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How Do Surveyors Value Properties?

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Of course it's just guesswork. It's an attempt to catch the current market average. How does an auction house value a painting or an antique candlestick?

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They simply look at what comparable properties in the area (of comparable area) have recently sold for. They have access to a lot of data on the Professional version of Rightmove with historic photos etc. In a rising market they will adjust upwards for published inflation and in a falling market, adjust downwards.

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For mortgage purposes the valuation figure they give will either be exactly the same as the agreed purchase price or less, never more. IIRC.

If its a standardish house similar to others nearby, they spend ages working out square footage, looking at spec, condition and improvements made etc etc, then all that goes out of the window and they look at equivalent recent sold prices to see if they can get a near match to the agreed sale price. so the end result is pretty unskilled.

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They simply look at what comparable properties in the area (of comparable area) have recently sold for. They have access to a lot of data on the Professional version of Rightmove with historic photos etc. In a rising market they will adjust upwards for published inflation and in a falling market, adjust downwards.

RICS Guidance: https://consultations.rics.org/consult.ti/comparable_evidence/viewCompoundDoc?docid=836980&sessionid=&voteid=&partId=837044

"Comparative valuation is based on the well-established economic principle of substitution. In summary, this states that the buyer of a good would not pay more for it than the cost of acquiring a satisfactory substitute.

A person assessing the price to pay for a particular good will therefore look to the price achieved for similar goods in the market (the comparable evidence) and make a bid accordingly. When assessing the comparable evidence, the potential purchaser and/or valuer will need to ensure that it is:

  • comprehensive - a sufficient number of transactions is needed to confirm the price. A single transaction is unlikely to be sufficient
  • identical, or at least very similar, to the item being valued
  • recent
  • the result of arm's-length transactions in the open market
  • verifiable
  • consistent with local market practice.

Comparable evidence underpins the valuation of almost all goods traded openly. Provided the above criteria are met, it can provide an accurate indication of value for a very wide range of traded assets".

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