How Much Your House Is Worth
If you are asking ‘how much is my house worth’ you are not alone, this is one of the most common questions from homeowners in the UK property market. Estimating the value of your house is extremely difficult and you, as the property owner, are probably not in the best position to judge.
This is because it is almost impossible to be objective about your own home as you have probably invested a lot of time and money into making it reflect your personal tastes. Instead a pragmatic approach is required to determine how much your house is worth.
Despite your emotional attachment to your home, property is an asset like stocks and shares. As a result, its value can be affected by slumps and booms in the marketplace.
At best, how much your house is worth is a combination of timing (when you decide to sell), a consideration of the house’s characteristics (such as its size and location) and guesswork. The simplest answer to this question is that the value of your home is determined by how much a buyer is prepared to pay for it.
How can you accurately estimate the value of your home?
The most accurate way to work out the value of your home is to use a variety of different resources such as: the UK House Price Index, tools on online property websites and local or online estate agents.
The UK House Price Index
The UK House Price Index lists the average prices of property sold in the UK according to county or region and breaks it down according to property type (such as detached, etc.) It can be invaluable in giving you a starting point in estimating how much your house is worth.
The only problem is that data can be at least a month out-of-date as it takes time to upload the details of every house purchase. Another thing to bear in mind is that the average price does not take into account regional variations. No county or city has uniform neighbourhoods where property prices are all the same.
House valuation tools on online property portals
Most property-based websites have a tool where you enter your postcode or address with some basic information about your home. Using this information, the tool will search its database and give you an estimation about how much your home is worth.
This is handy as a rough guide but not always very accurate. The parameters used by such tools are quite basic, and it cannot always take into consideration very real human factors that make your home unique or worth more. For example, being in the catchment area of a good school or any property renovations you have made.
Consulting estate agents about your house value
Both local and online estate agents can be helpful in setting a price for your home as they are usually property experts. However, they are also hoping to be hired by you and make money from the commission.
It is quite possible that estate agents will overestimate the value of your home so that you will instruct them to market and sell it. Using a local agent is probably the best option for finding out how much your house is worth as they will be familiar with other similar properties in your local area.
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3 tips on setting a selling price for your home
1. Use multiple sources to value your house
Never trust one resource when judging how much your house is worth. Visit several property portals and ask at least three estate agents in order to be as accurate as possible.
2. Do your research into local house prices
You know your property and neighbourhood the best. As well as using different resources, do your own research and see how much other properties have been sold for, near to you.
3. Calculate an average house value
Although it might be tempting to go for the highest house price quoted, make an average of all the prices given to come up with an objective number.
Factors which affect the value of your home
The factors which affect how much your house is worth can be divided into two categories: the characteristics of the property itself and its location.
The characteristics of the property affecting house prices:
- The type of property
- Size of your property (footage as well as number of bedrooms)
- Age and condition of your property
- Structural integrity of the property
- The layout of your home
- The size and condition of the garden
- The inclusion of a garage or parking
- Extras such as outbuildings, a conservatory or adjoining land
- Whether your home is a listed building or not
Factors about your property location affecting how much your house is worth:
The proximity of facilities which influence property price depend on the needs of the potential buyer but include:
- Amenities like shops, restaurants, etc.
- Being in the catchment area of a good school
- Demographic composition of the neighbourhood
- Any planned local regeneration plans
- Transport links
- Crime rates in the local area
Does your house have earning potential?
Another important factor which can dramatically affect how much your house is worth is whether your property has earning potential, such as a buy to let property. if it is possible to earn money from your house from tenants, this can hugely increase the value, sometimes regardless of the condition of the property.
For example, if you own a property near a university with four bedrooms, and there is a high demand for rental properties in the area, your house could be used by someone who wishes to become a landlord and rent out either the entire property or rent out individual rooms to students.
This can affect the value of your property in a positive way and, if the property is also in good condition, is essentially going to mean your house is worth more than other properties nearby which do not have the same rental potential.
Why is it important to estimate the value of your home correctly?
One of the reasons that it is important to set the right price for your home before selling is for your own peace of mind. It may be the place where you have spent many happy moments, but a house is also an asset.
You deserve to see a good return on your property investment. The price must reflect how much time and money you have spent maintaining and improving the house. For example, refitting the kitchen or bathroom.
Another reason for correctly estimating how much your house is worth is the sale ability of the property. If you set the price too high, you might have to drop it later. Potential home buyers will see that the house has been on the market for a long time and then see that it has been reduced in price. They will naturally assume that there is something wrong with it so it could scare off potential buyers.
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