Downvaluations and Overestimations – the surveyors view of the Mortgage Valuation Report
An interesting article for new and existing mortgage borrowers from the Director of surveying firm e.Surv who are on the panel with select mortgage lenders to value properties on behalf of the lender but the valuation report (basic mortgage survey) is paid by the applicant on most occasions, unless the chosen lender offers a free basis mortgage survey incentive.
Richard Sexton – Director of e.Surv:
“One challenge is that, given the frequent requirement to hit a particular value to secure the mortgage offer, the proposed value of a property can be overestimated during the purchase or remortgage process. As a result, when surveyors submit a more realistic valuation to the lender, they can sometimes be seen as pouring cold water on the application.”
“The process is designed to capture a wider range of information that the lender will need in order to decide whether the property is safe to lend on and up to what amount.
Surveyors will typically assess the following:
• The overall condition of the property, including any work that has been done to modernise it;
• Whether the accommodation declared is accurate;
• Whether the property is affected by external issues such as being in a high-risk flood zone, or above a shop or restaurant;
• A basic check of any structural issues, clues that there may be damp, problems with the roof or any wiring issues. If these are flagged in the mortgage valuation report, the surveyor will often recommend that a more detailed report is completed if there is a concern.”
“Overestimates often come to light when surveyors begin to look at these figures. Every valuation is typically measured against a minimum of three other properties to compare prices and make considered adjustments that take account of differences…surveyors will need to look further afield, both in geographical terms or timewise. Older or dissimilar comparables are therefore not a sign of an inaccurate valuation, as the surveyor will make appropriate adjustments and state this on the mortgage valuation report, when considering their relevance to the subject property….just like a mortgage broker, we play an invaluable role in the homebuying process.”