The Property Valuation Process And The Homeowner
By Thomas Pretty
If you ask an estate agent what the hardest part of their job they will most likely tell you that the property valuation process constitutes the most difficult task in their day to day work. This is not only because it requires a large amount of factual knowledge and educated guesswork but it can also be hard to break the often bad news to homeowners.
Fundamentally a valuation takes into account the size of the property, its present condition and the market conditions; additionally it must also factor in the local area and amenities. If it less than the homeowner expects, then the agent has the unenviable and rather diplomatic task of telling them that their home is worth considerably less than they paid for it.
Those who own property rarely have an understanding of exactly what their property is worth. Most people think that a valuation depends upon the price that was originally paid for the property combined with the cost of any building work that has been undertaken throughout the years. Nothing however could be further from the truth.
The value of a home has nothing to do with any of the previous sale prices or any building work undertaken, fundamentally property is a commodity and like any commodity its price is regulated by demand. Most agents will tell you that a home is only worth what a buyer is willing to pay for it.
Presently the property market is changing due to fluctuations in the international financial markets. For around a decade it has been a seller”s market, with buyers easily obtaining mortgages and buying properties. Subsequently with many buyers on the market demand is higher and hence homes are worth more.
However due to problems with interbank lending and lending more generally mortgages have been harder to come by and as a result there are now less buyers on the market. The result is that property prices fall as less people are there to buy property. Understandably estate agents and surveyors must give lower valuation figures than those in the past.
As a result of the ”credit crunch” and the drop in the number of buyers many homeowners are instead looking to extend their homes rather than move. This can be an expensive task and is some cases may require a remortgage of the property. This is where surveyors are needed as lenders will normally only accept a valuation from a surveyor and not an agent.
If the surveyor sees enough potential for an extension and deems the property worth enough to warrant one these findings will be passed to mortgage brokers; however, in the current climate even remortgaging is becoming a difficult process.
As stated earlier a property valuation takes into account a number of different factors. The first of these factors is the size of the property in terms of the number of bedrooms, bathrooms and downstairs space. Once the size has been assessed the condition of the property is then looked at, issues such as outstanding building work or existing damage are brought into the equation as these will lower the value.
Once the property has been considered the process must then account for current market conditions, in particular the number of buyers looking for that size and type of home. The final step is to consider the area, its crime rate, the proximity of local amenities and the quality of local schools. It is only after combining this information that it is possible to find the true worth of a home in the current market.
About The Author
Real estate expert Thomas Pretty studies what is involved in a property valuation and how the process is affected by changes in global financial markets. To find out more please visit http://www.haart.co.uk/sell-house/house-valuation-online.aspx