From: MM 
Newsgroups: uk.finance
Subject: Re: house prices drop 10% in 4 months..
Date: Sun, 24 Oct 2004 08:34:31 +0100

On Sat, 23 Oct 2004 11:38:05 +0100, "Tumbleweed"
 wrote:

>
>"MM"  wrote in message 
>news:auakn0p8f3s04j3i4k4crb63ap9m370vqq@4ax.com...
>> On Tue, 19 Oct 2004 00:14:30 +0100, Richard Faulkner
>>  wrote:
>>
>>>In message , Peter Pann
>>> writes
>>>>well mine has anyway..
>>>>
>>>>I put my brand newly renovated 3 bed terrace on the market in Mid July 
>>>>for
>>>>£190K. (Central'ish Cardiff)
>>>>
>>>>The price was arrived at after 3 estate agents valued at 190, 190 and 195
>>>>
>>>>Later i reduced it to 186,950 then 184,950 then 179,950 now it is on 
>>>>174,950
>>>>
>>>>One of the agents said (in July) if it is still on the market at 
>>>>Christmas..
>>>>I don't know what he said after that as I switched off.. I thought he was
>>>>mad.  Obviously not..
>>>>
>>>>Those who are not watching the market closely may not have realised but
>>>>prices are dropping!
>>>>
>>>>
>>>>And it's still not sold so it may have to drop further.
>>>>
>>>>Any other sellers here feelin the pinch?
>>>>
>>>>
>>>
>>>Whilst your price may have dropped, it is almost certain that your
>>>"value" has not.
>>>
>>>Estate agents are notorious for telling a seller what they think he
>>>needs to hear to get the business. They are not actually providing a
>>>valuation, rather they are proposing an asking price. In a rising market
>>>this is generally fine, and you can even argue that they are doing the
>>>right thing in attempting to forecast the foreseeable future.
>>>
>>>However, if this has happened, (and you can be sure it has), and the
>>>market slows, or stops, your "value" will not rise to meet your "price",
>>>so your price has to drop to meet your value.
>>>
>>>I remember buying a wreck in 2001 for £40K, thinking that after spending
>>>£25K, it would sell for £80K - a nice little profit.
>>>
>>>In the event, the work was more extensive than expected, took a year,
>>>and cost £45K - but it sold for £150K. It's now worth around £230K.
>>>
>>>This rate of rise has to stop, and if your agents were continuing to
>>>forecast the same rate of rise, and it has stopped, your situation is no
>>>surprise.
>>
>> If only there were a more scientific, predictable way of valuing
>> houses rather than the stick-finger-in air method, house
>> buying/selling would be somewhat eased as everyone concerned would
>> have a better idea of the true worth of a property without continually
>> having to factor in wriggle room for estate agents' or vendors' wild
>> optimism.
>>
>> How about:
>>
>> Location - quiet/noisy road (score 10 for quiet, 5 for noisy)
>> Floor (i.e. living) space in cubic feet (cubic to factor in room
>> height)
>> Garden size(s)
>> With/without garage
>> Condition: Wreck/habitable/pristine
>>
>> ...and so on. A list like this would be a doddle to computerise and
>> even make available on the web so that an agent on site could connect
>> to his or her office via pocket or laptop PC. The scores would be
>> totalled, and a *ballpark* figure arrived at. Over time, individual
>> scores could be adjusted to fine tune the ballpark.
>>
>> Finally, the agent could hand the vendor a printout showing a complete
>> record of how the ballpark valuation was arrived at. The vendor would
>> be able to wave this at prospective buyers to demonstrate that the
>> asking price arrived at is reasonable. If a greedy vendor asked too
>> high a price, the buyer might ask to see the printout of the ballpark
>> valuation. If (a) there were none, or (b) the vendor did not want the
>> buyer to see it, well the conclusion is obvious as vendor watches
>> buyer hightailin' it down the garden path.
>>
>> MM
>
>Not a chance. What you forgot is that each of those factors has a different 
>value to each buyer, from zero to very high (and quite likely different 
>between couples buying) ,and there are many more factors than you mention) 
>Then, you have to add in the buyers circumstances, plus the competitive 
>position.

Most if not all of these criteria *can* be quantified, based on a
sample of test data. Most young couples, for example, will have
similar - not identical - aims. Most elderly people know there will
come a time when stair climbing becomes impossible. Most growing
families need plenty of space. In fact, even when it comes down to
esoterica like 'nice view', 'pleasant area', all of which are in the
eye of the beholder, most people recognise the Lake District as rugged
or the Cotswolds as pastoral. Don't forget I'm only looking for a
'ballpark' valuation initially, which of course the agent can discuss
with the vendor to come to a final valuation.

MM