About 5 years ago I wrote a blog about the sometimes impossible task of valuing a house.
Today, the exercise is even more complex. The seemingly never ending housing shortage, in combination with an apparent over supply of the wrong sort of property (namely ‘luxury’ flats in city centres) is a typical conundrum.
When a client engages us to prepare a building survey, on rare occasions they will ask for valuation advice. I understand the nervousness of an inexperienced buyer, but never succumb to this request.
Mortgage valuations are a necessary evil but often confuse a buyer who is purchasing a property usually for very personal reasons. The valuer must obtain strong comparable evidence to justify his figures otherwise his professional indemnity insurers will not be very happy should a lender come knocking on the door following repossession. And believe me, that is exactly what they will do. So, it is not surprising that valuers suffer from natural caution. More importantly, he (or she, yes there are female surveyors and valuers) does not have his heart in the purchase. He might consider properties X and Y are worth the same, but a buyer may have very good personal reasons why they want to pay £20,000 more for X. For a start, it is not available for the price of Y.
When it comes to mortgage valuations, the surveyor is stuck between a rock and a hard place. If he can’t find the evidence to justify the purchase price he will either upset the estate agent, seller, broker and no doubt the buyer, or risk consequences if the property is repossessed and the bank questions his valuation. What’s more, the valuers portion of the fee is barely enough for lunch. It is not surprising many of them regularly value below the purchase price. In fact, I know one local valuer that does this as a matter of course. You can understand why I avoid them like the plague (valuations that is, not the valuers, you understand…).
On many occasions, I see sales collapse because a valuation is below the sale price. The disappointed buyer loses the house, either because they genuinely think they are paying too much, or could no longer raise the funds required, only to see another purchaser pop up and pay what the first buyer offered; in fact, sometimes more!
Valuation is not an exact science and for the most part, purchasers do their own research not least by viewing several properties. Usually, they know what is a reasonable offer to make, and should avoid being distracted by a professional who is far more clinical in his approach.
If you are buying a house to live in, regard it as a home, not an investment. Who cares if you might be paying a little over the odds if you really love it?
When I explain this to a client, they usually drop the request. They are employing us for our experience and knowledge of construction and defects, not to phone around a few agents to find comparable evidence of value.
As for estate agents; if you recommend a surveyor to one of your buyers, make sure it is one who doesn’t give unsolicited valuation advice.
When dealing with the mortgage valuers, supply them with good comparable sales evidence; this will give the poor fellows the comfort they need to support the sale price without risking their reputation, or for that matter, their shirt.
Robert Desbruslais is the Managing Director on Desbruslais Chartered Surveyors. His book on how to buy a house is to be released soon.
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