Here are several methods for property valuation, but the two most popular are known as ‘rental appraisal’, which is based on the rental market, and cost-of-development-approach, which uses the construction costs plus selling price.
They suggest that to use any method of property valuation you will need a good understanding of the local market. In practice this means forming a view of what prices properties similar to yours usually sell for – in other words what would an informed seller be looking to get from your home? Rental appraisal is more suitable where there’s less difference between selling prices and rental yields (eg a rural location), whilst the cost of development is more common in urban areas with high rents and low resale values.
There are many factors that can determine the valuation of a property in the UK. To get an accurate estimate about what your property is worth, you would need to factor out what features are most important for you based on where you live or how far away from services, areas with good transport links, desirable schools and so on. Once you have determined your criteria for consideration, there are various sources available to find out which properties meet these demands: online databases; estate agents; and local authorities. The combination of these tools should give a good indication of your property’s value by eliminating options that don’t match up to your needs or specifications. Be aware that valuations can change quickly.