What is an online property valuation?
It’s typically a very simplistic tool that can quickly generate an estimate of a property’s value for a potential sale, based on a few pieces of information that you enter.
Property website Zoopla is one of many businesses online that offer free online estimates. The process for obtaining a quote is relatively simple. You start by entering the postcode of your house or flat, and then narrow down the search to your home’s number. Then you click “get estimate” and in seconds you have a projected value.
Most websites that offer speedy online property valuations will present the results with a topline figure for the estimate price range that your home might fetch at sale – for example you might be given a valuation of £100,000 to £150,000 with a specific estimate of £125,000.
Although you should never take such estimates as the definitive statement of your home’s value, because of mitigating factors explained below, online property valuations can sometimes be a useful tool to get a quick sense of the potential sale price that you might be able to seek.
How are online property valuations calculated?
You might wonder how a website is able to generate specific valuations for properties so quickly, and that’s because it draws from a compilation of existing home data.
When you use an online property valuation tool you’re communicating just with a computer that automates an estimate based on the home data it has. The information that valuation websites use for their estimates include recent figures on property market value fluctuations for similar houses and flats in your area, as well as facts like the number of bedrooms and bathrooms in your property, and the price that homes have sold for in prior transactions.
The valuation website crunches all of this data in an instant, producing a price range that it thinks your home will be worth based off the information in its database.
It’s important to know that although online valuations can give you a general guideline for how much your home might be worth, they typically online rely on a set amount of data from a specific amount of time. For example, you might be seeking an online valuation even though the website tool that provides this will be calculating the value of your home based on 2019 data. This means that the final valuation you receive could already be out of date when you get it.
The sources of information that online valuations use often includes data on the price of previous home sales within a stated area as provided by HM Land Registry, which is a non-ministerial division of the UK government that registers data on the ownership of property and land in England and Wales. This information is frequently updated, so you can at least count on this aspect of an online valuation often being accurate as far as sale prices for houses or flats that are similar to yours in shape or size and that have recently sold in and around your neighbourhood.
Some online property valuation tools will frequently check the HM Land Registry for the latest information on home sales, which does help to increase the reliability of the results they give you for a projected property sale price. Other online valuation tools will not update their core data as frequently, which can undermine the veracity of whatever quote they provide to you for selling your home. It might be worth contacting whichever company is operating the website on which you are using a valuation tool to ask them for specifics on the data on which they rely.
And some online valuation tools will also rely on data collected from estate agents in the area who might provide information on the latest trends in home sales and prices. This is particularly true in cases where you submit details on your home via an online valuation tool and don’t get an instant quote but instead an estate agent will review the data and then get in touch with whatever estimate they calculate. But you should know that in the vast majority of cases, an online valuation tool is simply a computer parsing data through a specific algorithm.
Online valuation tools generally do not calculate estimated prices for selling your home based on recent physical changes that you might have made to the property, or changes in situations in your neighbourhood beyond your control such as fluctuations in crime rates, announcements of recent plans for property development in the area, and a host of other crucial factors – even though these elements will be central to the final valuation you make for selling your home.
Even property sales websites including rightmove and Zoopla note that their valuations are good starting points for getting an estimate of your home’s potential sale price, and that in-person visits from property sales agents will generate a more accurate valuation that is based on a professional examining the exterior and interior of your property.
There can also be some fluctuations between the estimated sale price that you are given by an online valuation tool and the current market prices for homes similar to yours on sale in the area. If this happens you could ask the company behind the online valuation tool that you used to give you an explanation of the discrepancy. It is most likely because the tool is using information that is out of date already. But in certain circumstances the difference might because your postcode is causing some complications with the algorithm that the online tool uses, such as homes with higher insurance values or properties that have very big gardens.
Are the estimates from online property valuations trustworthy?
Although online property valuations have the tremendous perk of being free, the fact that they can be generated so quickly should make most homeowners skeptical of their accuracy.
That’s not to say online estimate can never be trustworthy, and indeed some searches for properties will produce a value that ends up being close to what an estate agent might give for the house or flat if they did a more-traditional in-person property evaluation.
But there are a number of mitigating factors that reduce the accuracy of online property estimates. For example, some websites may have outdated information that they’re relying on when it comes to calculating an estimate on what your home might be worth. If the website is using details on home sales in your area that hasn’t been updated in several years, the estimate you’re given might not accurately reflect how local property prices may have risen or fallen.
You should also be cautious about relying just on a website property evaluation before proceeding to trying to sell your home because it doesn’t account for as much detail as an in-person assessment. A simple online valuation that relies on publicly available information instead of a detailed case-specific review of your property is naturally going to miss a lot of important facts that could significantly change the estimated value of your home.
Perhaps your recently completed work to increase your property’s value, such as recent renovations or additions you might have made that boost your potential sale price. An online estimate generator won’t know about that work, nor is there any way that you can tell the tool to account for the work. As such, any online estimate you’re given won’t be an up-to-date accurate valuation.
That’s why it’s important to think of online property valuations as a general guideline for your property’s overall worth but not to base major decisions like selling by only using that valuation. You should do additional research before you decide to sell your house or flat.
Alternatives to an online valuation
It’s recommended that homeowners do not rely solely on free online valuations when trying to determine how much their house or flat is worth and what sale price to use when trying to sell their properties. Instead, use the range of prices that you will get from an online valuation and consider that just one piece of information before pursuing more accurate estimates.
Remember that using an online valuation as the sole source of information for your home’s potential sale price could significantly complicate your efforts to sell it. If the estimate is too high, you might set a price that attracts no buyers, and if the estimate is too low you risk selling your home below its potential value, meaning you will make less profit from selling than you could.
In addition to using an online valuation, there are several other alternatives to getting an estimated sale price for you home. Most of the options below will not require you to spend any money, and they will generally be significantly more accurate to the online version. Depending on much time you have available before listing your property for sale, the more valuations that you can collect, the more data you’ll have to determine a very accurate estimate to use when setting your sale price.
And also note that none of the below ways to get a valuation for your home are essential; you could take a chance and try listing your home for sale based on only a few pieces of information such as whatever result you get from an online valuation. However, it’s generally suggested that to get as many different valuations as possible to give you the most accurate sale price.
Ask a property auctioneer to give you a projected opening bid price
One possible step you could take is to get in touch with property auctioneers in your area and tell them that you are thinking of selling your home using their services. Tell them about your home and ask them what they think the opening minimum reserve price should be; this is the price at which you are comfortable selling even if you only get one bid during the auction.
Some auctioneers will likely provide you with this information for free, or at least give you a rough estimate that you can then use as part of the planning process for selling your home as you gather valuations from a range of sources. But the reserve price is usually set below a value that you home could actually receive when selling through other methods, because the auctioneer is trying to get as much interest from as many buyers as possible. The goal is to have many people wanting to buy your home so that they try to outbid each other at the auction and push the final sale price significantly higher than the opening reserve bid. Yet this also means your home might truly be worth more than whatever the auctioneer says.
As with other methods of receiving a valuation you should not decide your sale price based solely of this source, but consider it another useful piece of information in your research.
And if an auctioneer demands that you pay them a fee before telling you how much they think your home might be worth, and its corresponding best opening reserve bid price, you should not pay and instead opt against trying to get a valuation from there before selling your property.
Consult with several estate agents to get free estimate for your home
Many homeowners looking for a valuation of their properties will contact estate agents to get free valuations. These are typically accurate because estate agents know the latest information about selling homes in your neighbourhood, including the value at which similar properties are selling as well as any potential pros and cons that could help or hurt the sale of your home.
But beware that some estimates that you might get from estate agents can be inflated above the true value of your property. Estate agents are happy to offer you free valuations because they hope that you will sell your home through them, and then they can charge you commission if they find a buyer for the property. Because they want to get your business, they might tell you a potential sale price that is above the value that they know they can actually get for your home.
Take some time to collect valuations from a number of estate agents so that you can compare them against each other. If all of the projected sale prices are within the same general range then you can likely put some trust those valuations. But if one estate agent quotes a sale price that is significantly higher than all the other estimates you have received, it is sometimes an attempt by that one company to try enticing you into selling through them by increasing the valuation.
Pay for an independent valuation from a qualified property expert surveyor
One method for getting an accurate valuation, but that will cost you money, is to find an expert property valuer who is a member of the Royal Chartered Surveyors, or RICS, which is dedicated to enforcing the best standards for valuing, managing and developing properties. An assessment of your home’s value by a professional and independent valuer who belong to RICS is considered to be credible and a good guide for setting your eventual sale price.
The reason why RICS valuations are considered credible is that the surveyor does not have any stake in the outcome of your home sale, and can therefore provide a truly objective value.
And a further benefit is that RICS valuations can be used in a number of legal situations, including for home insurance applications, financial transactions, legal disputes, and more.
However, you will have to pay the survey to conduct the valuation and you can expect to pay roughly £100-£200 for this service, although it might be more or less depending on your home and the surveyor that you use. If you have the time and money to get such a survey it can be beneficial given the accuracy of the valuation that you will receive from the surveyor. But not every homeowner can afford the cost of such a survey or have the time necessary to wait for it to be completed and instead can rely on other valuations. The good news is that a RICS valuation is not an essential requirement and alternative valuations are perfectly valid.
Seek a no-obligation sale quote from a fast buyer like LDN Properties
Quick questions about getting an online property valuation
We often get questions from homeowners about whether they can trust online property valuations, and here are our answers to three of the most commonly asked queries:
You should never make any decisions on selling your house or flat based solely on a valuation generated by an online estimation tool. Think of them more as an advisory piece of information that might give you a general guide to what your home could be worth, but be aware the actual price might differ significantly from the valuation.
The speed of an online valuation is the biggest benefit, because you can type in a few details and generate an estimate within less than a minute. The biggest drawback of this is that online estimates can be very unreliable and based on outdated data, so you can’t be sure the value you’re given is anywhere near your home’s real value.
You could contact a local estate agent to come and appraise the value of your property. Very often they won’t charge you any money for this because it’s a chance for them to get a potential client if they can convince you to sell through them. Still, some valuations can cost money, for example if you need to have one done to obtain a loan.
For a fair estimate on your home’s value, call our experts today
At LDN Properties, making fast and competitive offers to buy houses and flats is our speciality so we are very skilled in making accurate estimates of property values.
