Comparable sales are the foundation of most conversations about property values. These are used by estate agents to determine the value of a property upon which to list it, by buyers to determine if the asking price of a house is fair relative to other similar houses in the area and by surveyors to assess whether a bank should provide financing for a purchase. Everyone in the property industry uses comparable sales and most use them in ways that lead to misleading conclusions.
Almost all cases of misuse start with the same error. When attempting to determine the value of a piece of property, it is common for people to use the sale price of another property that was located near the property in question. However, such values do not account for any of the variables that exist between each piece of property, which can differ significantly from one another.
A comparable sale is only useful insofar as it is comparable. While this may sound obvious, applying such a rule can be difficult in practice. For instance, if two houses are sold within a certain area for a similar price, do they necessarily share the same attributes that make them similar in value to others? Do they share the same number of bedrooms? Are they in the same condition? Do they have the same size of garden? Have they been extended? Did they sell in a different market at the time of the other house’s sale? Was there a specific motivation to purchase the other house (e.g. a school catchment, a job proximity, etc.) that impacts its valuation differently than others? For help from Gloucester Estate Agents, contact https://www.tgres.co.uk
Each of these variables is important to consider when selecting a house for sale. To find a house with similar features to the one that you are selling, you must have knowledge about the properties, the neighbourhoods and the area itself. This will help you to compare the features of the two houses and make an informed decision about the value of your home.
Therefore, when looking at a property, it’s always more valuable to ask the estate agent about their comparative analysis of the property rather than performing the same analysis yourself on a property portal. The estate agent has knowledge of both the properties, the prices that they were sold for and the reasons why those prices were established for those properties. So, when discussing the property with the estate agent, they are able to offer you considerably more useful information than any analysis that you might perform online.
