Proper London Property Valuation - Do You Want To Overpay For Your Next Home Or Investment Property?

London property valuation - How To Assess The Price Of A London Property

When you finally find the right property, you need to have a reasonable idea of what the fair value of the property is otherwise you could make a horrible mistake. Unbelievably, people spend very little time doing the necessary research or calculations. Consequently buyers needlessly waste tens of thousands of pounds – and often considerably more - when a few hours of research was all that was required.

I am not suggesting that the price you calculate will be the price that you pay. We have members who simply want to secure a home and will pay a premium to have it withdrawn from the market quickly. Conversely, we have members who want to ensure that they are achieving a very competitive price.

Ultimately that choice is down to the individual concerned. What all our members want though is to be able to make an informed decision.

Although we advise our clients on price, we also back up our London property valuation with accurate information. We have a huge database of recently sold properties which includes floorplans and detailed information on each property.

Unfortunately, accurate comparable data is not easy for the average buyer to obtain. The data is invariably incomplete and therefore dangerously misleading.

The Land Registry (www.landregistryonline.gov.uk) lists most transactions, so that you can see what properties have sold for in any given street. Unfortunately there is no information on the property other than      price (www.nethouseprices.com will also give you this information for free).
The problem with London property valuation is that no two properties are the same even if they are in the same stucco fronted terrace in Belgravia. They could be configured differently, be a different size (because one has had an extension which is not obvious from the street) or the condition of the properties could be different etc, etc. This makes the information provided by these sites nearly useless unless you have seen the comparable property yourself or at least been able to look at the full details including the floorplan.

Therefore you will need to find your information from elsewhere.

The best sources will be:

- The properties you have seen especially those that have sold – If you have conducted a thorough search over a period of a few months you should have seen numerous comparable properties. You should have kept all the details and made notes while viewing the properties (even if they were unsuitable). These will give you an excellent frame of reference. Invariably some of these homes will have been sold or reduced in price. Call all the relevant agents to see what they sold for and glean as much information as possible, e.g. did the agent think this was a good price for the seller? If yes, what did he think the property should have sold for? On what is he basing this London property valuation?

- What is available for sale – You will hopefully have seen all the comparable properties in your target area. However, there is an outside chance that you might find somewhere you like during your first two or three viewings. It is essential that you check that there is nothing better available. If you have only seen ten or twelve properties, you have probably only seen a small percentage of the market. Therefore the chances of you having seen the best property available are slim. You must call all the other agents to see if they have anything suitable or comparable. At the very least download details from websites like www.primelocation.com & www.globrix.com or any of the other websites.  so you can compare prices. (Negotiation Tip: You can make offers on multiple properties simultaneously. Do not feel you have to handle one negotiation at a time. Therefore it makes sense to ensure you have seen all suitable properties available. Here you can find out more on London property negotiations

- Information from the estate agents – Ask other agents if they have recently sold a similar property to the one you like. If so, say you are trying to get a feel for the area and ask them to send the old details. Also see if they have anything similar at the moment. In some cases you may want to ask their opinion on the property in which you are interested. However, you need to take any opinions with a pinch of salt. If another agent gives his/her opinion ask which properties they are using as comparables to form their opinion.
Also ask the agents selling the property to justify the London property valuation. Ask them to provide comparable data. If they can’t, quite often an agent will admit that a property is overvalued (to be fair to the agents owners sometimes insist on asking for an inflated price despite the agents’ advice). The more questions you ask, the more likely the agent might let slip a useful piece of information. Of course this needs to be a conversation rather than an inquisition.

Once you have collated all the data you must compare like for like.

It sounds obvious, but this is not always easy as prices can vary massively in the same street for one reason or another. Indeed they can vary in the same building. For example, a first floor apartment in a stucco fronted conversion will generally be more expensive per square foot than a top floor apartment in the same building. However, apartments on the higher floors in a modern building will be more expensive than those on lower floors.

Therefore you must be very careful as to what you use for comparables.

You may want to enlist the help of a property finder (click here for more information) if you do not know the area well. Alternatively you can do some basic research by speaking to other residents in the street. It is also always worth speaking to the neighbours. Simply say: “We are thinking of buying a property in the street. What can you tell me about the neighbourhood?” They may have some useful information on the property you are hoping to buy. Just as importantly you can see if they are people next to whom you would be happy to live.

Points to Consider when making your London property valuation:

• How does the price compare per square foot to similar homes in the area? This should only be used as a rough guide as there are many other factors to take into consideration.
• How long is the lease in comparison to the comparables you are using?
• How does the property differ to the comparables you are using? E.g. does it have a lift? Is the condition better? Is there parking or outside space? Is the other property affected by the tube? How will these differences affect the price?
• How strong is the market? Is the market racing up or is it stabilising before further falls? You cannot tell for certain, but you need to assess the state of the market.
• How many similar properties are available? Is there an oversupply?
• How many comparables do you have? If you only have one or two, you need to be very careful. It is possible that that purchaser paid a huge premium and so the price may not be a true indication of fair value. Conversely the buyer may have negotiated an extremely good price, so you may be put off making an offer because the property seems overpriced when in fact it may still be a good buy.
• What makes this property stand out for you?Proper London property valuation: It is essential to consider the value of the property to you rather than just the price.

(If you are planning to buy an investment property, please click here for further advice on this topic).

There are properties in prime central London for which there are no direct comparables. They are unique and command a premium for being so. These properties often do not reach the open market so the judgement on value will be very personal. I know of one house in Kensington where the owner has quietly let it be known that he would sell for £250 million. In these situations London property valuation is as much an art as a science (and negotiation skills are more important than ever).

Whatever the property you wish to buy, you must decide on the maximum figure you would be happy to pay for the property. This must be decided before you start negotiating. This must also be a figure that you will commit to not exceeding as this will be the target for your negotiation. Ideally you will buy the property for less, but this will act as your ceiling price. If you cannot reach an agreement at this price or less then you must be prepared to end the negotiation (please visit the page – property negotiation for more details).

If you would like more information on London property valuation and how to make the buying process as successful as possible while reducing the normal stress, frustration and wasted time suffered by the average buyer, please order your free copy of our report:
“The Seven Biggest Mistakes Property Buyers Make (...and how to avoid them)”
Please fill in this simple form below and we will send you the report immediately.

To the top of "London Property Valuation"