Seven things that WON’T determine what your home is worth

Whichever way you go with home prices this year, buyers and sellers will have to decide whether an asking price represents a fair market value.

The average asking price is currently 23 percent higher than the average price for which properties are actually sold, suggesting that some sellers are setting their bar too high.

As of March, the average UK asking price on Rightmove was £365,357. The average sale price, according to the Land Registry, was £289,818 as of January.

When it comes to selling a home, it’s critical to establish what it’s worth before putting it up for sale.

Sellers who demand too much may have to watch their home hang on the market for months.

Often the longer it stays, the less interest it will attract – with potential buyers taking the months of marketing as a sign that something must be wrong.

On top of the time wasted, the asking price will have to be reduced – perhaps several times – and the owner risks selling their home for less than if they had started with a more accurate appraisal.

Likewise, if the value of their home seems like a bargain, they may be shorting themselves tens of thousands of pounds.

Henry Pryor, a professional buyer’s agent, says, “What a property is worth is part art, part science. The asking price is part of the marketing. Properly pitched, it should attract potential buyers.

“What other comparable properties have sold for is helpful, but what other comparable properties are selling for may be more relevant in many ways. What more can a buyer choose than your home?

“And likewise, how many people are looking for your kind of property, and how much do they have to spend to compete with each other?

“If there are 20 people with £1 million each, then you get to sell for a premium.”

As for potential buyers, Henry Pryor says they should never take the asking price too literally.

The asking price, according to Pryor, is not necessarily indicative of value, nor is it a statement of what the seller might accept.

It’s also not necessarily what the broker advised, or what a mortgage appraiser might sign off on.

Buyers are therefore advised to do their own research before bidding. According to Pryor, this doesn’t just mean hours of scrolling on Rightmove and Zoopla. It also means talking to local real estate agents.

“If you want to know what a home is worth, ask a real estate agent,” says Pryor. ‘Preferably not the person who sells the house you want to buy.

‘They know who is watching, what they have to spend, what else they can buy and which way the market is heading.

‘Ultimately, the buyer decides what it’s worth. The seller has the luxury of deciding whether it’s enough.’

We spoke to Henry about the seven things that don’t determine what someone’s home is worth – despite what sellers and buyers may think.

Things that don’t determine what a house is worth

1) What you paid for it

No one wants to sell their house for less than they paid for it, but in some cases they have to.

The old adage that real estate prices are always rising doesn’t always go the way people would like it to.

Even if the news headlines tell you that house prices have risen in recent years, the situation may be very different in certain parts of the country.

There is also a chance that you paid too much in the beginning. Those who buy new builds tend to find the price decreases in the beginning – just like a new car.

The good news is that even if a home has dropped in value, chances are homes in the same area are also cheaper.

Pryor says, “What you paid for the house may affect what you’d accept, but it’s unlikely to motivate anyone to make an offer.”

2) What you need

It doesn’t hurt to test the market for those who need a certain number – perhaps to buy their next home.

However, if they charge more than buyers are willing to pay, they are likely to be disappointed.

Pryor adds, “What you need to move into the next house is important, of course — but again, it doesn’t mean someone will offer you more just because you have expensive taste.”

3) What your neighbor is asking for his house

Noticing a neighbor’s house on the market has spurred many a seller into action – especially if they’ve been pleasantly surprised by the asking price.

First, it’s important to determine if the neighbor’s house is similar in size and condition to yours.

If so, remember that their asking price is not the same as the selling price and the difference between the two can get big.

The average UK asking price on Rightmove is currently £365,357. The average sale price, according to the Land Registry, is £289,818 as of January.

Pryor says, “Your house will be different, and therefore worth a different amount. Your neighbor may have a variety of reasons for selling that warrant a higher or lower asking price.

“You need to price your property to compete with theirs and get buyers to come see your home.”

4) What your friends say

Everyone has an opinion about real estate these days, but that doesn’t mean they have no idea what they’re talking about.

Family and friends are likely to base their opinions on their own experiences and what they’ve read on social media and in the news. Take it with a pinch of salt.

“Most salespeople get the advice from friends and family, whether they like it or not, but unless they pull out their checkbooks, it’s not really relevant,” Pryor adds.

5) What brokers say

Estate agents are probably the people most sellers will rely on to provide the correct valuation.

Unfortunately, some brokers may be more concerned about winning the contract than about judging the price fairly.

They will then blame the market for the lack of interest in the coming months and lower the price.

That’s why it’s important to audition with some realtors for the role. And don’t necessarily go with whoever says the house is worth the most, or who says they’ll sell for the lowest price.

“With the market hardening and it’s hard to get new business, I’m afraid there are some agents out there who will flatter you with an inflated amount in hopes of winning your business,” says Pryor.

‘One of London’s largest estate agents only sells one in five properties they take on because they are so optimistic about their pricing.’

6) The cost to rebuild

This is one that homeowners may be familiar with on their insurance policies. The rebuilding cost of a home is not the same as its market value.

This is how much it will cost to rebuild the property from scratch if it was destroyed – for example, after a fire or an explosion.

The rebuild costs are usually much less than the market value. However, it can be much higher on some older or unconventional properties.

Pryor adds, “The cost of reconstruction or the insurance value does not include the land on which the house is built.

“It’s just the value of what could be repaired if it burned down, for example.”

7) What you spent on it

Unfortunately, this can be another psychological barrier that salespeople have to overcome.

Just because they remodeled an attic, added a side return, or remodeled the entire kitchen doesn’t guarantee they’ll make a profit—or even get that money back—when they come to sell.

Pryor adds, “You may have spent a fortune on fancy lamps or a fancy kitchen, but it only helps sell the house.” It’s not in the value, especially if buyers don’t appreciate it.’