I received the following email this weekend from an estate agent.
It will have been sent to hundreds and probably thousands of buyers registered with the agency.
The property details were attached to the email which read:
“Good morning and a little Saturday treat.
My feeling is that this house is hiding in plain sight — and that is probably the only reason it is still available.
There have only been two other recent sales in the street, both in 2023, and the £ per sq ft achieved confirms this is a seriously prime location. I also look carefully at asking prices versus eventual sale prices, which makes the opportunity here even more interesting.”
The agent then listed the two sales which showed that the houses had completed at a price per square foot of £,3032 and £3,347 – both well above the guide price. He then continued merrily:
“The house itself needs, quite simply, a complete overhaul. It needs to be started again. But surely that is the appeal — and the excitement.
It is freehold, with a private garden and garage, in an exceptionally discreet enclave, and planning is already approved to extend it from approximately 1,233 sq ft to around 1,500 sq ft.
For me, this is a rare opportunity to create something genuinely special in a location where opportunities like this very rarely come to market.
The seller is very motivated, so I really think this one is worth a closer look.”
Sounds like a steal when you discover that the house can be acquired for c. £2000 per square foot and the two houses mentioned above required work as well. But, as I repeat ad nauseam, price per square foot valuations are a woefully blunt instrument even if they seem precise.
You also need to take into consideration factors like the:
- location in the street
- layout of the property
- views
- ceiling height
- outside space
- standard of decoration
- style of decoration
- quality of the building
These are obvious examples and it is far from an exhaustive list. You need to consider all the important factors and then work out how much these should impact the value of the property, i.e. two properties can be in the same building and have the same floor area but be worth considerably different figures on a pound per square foot basis.
So, imagine the difference in value that is possible between streets let alone areas which is why the average figures in the press and the comparators most buyers rely on are woefully inadequate (unless you don’t mind overpaying).
You also need to beware traps. For example, sometimes a property with a garden should trade at considerably less than one that doesn’t. Sometimes a share of freehold is not as good as a leasehold apartment despite what conventional wisdom will tell you.
If you don’t understand what affects valuations, then you are playing blind archery and don’t expect the estate agents to remove the blindfold. Their job is not to find you the best property your money can buy.
No, their job is to sell any one of their clients’ properties to any buyer they can and FOR THE HIGHEST PRICE POSSIBLE. They are very good at this as it is a legal obligation. The seller is their client. You are called an “applicant” in estate agent jargon.
Legally, they are not allowed to lie to you, but do you think that means they can’t cherry pick statistics to fool you into making an expensive mistake? Again, you can’t hold this against them. It is their job.
If you would like more information on how to accurately value properties so you don’t overpay, just let me know.
Best regards,
Jeremy
