Having recently qualified as an RICS Surveyor, I have wasted no time in immersing myself in Property Valuations. I recently undertook a very interesting Retrospective Valuation and I thought I’d share my knowledge and experience I gained!
So what is a Retrospective Property Valuation?
A Retrospective Valuation is typically a valuation of a property based on the market conditions of a previous or historic date. For example, a client will require the valuation of the properties in the 1960’s, 1970’s, 1980’s and so on. Generally, the valuation will be on a specified date of importance which may be the purchase date, sale date, date of death, divorce etc.
So why would anyone want to a Retrospective Valuation?
Well there are various reasons why this valuation is required so often.
- Probate Purposes – whereby an owner would like to value the interest of their property based on the date of a parent’s death. This can then be used for the purpose of paying inheritance tax.
- Capital Gains Tax – capital gains tax can be reliant on the increase in value for the subject property, based on the time of purchase of when it became an investment property to the date of sale. This is the most common purpose of a retrospective valuation.
How can you value a property based on historic sales?
Depending on the date of valuation, this can be extremely simple or extremely complicated.
Naturally, if a client has requested a retrospective valuation for a property based on the market post 1995, you will most likely be able to find electronic archived sale prices via the internet, which will then allow me to have a clear view on the properties price during that period.
The general rule of thumb with retrospective valuations is the nearer the date of valuation to the present day, the more straightforward it will be.
So what do you know when there isn’t data available?
I recently had to undertake valuation of a property based on its market price in 1982. Therefore, there are no known electronic archived sale prices in the area during 1982 as the internet wasn’t used in the same manner as it is today.
In order to gain the best insight into the price of the property and provide the most accurate report possible, I searched, reviewed and obtained archived newspaper advertisements which were located at the British Library.
These advertisements contain an image of the property, a very brief description and then finally the asking price of the property.
As information was extremely scarce, I had to obtain a lot more comparable than usual to obtain a clearer image of what the property value could be. In this case, I looked at over 350 different properties, each time map searching the location to try and find at least 10 to 20 that were all within 1 mile of the property being valued.
Once I had that information to hand, I was then able to look at the general market trends for 1982 and get a very good idea of how strong the market was at the time, lending itself to my assessment of the property prices.
If you are considering obtaining a retrospective valuation, please do not hesitate to give us a call and we will be more than happy to assist with your query.