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Comparable evidence is used to calculate and estimate valuations for properties that are due to go on the market. If you are a homeowner, and you want to sell your property, you may be interested in how a valuer produces their valuation. Comparable evidence is used to compare different properties in a local area. A chartered surveyor will use a set of comparables to estimate the value of an individual house or flat compared to similar properties. Using comparable evidence provides sellers with an accurate estimate of the value of the property if it were to go onto the market on a given date.
Comparable evidence relates to the use of comparables, which are defined by the RICS (Royal Institution of Chartered Surveyors as “an item of information used during the valuation process as evidence to support the valuation of another, similar item.” Valuers will use a set of comparables that are relevant to the property to determine a valuation.
Before a valuer provides a seller with a valuation for their property, they will conduct research and search for relevant comparable evidence. The valuer will record details about the property in question, which include:
When using comparable evidence, RICS guidelines suggest that comparables should be:
When using comparable evidence to value a property, a valuer will verify sources and record all data used. They will not usually provide specific information about the comparables used when presenting sellers with their valuation.
There are several possible reasons why valuers may struggle to collect comparable evidence that fits in with the criteria listed above. Examples include:
The comparables used will vary according to the type of property. A valuer will use different comparables for a rural property from a commercial or residential property.
Timing and movement of the market can pose challenges for valuers. It can be difficult to collect relevant, reliable information if houses are selling very quickly because data goes out of date rapidly or if the market slows right down and there are very few transactions that are relevant to the property being valued.
The RICS uses a hierarchy of evidence framework. This includes three categories:
When using comparable evidence, valuers are required to adhere to guidelines, which aim to maximise transparency and ensure that information is credible and verifiable. Valuers will record information linked to key comparables, including details about the property, the source of the data, the parties involved, the date of the transaction, the date of data confirmation and any additional notes about the reliability of the information used during the valuation process.
There is a broad spectrum of properties available on the UK market. While this can be beneficial for buyers with varying tastes and preferences, it can make finding and collating comparable evidence challenging. It is usually relatively straightforward to find comparable evidence to value traditional homes and properties that are found commonly within residential areas, such as semi-detached and terraced houses, city-centre apartments and detached suburban homes. It can be more difficult to locate relevant data for unique properties and homes in more rural areas.
When there is a lack of comparable evidence, the knowledge, skills and experience of the valuer become more influential and they may need to broaden their search area and access a wider range of evidence to provide a valuation. This may include considering national or regional trends and transactions if it is not possible to find comparable evidence of direct market transactions.
Comparable evidence comprises a set of comparables, which are used to value a property. Valuers will use data related to similar or identical properties and transactions to enable them to estimate the value of a property if it were to go onto the market on a given date. Comparables should be comprehensive, similar or identical, verifiable and recent to ensure accurate valuations. When you have your home valued, you will be presented with a report, which contains a valuation figure. The comparables may not be listed, but valuers always record data sources and keep a record of all the evidence used to provide the valuation.
Author: Chris Bloor MSc MRICS is a chartered surveyor and RICS Registered Valuer as well as being the founder and Managing Director of CJ Bloor Property Consultants – a property consultancy based in the Northwest of England. Prior to establishing CJ Bloor in 2019, Chris worked as a senior professional consultant in another firm of chartered surveyors based in Newton-le-Willows.