How House Buying Companies Value Your Property (And How It Impacts Your Offer)


House Buying Companies Valuations

Are you considering selling to a house buying company, but worried about getting a low offer? Learn how their valuations work so that you can negotiate with confidence.


how house buying companies determine your properties value

When you approach cash property buyers, one of the first steps is getting your property valued. But how do they arrive at that all-important number? Let's break down the different methods and what they mean for you.

Types of Valuations

  • Desktop Valuations: This is the fastest method. Companies use online tools and recent sales data to get an initial estimate of your home's worth. It's convenient but may lack the precision of an in-person assessment.
  • Surveyor Visits: Some companies send a surveyor to evaluate your property firsthand. This offers a more detailed understanding of its condition and potential value.
  • A Combination Approach: Many companies start with a desktop valuation and may offer a follow-up survey if you seem interested in their initial offer.
  • Automated Valuation Models: Some companies rely on sophisticated computer algorithms that analyse huge amounts of property data. While very quick, these might not fully account for the unique aspects of your home.

Related: What is the true value of your home?

Factors Considered

  • Comparable Properties: Companies look at recent sales of similar homes in your area to establish a baseline.
  • Market Trends: Is the housing market where you live booming, slowing down, or steady? This affects the price they're likely to offer.
  • Property Condition: Flaws, both major and minor, will significantly impact the valuation. Consider investing in some repairs to potentially improve the offer.
  • Location Specificity: Desirability varies even within the same town or city. This plays a role when comparing your home to others.
  • The Company's Needs: Companies that buy houses need to cover their costs and make a profit. This means their offers will generally be below the full market value, even if the valuation seems fair.

Speed vs. Accuracy

It's important to remember:

Quick sale firms valuations prioritise speed over pinpoint accuracy. They need to make offers quickly to stay competitive. If getting the absolute highest possible price is your top goal, listing traditionally with an estate agent might be better.


What Does the Valuation Mean for Your Offer?

You've got a valuation from a property buying company – now what? It's crucial to understand that this figure isn't the same as the offer you'll get. Here's a deeper look at why:

Percentage of Market Value

Most reputable companies that buy houses typically offer around 75-85% of your property's market value. While it might seem like a significant discount, there are valid reasons:

  • Renovation Costs: Many homes they purchase need some updating before being resold. This can range from minor cosmetic fixes to major structural repairs.
  • Holding Time: The longer they own the property, the more it costs them in taxes, maintenance, and lost opportunity. A quick sale minimizes these expenses.
  • Profit: Like any business, these companies need to make a profit to operate and cover their risks.
  • Market Fluctuations: If the housing market takes a downturn while they own your property, it could impact their resale value.

Let's illustrate this. If the market value of your home is £185,000, here's a potential range of offers:

  • 80% of market value = £148,000 offer
  • 88% of market value = £162,800 offer

Find out how we helped Mr Edwards from Birmingham and paid 88% for his property

Unfortunately, some less reputable companies might use the valuation as a starting point to try and lowball you even further. Always research the company and be prepared to negotiate or walk away if the offer feels unreasonably low.

Related: How to spot we buy any house scams

According to The Property Ombudsman, a neutral industry body, the average offer from a house-buying company falls within the 70-85% range of market value. However, individual offers can vary.

Empowering the Seller: Take Control of Your Sale

Think of selling to a house buying company as a negotiation, not a surrender! Knowledge gives you leverage, and taking a proactive approach can often result in a better outcome. Here's how:

Importance of Research: Unlock Your Home's True Potential

Don't rely solely on what the house buying company tells you. Become an expert on your local market:

  • Research Rightmove : Dive into recent sales data. Pay attention to homes with similar size, features, and location to yours. This establishes a realistic baseline.
  • The Inside Scoop: Search online for home buying companies reviews. These might reveal the typical percentage range offered, giving you valuable insights.
  • Beyond Market Value: Research if any upcoming developments (new transport links, amenities) are planned near you. These could boost your home's desirability, which you'll want to highlight.

Negotiation Power: It's Your Move

The valuation is a starting point, not the final word. Use your knowledge to negotiate confidently:

  • Be Bold: If their offer seems significantly below your research, counter with a higher figure.
  • Data is Your Ally: Cite specific comparable sales to support your argument.
  • Highlight the Positives: If your home has unique selling points (great view, energy efficiency), don't be afraid to emphasise their value.

Related: How to negotiate in property

Can You Challenge a Low Valuation?

Receiving a valuation that seems far below your expectations can be frustrating. The good news is, you don't have to simply accept it. Understanding when and how to challenge the valuation gives you more control over the sale.

When to Consider a Challenge

  • Significant Discrepancy: If your thorough market research reveals a substantial gap between recent comparable sales and the HBC's offer, it warrants further investigation.
  • Lack of Transparency: Reputable sell house quick companies should explain their valuation methods. If they're vague or dismissive, politely ask for a detailed breakdown of how they arrived at their figure.
  • Gut Feeling: You know your home best. If something seems dramatically off, and you're confident it's worth more, don't ignore that instinct. It's worth digging deeper.

Research Note: Explore forums and blogs focused on property sales. See what reasons other sellers cite for feeling valuations were unfair. This can reveal common issues to be aware of.

Your Options

  • Get a Second Opinion: A private surveyor provides an unbiased valuation based on in-depth analysis. While this comes at a cost, it can be powerful ammunition for negotiation. 
  • Negotiate Directly: Before commissioning a survey, approach the HBC and respectfully present your case. Have your comparable sales data ready, along with notes highlighting any unique aspects of your property they may have overlooked.
  • Walk Away: No matter how fast a sale sounds, you're never obligated to accept an offer that feels unfair. Explore other options, including traditional listing or contacting other home buying companies.

Presenting Your Case

  • Polite but Firm: Acknowledge the HBC's interest, but clearly state that you feel the valuation is too low and why.
  • Data-Driven Argument: Share your research on comparable sales, explaining how it supports your belief in a higher valuation.
  • Highlight the Unique: Point out desirable features of your home (location, upgrades, expansion potential) that may not be fully reflected in the initial valuation.
  • Open to Negotiation: Express willingness to find a fair compromise for both sides.

Final Thoughts & Key Takeaways

Now that you understand how house buying companies determine their offers, it's time to focus on how to use this knowledge to your advantage. Remember, while a quick sale comes with trade-offs, you have more control over the process than you might think!

  • Knowledge is Key: Understanding how these companies arrive at valuations gives you significantly more power during the negotiation process.
  • Speed vs. Maximum Price: HBCs offer convenience and a guaranteed sale, but typically at a discount compared to the open market. Weigh this trade-off carefully.
  • Empowered Seller: Doing your own research, preparing your home, and understanding your rights means you can approach the sale with confidence, getting the best possible deal for your situation.

Key Takeaways

  • Quick Sale firm's valuations are a starting point, not the final word. Your research and negotiation skills can influence the outcome.
  • Even small improvements to your property can make a difference in the valuation you receive.
  • Don't be afraid to walk away. If an offer feels unreasonably low, explore other options – you're always in control of the sale.

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