Increasing numbers of homeowners are turning to online estate agencies for the convenience and instant accessibility they offer. However, there is frequently a considerable discrepancy between the online house valuations from agencies such as Property Price Advice, Zoopla and Yopa and the final price that the property realises. Consequently, there is much doubt over the accuracy of online property valuation tools and the methods they use.
How online house valuation tools work
Although there are minor differences between the valuation tools regarding the amount of detail they request, they all calculate a home’s worth by using a similar system. Generally, a property’s postcode is used to begin comparing it to other homes within a limited radius of its location. If the submitted postcode is in an area with high numbers of recent sales of similar properties the valuation can be relatively accurate in some cases. Without local sales or if the property is quite isolated, the valuation is calculated on the sales of properties much further afield and can vary considerably depending on which region of the UK they are located in.
Why do properties prices vary within the UK?
Regional property prices are dependant on a complex set of issues including geography, infrastructure and the concentration of various industries. Prices directly reflect the practicalities and appeal of the regions to prospective homeowners. As a result similar properties situated in various counties will have much different values. For instance, a detached family home in the north east of England may command an average price of £265,000 yet on the other side of the Pennines it can realise £330,000. Other regional averages are as follows:
Midlands – £230,000
South East – £320,000
South West – £225,000
London – £650,000
Wales – £157,000
Scotland – £184,000
When an online house valuation tool calculates a price in one region it might use any of those listed above resulting in a figure that doesn’t match the property itself simply because it cannot account for additional features that might affect its valuation.
Why prices can vary between similar properties
Online valuations are driven by the simplest formula of how many bedrooms a property has but even this can lead to a confusing result. Some homeowners opt to increase their number of bedrooms by dividing a large room into two. When calculating a valuation for such a property the online tool processes data from the postcode and properties nearby. This often results in an inaccurate figure due to not being able to evaluate the impact of additional but smaller sized bedrooms compared to homes that had the larger number of rooms to begin with. The majority of homeowners enjoy modernising their homes or adding extra features to make their properties comfortable to live in and to increase their value. Adjacent properties which were once identical in structure and amenities can eventually achieve vastly different selling prices due to the extra features they include. However, not all improvements will add directly to the value of the property.
Adding value to property
The most beneficial projects are those that increase the available living space within a home. Building a conservatory or converting a garage into an extra room will both add around 10% to the property’s value for investments that are often well below £10,000. Similar figures apply to loft conversions. Kitchen and bathroom refits never realise more than a maximum of 3% of the value due to being closely aligned with personal taste but they do add to the general appearance of a home. More than a thousand can frequently be added if there are such facilities as a sturdy shed for storage and a beautifully maintained garden but these won’t register in the online estimate. An online valuation tool is unable to factor into its calculations the appeal a well-appointed home might have to prospective buyers.
Obtaining an accurate estimate
Zoopla and Property Price Advice both state that their online house valuations are only an estimate and advise seeking a more detailed analysis when deciding to sell a property. Every home is unique and has its own particular merits that may add value for various reasons. The location is vitally important as being situated next to an eyesore can detract from the value of a home that is otherwise beautifully presented. Individual homes are always more accurately assessed through being seen in person. Online valuations are a useful tool that can suggest an opening figure for selling and often provide the inspiration for projects that will increase value. However, a personal valuation or appraisal carried out by an experienced estate agent who has an extensive understanding of the local housing market is still the most precise method for obtaining an accurate selling price.