Is this house overpriced? How to tell before you offer
Compare the asking price with what similar nearby homes have actually sold for, adjusted for size, condition, tenure and time. An asking price is an opinion, while a registered sale price is evidence. Public data cannot give you a valuation, but a few good comparisons will show whether a price looks stretched.
Find three to six honest comparisons
Ignore other asking prices at first. They tell you what sellers hope for. Sold prices tell you what buyers paid. Good comparisons are:
- The same type of home: terrace with terrace, flat with flat.
- The same tenure. A leasehold flat is not a good guide to a share-of-freehold one.
- Close by, ideally on the same street or a very similar one a few minutes away.
- Recent, ideally within a year or so. If the market has moved, older sales need adjusting.
HM Land Registry's data covers England and Wales from January 1995, with registration usually taking two weeks to two months, so the latest sales may not show yet. Its records do not say what condition a home was in. Look at old listing photos where you can. A sale for a low price may be a wreck, and a high one may have a new extension.
Work out a price per square metre
Bedroom counts hide a lot. Floor area is a better measure, and it appears on most EPCs. Divide each sold price by the floor area, then do the same for the home you like. The figures below are invented to show the method and are not real sales.
| Home | Price | Floor area | Price per square metre |
|---|---|---|---|
| Sold A | £285,000 | 88 m² | £3,239 |
| Sold B | £298,000 | 94 m² | £3,170 |
| Sold C | £272,000 | 84 m² | £3,238 |
| The one you like (asking) | £335,000 | 90 m² | £3,722 |
At around £3,200 a square metre, a 90 m² home would come to about £288,000. The seller needs to justify close to £47,000 more. A new kitchen or larger garden might explain some of it. If nothing does, you have a reason to offer lower. An EPC floor area can be out of date if the home has been extended, so treat this as a sense check rather than a calculation.
Check the home's own history
Look at what this home last sold for and when, then see how prices moved locally. The UK House Price Index, published monthly about two months after the period it covers, shows trends for local areas. It is an average, so it will not reflect a loft conversion or a bad roof.
If a home bought four years ago is back on the market at a far higher price and the index has barely moved, ask what changed. Planning records and a newer EPC may show real improvement. If nothing has changed, the increase is only the seller's hope.
Adjust for what the price leaves out
Two homes with the same price may cost very different amounts to own. Take these into account before you decide on a figure:
- A short lease. Fewer than about 80 years can make a flat costlier to extend and harder to mortgage. See the flat guide.
- Service charges and ground rent, which come out of your pocket every year.
- A low energy rating and the cost of improving it.
- Work you would need to do, ideally priced after a survey.
- Flood insurance costs, if a flood risk check raises questions.
- Plans for the land nearby, shown by a planning check in England.
Then ask the agent two plain questions: what evidence supports this price, and how long has it been on the market? Listing sites can show when a home first appeared and whether the price has dropped. A long time unsold or repeated reductions suggest room to negotiate, although they do not prove the price is wrong.
What happens if you pay too much
Your lender will value the home before lending. If its valuer comes in below the agreed price, the lender usually bases the loan on the lower figure, leaving you to cover the gap or renegotiate. You can try to challenge the figure with comparable sales, try another lender, or walk away, as nothing binds you until exchange. If you want an independent view of value earlier, a RICS Level 2 can include a valuation. A Doorstep Report is not a valuation: it shows the records so you can do this comparison yourself.
Is this house a good investment?
Nobody can tell you that with certainty, and we do not give investment advice. House prices can fall as well as rise. What you can do is compare evidence:
- How the home's past sale prices compare with the local index over the same years.
- The total cost of buying and owning, including tax. In England and Northern Ireland, a purchase that leaves you owning more than one home usually carries an extra 5% Stamp Duty.
- What could change value in either direction, such as lease length, nearby development or energy upgrades.
- How the home would suit you if prices stood still for 10 years.
For personal advice on property as an investment, speak to a regulated financial adviser.
Questions, answered
How much under the asking price should I offer?
There is no fixed percentage. Base your offer on comparable sold prices, the condition of the home and how long it has been on the market, and be ready to explain your figure.
Can I find out what the seller paid?
Usually, yes. Sales for value since January 1995 appear in HM Land Registry's Price Paid Data, unless the transfer type is excluded, such as a gift. Use it as evidence, not as a guide to what the home is worth today.
Is an estate agent's valuation reliable?
It is an opinion, usually given to win or keep a seller's business, and the agent acts for the seller. Ask for the sold comparisons behind it and check them yourself.
Does a Doorstep Report tell me what a house is worth?
No. It is not a valuation. It shows registered sale history, nearby sales and floor area where a certificate matches, so you can compare the evidence for yourself.