Valuation isn’t a science or a fine art. Most agents simply make appraisals of a property and produce a figure that they think sits well in the local market," says Peter Bolton-King of the National Association of Estate Agents as quoted by telegraph.co.uk
He admits some agents produce high figures if the market is rising, while others may pitch a low price to generate competitive bids and, perhaps, an eventual sale price which is higher than that asked.
"Surveyors for banks and building societies are extremely cautious – too much so. They’ve consistently undervalued properties to protect the lenders. That situation is improving but it’s still a factor, especially with new homes," Bolton-King says.
He advises sellers to quiz agents on the number and type of comparable properties they have sold and how quickly they went. The Royal Institution of Chartered Surveyors, which regularly updates its "Red Book" guide to valuation, also says comparable property sales are a good – but not exact – guide to a home’s worth.
Firms such as Rightmove and Hometrack, although best known for advertising homes or producing price indices, make much of their money from selling these AVMs to insurers and similar companies that need to know property valuations.The Nationwide and Halifax use their mortgage data to create the AVMs that power their online house price calculators. In theory, these guide home owners on their values, but they differ widely from prices put on properties by local estate agents.