £298k. It sold for £360k ......... The market in Scotland is as overheated as the rest of the UK.

And obviously however much over the value we offer has to come out of your own pocket. It can’t be mortgaged. In our situation at the moment money that we should be using to bulk up our deposit to reduce our LTV is having to be used to pay the difference between the HR and the offer - over £25k in our case. Our choice to do that of course but it’s just the way it is at the moment!