Do Surveyors really value the property or just rubber stamp the lending process?
We can provide help and advice with regard to building surveys, structural surveys, independent valuations, property surveys, structural reports, engineers reports, specific defects report, home buyers reports or any other property matters. As you can see from this article we use lots of sketches and photos in our reports as the feedback we have from our clients is that the sketches and photos help them understand the reports.
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Surveyors, or should we have said panel surveyors?
Surveyors come in different forms with different specialities, as do many professional disciplines. The one that you commonly come across when buying a house is a valuation surveyor, but you may also be aware of a quantity surveyor, who are used similar to accountants on larger projects. You may also have in your mind, when you think of surveyors, of a land surveyor with his theodolite and level, measuring and setting out buildings and surveying the land.
So it may surprise you that by far the biggest branch of surveying is valuation surveying, which is carried out by mortgage companies, or for mortgage companies and banks, often by their own surveyors, more correctly known as valuers and usually referred to as surveyors. Within this area of expertise has grown a very unusual, or we think a very unusual, panel surveyor. It is very important to make the right choice with regard to valuing your house, or property, which we think is very, very important.
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So, what is a panel surveyor?
A panel surveyor is a surveyor who is approved by a bank or mortgage company to carry out their valuations. Very often it is a surveying practice that they own. If you look elsewhere on this website you will be very surprised about what banks and building societies own with regard to surveying companies and estate agents (see our article The unfair game).
Panel surveyors are approved surveyors by mortgage companies and banks who give mortgages. The reason they are approved is that they usually have reciprocal agreements with the mortgage company or bank, i.e. they will trade the number of valuations they give to each other in return for the number of mortgage instructions, valuations or other surveys. Property valuation is being traded and is very big business.
Naive thoughts
When we originally set up in practice we naively thought that if you carried out a good survey that you would get more work, not understanding that the surveys, or should we say valuations, were merely a small part of the selling of the mortgage, which was very big business, as it gives a fantastic income for many years, typically 25.
How does this all relate to how my house is valued?
The point we are making is that you are a small part of a very big process and that it is essential for the mortgage companies/banks to have your property value to carry on the conveyor belt of mortgage deals; therefore their income stream. Keep this in mind when reading the next section.
How are houses valued?
Houses are valued by valuers (often known as surveyors) using what is known as a comparable method. This is where they compare the property being sold against properties that have recently been sold.
The boring bit
Although the next section doesn't make very good reading and is a précis of what is in the Royal Institution of Chartered Surveyors Guidelines (known as the Red Book), it does show how a valuer should be valuing your property.
In addition to this there are various set criteria in the Red Book and these are:
Market Value defined as: The Valuer's opinion of the best price at which the sale of an interest in a property would have been completed unconditionally for cash consideration on the date of valuation, assuming:-
a) a willing seller
b) that prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the sale;
c) that the state of the market, level of values and other circumstances, were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;
d) that no account is taken of any additional bid by a prospective purchaser with a special interest;
e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.
However, in reality the above information isn't available to the surveyors and it is assumed that these criteria have been met.
Homebuyers Report
We would add that a Homebuyers Report is sometimes sold as a middle survey, with a valuation, and one of the selling points is that the valuation is for you. In all our years of surveying we have never seen a different valuation within the Homebuyers Report of that given to the mortgage company and we would argue that a mortgage company valuation is very much looking to validate the price that has been offered for the property using comparable data, known as comps, not looking to see what has been sold recently and being guided by this.
Also, incidentally, the Homebuyers Report has been very much used and abused by some large surveying practices as being the survey to have, when originally the Royal Institution of Chartered Surveyors promoted this as being a basic survey, saying that it shouldn't be used on old properties, unusual properties, or properties that have been altered and extended. We would add that their lawyers looked at it very closely and there are many caveats in it, which means that should there be an error made there is very little leeway for you to get any recompense from the surveyor.
Surveyors Valuation
Section 18 Valuation
We carry out property valuations, but we may not be able to carry out one for you
Valuation the Same, Snap
If you truly do want an independent expert opinion from a surveyor with regard to valuations, mortgages, mortgage companies, estate agents, surveys, building surveys, structural reports, engineers reports, specific defects report, structural surveys, home buyers reports or any other property matters please contact 0800 298 5424 for a surveyor to give you a call back.
If you have a commercial property, be it leasehold or freehold, then you may wish to look at our Dilapidations Website at www.DilapsHelp.com and for Disputes go to our Disputes Help site www.DisputesHelp.com .
We hope you found the article of use and if you have any experiences that you feel should be added to this article that would benefit others, or you feel that some of the information that we have put is wrong then please do not hesitate to contact us (we are only human).
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