Working out worth? The Land Registry is a great tool
We have often mentioned the Land Registry in previous posts and reviews, but how do you actually use the Land Registry website to determine the true worth to you, the investor, in what your offer should be?
It is as close as your going to get to what a surveyor uses to determine what a house is valued up at, so you should really be doing the same. It is the main tool you should be using when negotiating your offer on the property that you are interested in. There are some free aspects to it, including a heat map but what is of the most value is the ownership details and the title plan, both of which can be picked up for £3 on the Land Registry.
What about estate agents and the values they ascribe?
In the United Kingdom, it should be obvious that the estate agents work on behalf of the vendor in aiming to achieve the highest figure possible from potential buyers. We do not really have a concept of a ‘buyers agent‘ as in the USA where a corresponding agent works on getting the best price for the buyer. This changes a little bit if you are using a property sourcer who is procuring on behalf of the buyer, but it isn’t a like-for-like. For the most part, buyers will not be using a third party to do the due diligence for them.
Coming back to the estate agent, if you ask them for their view on the current state of the market, which one do you think they will edge towards?
- It’s a great time to buy – there’s some real deals available right now. You’ve really got to buy now before the prices keep going up.
- The market isn’t moving as quickly as it should and the sales are a bit sluggish. We haven’t really seen prices move beyond the pre-2008 credit crunch levels.
99% of you will say (a) as they are exactly what it says on their lapels: sales agents. They are on commission. and are not on your team.
A secondary point to note is that the listings on the estate agent’s windows are the asking prices. Unless it is in key areas that are in demand, then it is highly unlikely to achieve that figure. Even if it does go to that figure for somebody else, that doesn’t mean you – as an investor – should go to the asking price too. So what is the best tool to determine what it’s worth to you? The Land Registry is one tool that should be part of your ‘team’.
What does the Land Registry do for investors?
Once a property gets sold, the solicitor that has conducted the sale will be obligated to report it to the Land Registry for their records. This is a government body that registers the title deeds i.e. demonstrating ownership of real estate assets in England & Wales. The data that is submitted will include:
- The full address of the property
- The date of the sale
- The price that was paid for purchase
- What type of property it is
- Whether it is a freehold or leasehold property
The sold data stretches back to 1995 meaning that the investor can work out what price should be paid for a certain property. Even when recent sales aren’t available (as a property has not become available for sale), the investor can use like for like comparables to determine what should be the right offer.