Residential Valuation
Valuation basis, evidence and adjustment
Residential valuation applies a defined basis at a stated date. Market value is the estimated amount for which a property should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction, after proper marketing, with both parties acting knowledgeably, prudently and without compulsion. The RICS Red Book governs formal valuations; UK VPGA guidance provides national application. The valuer must identify the client, purpose, basis, valuation date, extent of investigation, assumptions and any special assumptions.
The comparative method is the primary approach for residential property. Select comparable evidence that is genuinely comparable - same locality, type, size, condition, tenure and date - then adjust for differences: accommodation, plot, parking, condition, outlook, road noise, lease length, service charges and ground rent. Other methods (investment, profits, residual, depreciated replacement cost) are used where appropriate, but not normally for a simple house. Leasehold valuation requires understanding of the unexpired term, ground rent, escalation, service charge, major works consultation, rights to extend or enfranchise, and mortgageability. Material matters include cladding and Building Safety Act issues, EWS1 forms, flood risk, mining, radon and planning consents. A valuation is not a survey.
Traps: using a sale price as market value without analysis; mixing valuation dates; ignoring a special assumption; adjusting comparables without evidence; treating an asking price as proof; missing a short lease or onerous ground rent.
Worked example: a comparable three-bedroom semi sold for £250,000. The subject lacks a garage (−£10,000), needs a roof overhaul (−£12,000), but has a better plot (+£8,000). Indicated value: £250,000 − £10,000 − £12,000 + £8,000 = £236,000, before market movement and negotiation.