Valuations – Are they for the lender or the borrower?
A surveyors activity is to consider and report upon all types of risks on behalf of the lender, during the valuation process.
A surveyor’s main aim is to detect any risks associated with buying that home – for the lender and mortgage applicant alike.
The BBC have reported last month that there has been a “significant” rise in homes being valued at less than what buyers have agreed to pay.
With one in five properties seeing a down valuation this can be a stressful time. Especially for clients that have brought off plan and may have exchanged months if not years ago. Only 2 years ago less than 1 in 20 properties were facing this issue.
It is reported that this is the highest rate since the financial crash in 2008.
A Down Valuation by a surveyor can mean the purchaser having to pay thousands of pounds to meet the purchase price or the client could potentially lose their ideal home or initial deposit if buying off plan. Estate agents Emoov said it reflected surveyors predicting a financial crash. And that surveyors were “simply covering their backs”
A market Value is often based on comparable properties and the Surveyors usually take an average of 3 properties recently sold. This information is usually obtained by a professional’s knowledge in the local market. If buying in a chain, usually the whole chain can slightly reduce their asking price to cover any lose but this would be down to each Vendor/Purchaser in the chain agreeing to this. IPFG would recommend you speak to your estate agent to help advise the best way forward. A good estate agent would negotiate this for you.
If buying a unique property or a new build property in a undeveloped area, this could result in the down valuation. So make sure you do your home work before committing to a purchase.