Paid Valuation vs Market Appraisal
Understandably, sometimes there is confusion between the use of the words ‘valuation’ and ‘market appraisal’ in estate agency. Additionally, some estate agents – including Chancellors – offer an ‘instant valuation’ service, which provides an online estimate for the value of a property.
However, these terms should not be used interchangeably, as they have distinct meanings. Below we have defined each term and outlined the difference between them, so that you can choose the option that best suits your needs.
When you apply for a mortgage, a surveyor is invariably employed to carry out a formal valuation on the property. The surveyor must be suitably qualified, and it is usual for mortgage lenders to insist that valuations be undertaken by a Registered Valuer from the Royal Institution of Chartered Surveyors (RICS). A fee must be paid for the Registered Valuer’s opinion.
This qualified person will have professional indemnity insurance, giving consumers confidence that the opinion of value can be relied upon, subject to any qualifications in the valuation document. Therefore, a full valuation is an evidence-based opinion with an element of subjectivity.
Of course, different Registered Valuers may provide different opinions of value. Over the years, the courts have been asked many times to decide if a value is correct. They have found that, provided the valuation has been conducted in accordance with the RICS Red Book (where best practice is set out), an opinion of value cannot be ‘wrong’ as long as it is within reasonable tolerances of the opinion of the court as to value. While this tolerance depends on the circumstances, it has been known to be as much as 17%, but is usually up to 10%.
Registered Valuers will be cautious in their opinions and will not take into account the ‘special buyer’, to whom the property has an enhanced value. Instead, the Registered Valuer will look at what comparable properties have sold for, considering how prices may have risen or fallen since the date those comparable properties were sold.
In addition, the Registered Valuer will carefully inspect the property, taking into consideration its structural condition and any repairs necessary to make it a safe place to live.
It is important to consider that a paid valuation is different to what a professional estate agent can achieve on your property.
Given the associated time and costs, a full valuation is not the approach most sellers will want their estate agent to take when advising them of the price and marketing tactics that should be employed to sell their home for the best price.
For these reasons, the Chancellors Group of Estate Agents does not provide clients with formal valuations. Instead, as marketers, we provide a free market appraisal service that incorporates recommendations on asking price and marketing strategies. We take into consideration the sellers’ individual requirements, our expectations of the market going forward, and known interest in the particular property and/or location.
We recommend what actions the seller can take to attract buyers and achieve the best sale price. This can include de-cluttering, gardening and redecoration. As we do not undertake surveys, we are not qualified to comment on the structural condition and recommend specialist advice is taken where a concern of this nature is identified.
To achieve the best price and terms for our clients, there are many strategies that can be employed – for example, ask a very competitive price to generate a queue. This can lead to a competitive situation where what is paid has little resemblance to a Registered Valuer’s opinion of value. Alternatively, we can ask a full price and be prepared to consider negotiating if the marketing strategy demonstrates that the asking price cannot be achieved within an acceptable timeframe.
For many people who have enlisted the Chancellors Group of Estate Agents to sell or let their property, their first step has been to request a free instant online valuation.
Your online valuation provides an estimate of how much your house is worth, based on average property prices in your area. As such, it offers a useful guide to your property’s potential asking price, but should not be taken as a reliable valuation – for instance, it is based on the assumption that your home is typical of those in the area, without any improvements having been made.
The formal valuation has its place, but usually not when considering how to achieve the highest selling price. Meanwhile, an instant online valuation is a useful initial guide to prices in your area, but lacks the insight of a more detailed assessment. As such, we believe that a market appraisal is the best route to follow if you would like to know what is possible when selling your property.
We therefore recommend that, free of charge, we visit your property to discuss how we can market your property to the best effect given your circumstances, the timeframes you are working to and the sale price you hope to achieve.