How to Value a Property Using Comparable Sales
The end value is the most important number in almost every property deal. Get it wrong and the profit, the refinance and the investor's trust all go with it. Professional valuers use comparable sales: recent sold prices of similar properties nearby. Here's how to do it properly.
Use sold prices, not asking prices
Asking prices are what sellers hope for. Sold prices are what buyers actually paid, and they're what lenders' surveyors use. Sources include:
- England and Wales: HM Land Registry's Price Paid Data, which records completed residential sales. New sales appear after a delay, often a couple of months, so the very latest market won't be in it yet.
- Scotland: sale prices are recorded by Registers of Scotland. Property websites also show many Scottish sold prices.
- Northern Ireland: less sold-price data is published, so local agents' knowledge matters more.
- Energy Performance Certificates (EPC) give the floor area of most homes, which you need for price per square metre.
Choosing good comparables
A comparable should be as close as possible to the property you're valuing, as it will be once any work is done. In order of importance:
- Same type and size: a two-bed flat with a two-bed flat, a three-bed semi with a three-bed semi. Similar floor area matters more than the bedroom count.
- Close by: the same street or development is best. Within a quarter to half a mile is good in towns. Avoid crossing obvious boundaries such as a main road, a different school catchment or a different estate.
- Recent: ideally within the last 6 to 12 months. Older sales need adjusting for how the market has moved.
- Similar condition: if you're valuing after refurbishment, use sales of refurbished properties.
Aim for three to six good comparables rather than lots of loose ones.
Price per square metre
When sizes differ, compare price per square metre: sale price divided by floor area. If three comparable flats sold at £1,150, £1,200 and £1,250 per m², a 62 m² flat in similar condition points to around 62 × £1,200 = £74,400. Price per square metre isn't perfect (smaller homes often sell for more per m²), but it stops one large or small sale skewing your figure.
Adjusting for differences
No two properties are identical. Adjust for the things buyers pay for:
- Condition and specification (new kitchen and bathroom versus dated)
- Extensions, loft conversions, an extra bathroom
- Parking, garage, garden size and orientation
- For flats: floor level, lift, outside space, lease length and service charges
- Freehold or leasehold, and any short lease
Spot the sales to ignore
- Unusually low sales can be repossessions, auction sales, sales between family members or properties in very poor condition.
- Unusually high sales may have been heavily extended or newly built.
- Sales of a share (shared ownership, part-transfers) don't reflect full value.
When one sale looks odd, find out why, or leave it out.
From comparables to a value
Look at the spread of your adjusted comparables and settle on a low, likely and high figure. Use the likely figure for planning and the low figure for your stress test, especially for a BRR refinance, where a lender's down-valuation can leave money stuck in the deal. Sense-check it with a local estate agent and against what's currently for sale.
Common mistakes
- Using asking prices, or one sale on its own
- Comparing a refurbished end value with sales of unmodernised properties
- Ignoring size differences between flats and houses with the same number of bedrooms
- Using sales from years ago without adjusting
- Forgetting the lease length on a flat
How Dealcraft helps
Add a property with its postcode and Dealcraft finds recent comparable sales nearby, nearest and most similar first, and suggests a low, likely and high end value, using price per m² when floor areas are known. Every sale links to its source so you can check it, you can untick any you don't trust or add your own, and one click sets the end value for every strategy calculator. Comparable sales can also go into your deal pack, so investors see the evidence.