If you’ve decided you’re ready to get the selling process moving, the first thing you’ll need to do is decide what the asking price of your property should be.
There’s no exact formula for this and it’s very much down to personal judgement, which can make it seem like a difficult decision. But if you break it down and think about it logically it can actually be easy.
Step 1: Get a very rough estimate
Zoopla has a tool that estimates the value of any property – all you need to do is put in the address and it gives you a price range instantly. It’s only approximate, sometimes giving a range of up to £200,000, but it’s still great to have a ballpark figure you can use as a starting point.
Step 2: Research recently sold property prices
The next step is to do a bit of research into how much similar properties in the area have sold for recently. Rightmove has a useful part of their website where you can explore old property sales by town, postcode or road, and look at what they sold for and when.
When you’re doing this, bear in mind that the price the properties sold for is unlikely to be the original asking price. Negotiation is common in property transactions and often properties are sold for a little lower than the price the seller originally put on them. As a result, when working out what your asking price should be, it’s best to market it at 5-10% more than the average selling price for similar properties in the area.
Step 3: Check out the current market
Having an awareness of current property prices is key to making sure you get the best from your property without asking for an unrealistic price. You don’t want to undercut other properties, but equally you don’t want to ask for a price that’s much higher than the others. As a result it’s important to look at what properties are currently on the market for, as well as what they’ve sold for in the past. You can browse online property portals like Rightmove or Zoopla, or do it the old-fashioned way and look at listings in estate agents’ windows.
It's also good to understand the state of the current market. You don’t need to study it extensively, but it’s good to establish whether it’s a buyer’s market (lots of properties for sale and a lack of buyers) or a seller’s market (lots of potential buyers but a lack of properties on the market). If it’s a seller’s market you can set a higher asking price. But if it’s a buyer’s market you’re better off having a lower one.
You can tell whether it’s a buyer’s or seller’s market by looking at online property portals over time. If the same properties have been on there for a while it suggests a shortage of buyers and a property surplus – a buyer’s market. If properties are being snapped up quicky it suggests a seller’s market. You can also put your address into PropCast for a ‘property forecast’ in your area, or check out our House Price Forecast to see what’s expected to happen to house prices in your region in the next three months.
Step 4: Consider your property
Looking at sales of other properties is very useful, but at the end of the day every property is unique and you’ll need to think about how characteristics of your property will affect how much people are willing to pay for it.
When comparing your property with others, think about:
Age: as a general rule, new homes are more expensive as they’re less likely to have wear and tear.
Number of bedrooms: more bedrooms will usually mean a higher asking price, although be aware of the ‘ceiling’ price - the maximum a property in that area will sell for, regardless of the number of bedrooms.
Size and shape of garden: Some garden shapes, size and features are more desirable than others in certain locations. For example, in a family-friendly area a big grassy garden might be desirable, whereas in a city of young professionals a small patio that allows for entertaining guests but requires little maintenance might be better.
Size of home: the bigger the property the higher the asking price.
Parking: in some areas parking is particularly desirable and will add considerable value.
Structural integrity: for obvious reasons, properties with structural issues won’t sell for as much.
Wear and tear: again, this is common sense – properties that need work or that have issues will probably require a lower asking price in order to sell.
Leasehold v freehold: depending on the length of the lease remaining, a leasehold property might sell for significantly less than a similar property that’s leasehold. Read more about the difference between leasehold and freehold.
Location: Some locations, for example London, will carry a premium on house prices. Also proximity to things like good schools, public transport and public facilities might also push your asking price up or down.
Characteristics of the local area: for example, crime rate or pollution levels.
Stamp Duty: be wary of the implications of high asking prices on Stamp Duty – you don’t want to put buyers off by putting the property in one of the higher tax bands.
Extras: anything that might add value e.g. double glazing or pre-approved planning permission.
When thinking about all of this, chat to local estate agents about what people in the area want. Is parking important? Are the schools particularly desirable? Or is the neighbourhood full of young professionals who just want to be able to commute into the city? The priorities of potential buyers will determine how much all of these factors should affect your asking price.
Step 5: Think about your personal circumstances
An asking price is a personal decision so it’s sensible to consider what you need from the sale. For example, if you need a quick transaction, it might be a good idea to consider a slightly lower asking price.
Don’t forget to consider your financial obligations as well. Do you need a certain amount of money from the sale in order to pay off your mortgage, or to buy your next property? Always make sure you know what the minimum you need from the sale is, and don’t set an asking price that’s too close to it.
A few other things to consider
When you’re setting your asking price, if in doubt it’s better to set it a little bit higher as your buyer may well negotiate it down. However, be careful not to set it too high – it could prevent the property from selling, and if a property is on the market for a while it can be a red flag to potential buyers.
Go for a nice round figure, even if it means rounding down. If you set a price of £305,000, your property won’t even appear on filtered online searches from buyers with a budget of £300,000. For the sake of a few thousand pounds it’s worth rounding down if you’re able to, to increase your pool of potential buyers.
If you’re still not sure what your asking price should be, you can get a professional valuation done.
However, be wary of valuations from estate agents. They’re very knowledgeable about the property market and the local area, but as they work on commission and will want your business, they may givean inflated estimation of your property value to encourage you to sell with them. As a result, if you want an unbiased valuation, with a figure that your property might actually be able to sell for, it’s best to get a valuation from a Chartered Surveyor.
Setting your asking price doesn’t need to be scary – as long as you do your research and consider everything we’ve listed above, you can’t go far wrong. But if you’re worried, it’s best to get a valuation from a Chartered Surveyor.