Does sentimental value come into play?

By Arwel Griffiths, senior partner at Robert Sterling Surveyors

‘Market value is the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, and where the parties had each acted knowledgeably, prudently and without compulsion.’

On first glance, there seems to be little room for sentiment in such a definition, though it will undoubtedly play a part, and can have a significant impact on the seller.

Perhaps the property has been owned by a family throughout a number of generations; perhaps it is where a family was created and grown, or is the first one to be shared with a partner. Whatever the scenario, there are often high levels of emotional and personal attachment involved, which can be influential on what you perceive the true value of a property or asset to be.

Of course, buyers look at it from the opposite perspective and viewpoint. They are not interested in how the front room played host to the seller’s baby son’s first steps and are more focused on whether there is room for a bigger coffee table or the speed of the broadband. The big challenge for the seller can be removing the level of attachment and thinking from the buyer’s perspective – what would their first impression be of the property and what would make them want to buy it? Ultimately, if you are unable to emotionally let go of the property, a sale that is suited to all parties will be extremely difficult.

The role of the valuer is to look for comparable evidence, and there is little – if any – room for sentiment. If the comparables-based valuation methodology is being used, sentiment simply doesn’t come into it. This method of valuation relies on finding out what other similar properties have been sold/let for in the immediate area. That information is usually obtained from speaking with local selling or letting agents, or websites such as Rightmove Plus. Adjustments sometimes need to be made where, for example, the comparable evidence isn’t quite the same, say area or condition-wise. Valuers are essentially divorced from the situation and often handle it by ignoring it altogether.

I suppose one good example of when emotions could come into play are probate valuations, when loved ones have passed away. Those left behind have memories about a property, but they play no part at all in the valuation process.

A recent sentiment survey from the Association of Short Term Lenders shows that members are split about the direction of UK property prices, with 52% expecting slight growth and the remaining 48% expecting prices to fall. Whatever happens in the future, and whether prices go up or down, it is unlikely that sentiment will play a significant part.