When wanting to sell the house, getting an accurate property valuation and appraisal are important to speed this process along. Though this can be difficult, involving countless estate agents as well as wanting as high a figure as is possible, there are ways to ensure your house is valued fairly. This quick guide will tell you all you need to know.
The difference between property valuations and appraisals
Appraisals occur when an estate agent evaluates your house and provides an estimation of its value in the current market. They do this by considering your house’s location and what properties nearby have sold for recently. Advice is usually given on how the house could fetch a higher value- for example through home improvements such as redecorating a room.
Valuations occur when a surveyor inspects a house and reports on aspects such as structure and defects, providing the potential buyer with enough information to make an informed buying decision. Though this is usually carried out by the buyer, it can be worthwhile for a seller to hire a surveyor, so that defects can be corrected, speeding up the house selling process later on. RICS is a well-known company who conduct various surveys such as their, ‘HomeBuyer Report’ and, ‘RICS Building Survey’ taking into account defects, repair options and providing advice for your solicitor or lawyer.
Typically, your lawyer or solicitor will want appraisals from at least three local estate agents who know the area and market well. There are a few methods they may use but the outcome is the same: If you are provided with similar prices at which to sell, you will know that you have been provided with realistic choices. If given confusing variations, you can take an average from the three (or more) prices and then this is the approximate price at which to sell.
Method 1: Comparative Market Analysis (CMA)
The CMA is the most frequently used form of appraisal (and alluded to earlier). It considers similar housing in your area, as well as unique home features that may boost its value, such as location, pool inclusion and expert kitchen facilities. Potential market appreciation and depreciation is also taken into account. If a CMA is carried out, you may receive a market analysis report containing the following information:
- Active listings of houses for sale in your area
- Pending listings of houses that will be put on the market shortly
- Sold listings of houses that have been purchased within the last 6 months
- Off-Market lists of houses that were taken off the market for reasons including seller remorse, being priced too highly or agent firing.
- Expired Listings which includes houses that were unreasonably valued and thus did not sell.
With this information, you will be able to find a suitable price to sell your house that relates well to your local area.
Method 2: Income Approach
In cases where your house was bought as an investment (i.e. to sell on for profit) then the present value of the house is estimated based on its expected future value. The appraiser or surveyor works out the houses ability to create profit in the future by making assumptions on potential market prices, resale value and where relevant, income generated by the house. Though this method can be useful as it focuses specifically on your house, it is however dependent on potentially incorrect assumptions. It also discounts current market prices and thus is not based in actual reason.
Method 3: Cost Approach
This prices the house at the amount it would cost to replace it, taking into account land and building value as well as depreciation. For example, if the market value of the land was £50,000, to replace the house would cost £300,000 and depreciation was £50,000 then the value of the property is worked out like this:
50,000 + 300,000 – 50,000 = £300,000
This may seem a fairer method to property appraisals but some of the figures involved may be based on assumptions and thus not based on reality. The CMA could provide you with a higher value too so you may miss out by settling for its cost price.
Method 4: Do It Yourself
Fortunately, various websites exist that provide you with a quick CMA. Websites such as Zoopla.co.uk, rightmove.co.uk and the Land Registry present you with information such as houses for sale in your local area, how much houses have sold for recently and how much these websites believe your house is worth. This provides you with a quick appraisal, allowing you to price your house. The value gained from these websites can also be used in court should disagreements occur over what price to sell the house at.
These websites generally don’t however provide great detail of local factors. For example, two houses may be similar in layout and structure, but one located close to good transport links and schools would be worthy of a higher price, though some websites may not take this into account. Again, your house may be undervalued and you could lose out on a better price.
Something to bear in mind
Though the appraisal methods mentioned above have their benefits, all can be difficult and time consuming to organise, involving various estate agents and causing disagreements between you and your ex. Especially when you want a quick sale, appraisals can prolong this process unnecessarily. Therefore, as with anything regarding divorce, discuss all potential options with your ex so that an agreeable solution can be reached.Back to all articles