As a 17-year-old rookie estate agent, I was always impressed by how my elder colleagues could confidently tell a vendor how much their home might sell for. I was told a phrase that has stuck with me all my career - valuation is an art NOT a science.
There is a fundamental difference between valuations undertaken by a professional valuer, ones carried out by an experienced fully-licensed real estate agent and those made by the average home owner.
Some are based on knowledge and experience and a lack of bias, some are educated guesses and some are just wishful thinking.
In defence of homeowners, however, guessing is far more educated than ever before, due to the insane amount of information available online. Recent sales are recorded and you can check every home listed for sale similar to yours.
But that does not mean you can rest easy after reading an online report. How that information is interpretated and the fact that in many cases, data can be two or three months out of date makes that task harder.
Plus, valuations by homeowners are very often swayed by personal attachment to the home.
Agents, in comparison, spend all their working weeks listening to sellers and buyers right now. Valuers are inspecting and researching day in and day out.
To help you understand the facts and avoid confusion, a valuation is an estimate of an amount a buyer may pay for a home. It is however, an opinion, with no guarantees.
The figure estimated can change upwards and downwards in very short periods of time due to changing market conditions.
To gain the most accurate figure, I would suggest at least three separate agents' opinions. The closer these figures the more likelihood of accuracy.
If figures are far apart, always ask each agent exactly how they quantify it and consider paying for a valuation to get real clarity.
But don't take any valuation personally! Agents that give you a disappointing figure, but who can justify it, could be right.
At the end of the day, it's the market that will decide what your home is really worth.
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And beware agents bearing really good news by suggesting guides way out of line. This is an old trick used since time immemorial to sign you up. They will then seek reductions after or sell it cheap.
It is true that valuations can be seen to be wrong, but this is usually because markets change and demand for your particular home could suddenly increase or decrease. A valuation, after all, is a figure for today.
The most common misconception with property pricing is the fact sellers focus on what they need or what they want to achieve.
This of course is important to you as a seller, but in fact it has no relevance to a valuation or the market place.
So do your research first, listen to the professionals and get the knowledge to understand your market.
-- Sam Khalil --