How much is your house worth?
Your home is likely to be the most valuable thing you own, so it's alarming that when you come to sell it, you suddenly realise that nobody knows what it's worth. You'll have a number in mind, your friends and neighbours will have their own suggestions, and then any estate agents you bring round will have a view of their own too. So who is right? What's your property worth?
SEE ALSO: How to sell a house: get people in through the front door
See also: The UK's most spectacular sea views
When we try to value our home, we are subject to all sorts of faulty thinking. We tend to start with what we paid for it, so those who bought a long time ago may undervalue their home, while those who bought closer to the peak will be overly ambitious. We also suffer from the fact that when we own something, we automatically put a higher value on it. It makes it difficult to think objectively about price.
The experts recommend you get three estate agents around to value your property, but they can very easily differ by tens (or in extreme cases hundreds) of thousands of pounds.
This leaves sellers in a tricky position. If they price a property too low, then they may sell it fast, but they will miss out on the extra cash they could have made.
If they price it too high, then they may not sell at all. They can bring the price down later, but by then they will have missed out on the first rush of potential buyers that come when a property is first put on the market. They will also plant a seed of doubt among buyers, who wonder why a property hasn't sold - and why the seller has had to reduce the price.
What can you do?
Pricing your home starts with research. There are plenty of online tools, like Rightmove.co.uk, which will show you what similar properties have sold for recently. Zoopla.co.uk, meanwhile, will actually take previous prices, then factor in how they have risen locally, and add that price rise to your property, to come up with an estimate of what it's worth now.
You should also look at the sold prices of similar properties in the area. Don't get carried away with asking prices of things that are currently on the market, because it will mask where a property price will eventually need to be cut.
Put on a buyer's hat and learn the market, and you will get a much better idea of a reasonable asking price for the property.
2. Ask the experts
You should also get at least three estate agents in, but take their responses with a pinch of salt. Bear in mind that any agent quoting a fixed fee for selling will be biased towards quoting a lower price - because it will make it easier for them to sell. Those who are on a percentage fee, meanwhile, may be biased to push up the asking price.
You also need to bear in mind that with so few houses on the market, some agents will promise you a much higher price in order to win the business. There's no guarantee that they won't have to cut this to something more realistic later.
3. Consider your priorities
Once you have gathered all this information, think about your priorities. If you want to sell for the highest possible price, are wiling to wait a few months, and prepared to take a gamble, then you can go with the highest price you found for something similar in the area - or the highest price quoted by an agent.
If you want a quick and painless sale, you can go for something around the lower end of the estimates - on the understanding that you may be leaving something on the table. Alternatively, take something in the middle of the range, which you hope will yield the right balance.
4. Have a back up plan
After you have set a price, you also need to decide your bottom line. This is the level to which you might reduce the asking price if you don't have any interest. Alternatively, it may be the level at which you might accept an offer. You also need to be clear in your own mind when you would be willing to give up on your valuation and shift to your bottom line.
Unfortunately, the answer to the question of what your home is worth is 'whatever someone is willing to pay for it'. And that's something you can never be entirely sure of until your house goes onto the market.