Surveyors calculate market value primarily by analysing recent completed sales of similar properties, then applying professional judgement to reflect relevant differences. The RICS definition of market value refers to the estimated amount for which a property should exchange on the valuation date between a willing buyer and seller, acting knowledgeably and without compulsion.
The process is evidence based. It involves inspecting the property, selecting suitable comparable sales, considering any differences between those properties and the subject property, then reaching a reasoned opinion of value.
What does market value actually mean?
Market value is not the same as an asking price, an estate agent’s appraisal or the amount a seller hopes to achieve.
Under the RICS definition, market value assumes a transaction between a willing buyer and willing seller in an arm’s length transaction. It also assumes proper marketing and that neither party is forced to proceed.
This matters because a valuation reflects the market at a specific point in time. It is an opinion based on available evidence, rather than a prediction of the highest price that may be achieved in every circumstance.
A property may attract a higher or lower offer than its market value. Individual buyers can have personal reasons for offering more, while a seller may accept less because they wish to move quickly. The market value remains an independent assessment based on the evidence available at the valuation date.
Step one: Inspecting the property
A valuation usually begins with an internal and external inspection. This is different from a Level 2 or Level 3 survey, which focuses on the property’s condition and may provide more detailed advice on visible defects.
During a valuation inspection, the surveyor records information relevant to the valuation. This may include:
- Property type
- Accommodation
- Approximate size
- Layout
- Construction
- Tenure
- Overall condition
The surveyor will also note visible issues that could affect value. The purpose is not to provide a full condition assessment unless that forms part of the instruction. It is to understand the property being valued and identify the characteristics that need to be reflected when considering comparable evidence.
For flats, this may include reviewing the lease term and relevant information about the building. For houses, the inspection may consider matters such as extensions, parking, plot size and the relationship with neighbouring properties.
Step two: Gathering comparable evidence
The comparable method is the most widely used approach for residential property valuations. It involves analysing completed sales of properties that are sufficiently similar to the one being valued.
The strongest comparable evidence is usually recent, completed transactions. Asking prices and unsold listings can help show how properties are being marketed, but they do not confirm what a buyer has actually paid.
A surveyor will look for sales that are comparable in terms of:
- Property type
- Location
- Accommodation
- Age and construction
- Tenure
- Overall condition
- Date of sale
Sources may include HM Land Registry information and professional databases that record sold property data. The surveyor may also use local market knowledge and information from other reliable sources to understand the context of individual transactions.
Not every nearby sale will be suitable. A detached house may not be a useful comparison for a terraced house. Equally, two flats in the same road may have different values because of their lease terms, condition or position within the building.
The aim is not to find one identical property, as this is rarely possible. It is to identify a useful range of evidence, assess its relevance and decide how much weight should be given to each sale.
Step three: Making adjustments
No two properties are exactly alike. Surveyors therefore consider the differences between each comparable sale and the property being valued.
For example, a similar house may have sold for £450,000 but have an additional bedroom. If the subject property does not have that extra accommodation, the surveyor would consider an adjustment before applying the sale as evidence.
Other differences might include:
- A larger or smaller garden
- Off street parking or a garage
- A shorter lease
- A busier road position
- A different standard of condition
- An extension or loft conversion
There is no fixed formula that can be applied mechanically to every property. Adjustments require professional judgement, informed by market evidence and the surveyor’s understanding of how buyers respond to differences in the local area.
A surveyor may place greater weight on a sale that is very similar in type and location, even if it is slightly older. A more recent sale may receive less weight if it differs materially from the subject property.
The final valuation is a reasoned conclusion that reflects the quality, relevance and timing of the available sales evidence.
Step four: Considering the market at the valuation date
Comparable evidence needs to be considered in the context of the market at the valuation date.
A sale completed several months earlier may still be useful, but the surveyor must consider whether market conditions have changed since that transaction took place. The same property may have a different market value six months later even if nothing about the building has changed.
This is why valuation reports state a specific valuation date. The figure reflects the evidence and market conditions available at that point, not a guarantee of what the property will sell for in the future.
The comparable method explains how a figure is reached. For a closer look at the features that can influence the figure itself, read what affects your property’s market value.
The role of the RICS Red Book
RICS Valuation Global Standards, commonly known as the Red Book, set out the professional framework for formal valuations. The current edition became effective on 31 January 2025.
A Red Book valuation is prepared by a RICS Registered Valuer. The report should clearly define its purpose, the basis of value, the valuation date, assumptions and limitations. It should also explain the evidence considered and the reasoning behind the final opinion.
The Red Book does not require every property to be valued in the same way. The appropriate method depends on the type of property, the information available and the purpose of the valuation.
For most residential homes, direct comparison with recent sales is likely to be the central method. Where evidence is limited or the property is unusual, the surveyor may need to consider other approaches or supporting analysis.
Brian Gale Surveyors provides RICS Red Book valuation reports for residential and commercial property where a formal valuation is required.
Other valuation methods
The RICS comparable method is usually the most relevant method for owner occupied residential property. RICS recognises three broad valuation approaches: the market approach, the income approach and the cost approach. The chosen approach and method should suit the property and instruction.
The income approach may be used for investment property where rental income and investment returns are central to value. This can be relevant to commercial premises and some residential investment assets.
The cost approach may be relevant in limited circumstances where there is little comparable evidence, such as a specialised building. It considers the cost of replacing or reproducing an asset, with suitable allowances where appropriate.
More specialised property may also require methods such as residual valuation for development land or a profits based approach for certain trading properties. Comparable evidence can still be important, even where the valuation is not based solely on direct comparison.
Why might a surveyor’s valuation differ from the agreed price?
A buyer and seller may agree a price before a valuation takes place. If the available evidence does not support that figure, the surveyor’s valuation may be lower. This is often referred to as a down valuation.
This reflects the surveyor’s independent opinion that the comparable evidence and market context do not support the agreed price on the valuation date. It does not mean that either party has acted improperly.
This can be particularly important where a lender relies on the valuation as part of a mortgage application. The lender may base its lending decision on the lower valuation figure rather than the agreed purchase price.
The buyer may decide to renegotiate, contribute a larger deposit or reconsider the purchase. A valuation may be reviewed where relevant evidence was unavailable or there is a factual error, supported by reliable completed sales evidence.
Why independent valuation advice can help
A valuation can be needed for many reasons, including a purchase, sale, probate matter, matrimonial matter, taxation purpose or lending instruction. The correct basis of value and report format will depend on why the valuation is required.
Brian Gale Surveyors is an independent Chartered Surveying practice established in 1985. As RICS Registered Valuers, we provide residential and commercial valuation advice across Surrey, Sussex, Kent, Hampshire, London and the wider South East.
An independent valuation offers a clear opinion based on market evidence and professional judgement. It can help homeowners, buyers and sellers understand how a figure has been reached before making an important property decision.
To discuss the appropriate report for your circumstances, view our property valuation service or get a quote.
Frequently asked questions
- How do surveyors calculate market value?
Surveyors inspect the property and review recent completed sales of similar homes. They consider the quality and relevance of this evidence.
Professional judgement is then used to reflect material differences and market conditions on the valuation date.
- What is the RICS definition of market value?
RICS defines market value as the estimated amount for which a property should exchange on the valuation date between a willing buyer and seller in an arm’s length transaction, following proper marketing and without compulsion.
The definition assumes that both parties have acted knowledgeably and prudently. It provides a consistent basis for assessing value in an open market.
- What is the comparable method of valuation?
The comparable method values a property by analysing recent completed sales of similar properties. The surveyor then considers differences between each sale and the property being valued.
It is the most widely used method for residential property valuations because it is based on evidence of what buyers have paid for comparable homes.
- Why might a surveyor’s valuation differ from the agreed purchase price?
A valuation is an independent opinion based on comparable sales evidence and market conditions at the valuation date. It does not simply confirm the price agreed privately between a buyer and seller.
If the evidence does not support the agreed price, the valuation may be lower. This can affect the amount a lender is willing to lend.
- What is the difference between market value and asking price?
An asking price is set by the seller or their agent. It may reflect the seller’s expectations, marketing strategy or preferred outcome.
Market value is an independent opinion of what the property should achieve in an open market, based on relevant evidence and professional judgement.
