How could my valuation be 26% wrong?
It’s the biggest mistake buyers make: Using misleading statistics or comparable properties to value the home they want to buy.
Have I done the same? No, but a valuation surveyor has totally misled them.
I have just helped them buy a house and they now want to sell one of their properties to help fund it. I said I would recommend the best agent for their flat and arranged for four of the best agents for that style of property to value it.
I had been advised that they had had an official valuation by the bank carried out by a fully qualified valuation surveyor. The figure he gave was £2.3m. I hadn’t seen the flat at this stage so when I arrived I had certain expectations in mind.
When I arrived my heart sank. The flat was incredibly nice and had been refurbished and designed to a very high standard. The rooms were well proportioned, very light with big windows and high ceilings. It also had a roof terrace. It is a great flat.
Unfortunately the valuation surveyor had clearly totally miscalculated. In my opinion the flat is worth about £1.7m at best. The four agents’ valuations ranged from £1.695m to £1.85m.
As you can imagine my client found it hard to believe that the flat was worth, at best, 27.8% less than the survey valuation. Fortunately, they are in a position where the shortfall in expected funds will not be an issue. Nevertheless it is incredibly irritating to have one’s expectations raised and calculations confounded by such a huge misevaluation.
My client sent me the surveyor’s valuation report asking me to look at the comparable properties he had used to reach his figure. Unfortunately he had chosen a strange selection of properties which was rather like comparing apples to pears. They simply weren’t suitable hence the misleading valuation.
If a trained valuation surveyor can do this, you can imagine how many buyers make the same mistake. It is absolutely essential that you have a clear understanding of prices in your target market. The only way to do this is to view as many properties as possible and build up a library of similar properties that have sold recently (which ideally you should have seen).
RELYING ON THE INTERNET IS A HUGE MISTAKE AS ARE POUND PER SQUARE FOOT COMPARISONS
Yes, the internet may make life easy in many ways but here are a few reasons why relying on it is a bad idea:
- The agents don’t list every property available on the sites
- The photographs often make the property appear in better condition than it actually is
- Floorplans are often wrong
- You cannot judge the views
- You do not know what the neighbouring properties are like (google maps and earth are also no good)
- You cannot tell if it is affected by the underground
- It can be hard to judge the ceiling heights
- Properties can appear lighter than they actually are
- If an apartment block you cannot tell how the building is run or the standard of the communal areas
- You cannot tell if there is traffic or airplane noise
- Is the garden overlooked or is there a lack of privacy in general?
- Are there commercial properties nearby?
- Does the configuration of the rooms work well – this is often hard to judge even with a detailed floorplan
- Are there any unpleasant smells? E.g. is there a fish restaurant nearby or cooking smells emanating from neighbouring apartment?
There are plenty of other factors that I could include. If you do not know about these then pound per square foot calculations and comparisons can be extremely misleading. This is why buying on a pound per square foot basis is so dangerous. It is a blunt instrument and should be used as a guide only, rather than a rule.
You must do the research yourself.
Of course, there are numerous reasons why you may not be comfortable doing this yourself. So if you would prefer to be advised by someone with a proven track record of finding the best properties available (including off-market homes) and acquiring them at favourable prices, then you always ask Property Finders London to help!