Why Is An Accurate Property Valuation Important

Are you ready to sell your home and looking to get a valuation? Perhaps you have tried instant online valuations, but are wondering how accurate and reliable they are.  

We wrote about what goes into property valuation in another blog. This time, we want to talk about what it could cost you to put your property on the market with an inaccurate valuation. Not doing adequate research and miscalculating the true value of your property can cause more than a financial impact on you as a seller. Let’s dive in.

What are the reasons for inaccurate valuations?

A property valuation is an assessment of the value of your home to potential buyers, or a fair asking price given its unique features and other market conditions. It combines a lot of local knowledge, appreciation of the asset, and understanding of the market to come up with a reasonable price tag that won’t scare away buyers but won’t leave you at the losing end either. 

Yet because there is judgment and discretion involved, sometimes valuation can be way off the mark of a fair market value. How do some of these scenarios arise?

Seller-Related Reasons:

Sellers can unknowingly contribute to their property being inaccurately assessed. Emotional attachment can cloud judgment, leading them to overestimate its worth based on personal memories or renovations, ignoring the current market value. 

Lack of research or unrealistic expectations based on past experiences can also cause them to insist on an asking price that’s simply too high. 

In urgent situations like needing a quick sale due to financial pressure, sellers might undervalue to attract buyers faster, potentially leaving money on the table. 

Finally, a cluttered and poorly presented property can deter potential buyers and lead to lower offers, even if the actual value is higher.

Valuation Process Related Reasons:

Relying on outdated information or online tools that don’t reflect current market trends can lead to an undervalue. 

Choosing the wrong valuer, especially one inexperienced with the local market or property type, can also result in a missed opportunity. 

Even unintentional bias from the valuer, favoring specific property types or having internal targets, can impact the final valuation.

Market-Related Reasons:

External factors beyond the seller’s or valuer’s control can also influence the final price. 

A slowing market with fewer buyers and lower demand can naturally push selling prices down. Over-saturation, where many similar properties are on the market, creates competition and can depress the overall selling price.

accurate property valuation

What Is the Impact of Inaccurate Property Valuations When Selling?

Financial costs of undervaluing or overvaluing a property

Imagine you are selling your beautiful, well-located, and well-appointed cottage. A 10% undervaluation on a £250,000 property translates to a £25,000 loss – enough for a cozy new conservatory or a family vacation. 

On the flip side, overvaluing can be equally detrimental. Imagine listing your flat at £180,000, based on an outdated valuation. Buyers might be hesitant, leading to months on the market and potential price reductions. Eventually, you might accept £165,000, a £15,000 loss. This could have been avoided with an accurate valuation reflecting current market trends.

The financial impact extends beyond the final price. Inaccurate valuations can lead to wasted marketing spending. Imagine expensive brochures highlighting features beyond the perceived value. Worse still, an overvalued property might attract the wrong buyers (more on this later), leading to negotiations, time wasted on viewings, and even failed sales incurring transaction costs.

unhappy at inaccurate property valuation

Misleading sellers and creating unrealistic expectations

An overvalued property might initially bring a sense of elation, painting a rosy picture of a quick sale and substantial profit. However, this illusion quickly fades as the property sits on the market, attracting few interested buyers. Each passing week chips away at the unrealistic price tag, forcing price reductions and ultimately disappointing those initial expectations. This can be emotionally draining and financially detrimental, leaving sellers feeling frustrated and potentially accepting a lower price than they initially envisioned.

On the other hand, an undervalued property can lure sellers into a false sense of security. They might believe they are achieving a quick sale without much effort, overlooking the potential for a higher price. This underestimation can lead to missed opportunities and a lingering feeling of “what if” after the sale is finalized. Additionally, undervaluation can discourage sellers from making necessary repairs or improvements, further impacting the property’s marketability and potential selling price.

In both scenarios, inaccurate valuations act as a veil, obscuring the true market value and creating a distorted perception of the selling process. This can lead to poor decision-making, wasted time and resources, and as previously discussed, financial losses for sellers. 

Discouraging serious buyers or attracting the wrong buyers

An overvalued property might initially attract attention, but potential buyers quickly become wary of a price exceeding market value. This creates a sense of distrust and encourages them to look elsewhere, leaving the seller with a stagnant listing and fewer offers. Additionally, overvalued properties often attract individuals focused solely on price negotiation, leading to time-consuming haggling and potentially lowball offers far below the actual value.

Similarly, undervalued properties can lure the wrong type of buyer. While some bargain hunters might be initially interested, they may prioritize price over condition or potential, leading to offers below the property’s true worth. This can also attract individuals lacking genuine interest, simply looking for a quick flip or investment opportunity, resulting in unnecessary viewings and wasted time for the seller.

Ultimately, inaccurate valuations create a mismatch between the property and its intended audience. They discourage serious buyers seeking fair market value and attract individuals whose priorities might not align with the seller’s expectations.

Wasting time and creating undue stress on the seller

Inaccurate valuations can cause significant delays, dragging out the selling process and causing undue stress for sellers. An overvalued property, initially listed at an unrealistic price, sits on the market longer than it should. This prolonged wait can take a toll on the seller’s emotional well-being, leading to sleepless nights and a constant sense of uncertainty.

On the other hand, undervaluation creates a different kind of time-consuming challenge. While the property might attract some interest, offers are often below market value, leading to lengthy negotiations and the frustration of feeling undervalued. 

Months spent waiting for the right buyer can be incredibly stressful, especially when faced with financial pressures or relocation deadlines. Additionally, constantly fielding lowball offers and explaining the property’s true value can be emotionally draining.

delays due to inaccurate property valuation

Legal consequences of selling an overvalued property

While the most immediate consequences of inaccurate valuations are financial and emotional, there are also potential legal ramifications.

In Scotland, there’s a duty of fair dealing during the sale process. This means sellers must disclose any material facts that could influence a buyer’s decision. An inaccurate valuation, particularly if intentional or grossly negligent, could be considered misrepresentation, leading to legal action from the buyer if they discover the discrepancy after purchase. This could involve rescinding the sale, seeking damages, or even pursuing criminal charges in extreme cases.

Inaccurate valuations can also impact tax obligations. If the selling price is significantly lower than the market valuation, tax authorities might still tax you on the difference between your purchase price and market value. So you may end up without any savings on Capital Gains Tax while foregoing higher sales proceeds on your property sale. Messing with property values for tax reasons can be risky and complex. Always consult a professional accountant or tax advisor before proceeding!

Securing a Smooth Sale: The Final Word on Accurate Property Valuations

Selling your property is a significant life event, and navigating the process requires careful consideration. While factors like location, market trends, and presentation play crucial roles, the foundation for a successful and stress-free sale lies in one fundamental element: an accurate property valuation.

Ignoring the importance of accurate valuations can lead to a domino effect of challenges. 

By investing in a professional valuation from a qualified and experienced valuer familiar with the local market, you gain invaluable insights into your property’s true worth. This empowers you to set a realistic asking price, attract qualified buyers, and negotiate with confidence. 

Remember, a precise valuation isn’t just about securing the best price; it’s about minimizing stress, ensuring a smooth transaction, and ultimately, achieving a successful outcome that aligns with your financial goals and timescale.

Kirkland Estate Agents Team

Looking for Reliable Valuation for Property in Lanarkshire and Glasgow?

Kirkland Estate Agents are local experts in Glasgow and Lanarkshire. We have helped over 400 clients sell their homes at their ideal prices and timescales since 2020. We believe in taking a personal and honest approach to helping you sell your property – and that includes providing accurate and reliable valuations that make sense in the current markets.

Are you ready to take the next step? Just fill in our online form and we can help you get started with a property valuation.

For enquiries and to get in touch with the team, click on the button below.

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Stephanie Morgan
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"Thank you to Ross and Gillian at Kirkland’s for helping me sell my home. Within 1 week of it being on the market we had around 20 viewings carried out and closing date set. Very happy with the price we achieved! This business is very well organised and each step of the process has been straightforward. The reason we picked this agent to begin with was for the marketing / professional photos and they did not disappoint. Great service. Would highly recommend."
Carol McEwan
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"We selected Kirkland Estate Agents out of 3 estate agents. The valuation was spot on, there was no hard sell from Ross. We thought their photography set them apart from other estate agents and found out it was done by a professional photographer. We appreciated the fact they are a small, local company who would do their best to sell our house. As a meticulous graphic designer, I valued their swift responses to my photography and copy-related enquiries. This level of service might not have been possible with a large, national firm. Thanks to Wilma and Gillian for facilitating a quick, above-home-report offer in July and ensuring a smooth process. Wilma's solicitor recommendation was also excellent. If I was selling in the area again I would definitely use Kirkland as I found them super helpful and very quick to action everything."

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