Where does a valuer pick between local sales evidence as comparable versus national sales evidence?

Video Transcript

A RICS registered valuer would consider whether to use local or national sales evidence in a property valuation based on factors like the property type, market conditions, location and the strength of the tenant’s financial covenant. Here are some key considerations for each scenario.

Local sales evidence should be used when valuing traditional residential or commercial properties in established markets where local sales data is readily available.

Location specific factors can have a significant impact on value – e.g. school catchment areas, local amenities and local road networks in stable or well-defined local markets where property prices closely align with local demand and supply factors. Ultimately, local sales evidence should be used to value properties that reflect local market trends as these might not necessarily be accurately captured by broader national data, especially in unique or highly variable local markets.

National sales evidence should be used when valuing rare, unique or high value properties that have limited or no comparable sales in the local market – e.g. luxury residential estates and landmark commercial properties.

National sales evidence should also be used when valuing properties that are let for a long period of time to tenants with a strong covenant strength – e.g. Tesco’s or Marks and Spencer’s. If a property has been purchased and they are a tenant, let’s say for a significant period of time say 10 or 15 years, then the valuer would have consideration to what other buildings have sold for nationally with Tesco’s or, in this example, Marks and Spencer’s, if they are tenants on long leases, along with other similar types of supermarket chains. National sales evidence is also used for specialised property types – e.g. hospitals, prime student accommodation and agricultural land – that may not have local transactions but do have national trends and provide useful insight.

You have to provide a balance sometimes of both types of evidence.

When both local and national data could influence the valuation, a valuer may use a blended approach, weighting the local evidence more heavily for day-to-day relevance, but considering national evidence for context or market positioning. The choice between local and national evidence ultimately depends on the relevance, availability and reliability of data and the market context of the property.