A valuation is not, strictly speaking, a survey although it may be carried
out in association with a survey, or by a surveyor, as explained earlier. Under
present legislation building societies are still required to have property professionally
valued but the latest mortgage banks are less strictly regulated and may soon
be able to make an adequate appraisal by checking electronically against a database
of comparable properties.
Before most banks and all building societies can lend money to help you purchase property, they will want to have a valuation carried out by a competent professional person. Usually this valuation will come in fairly close to the market price of the property, but just occasionally the surveyor will have been asked to report on property outside his normal area or experience resulting in a more conservative judgement. This is only likely to be critical if you are seeking a full 90%, 95% or maybe 100% mortgage. Please talk to us if you have any doubt about it; your solicitor will be able to explain the implications and position more fully.
Since we sell a lot of property and have one of the largest registers of property in the area, it follows that we will have a very clear idea of current market trends. In the unlikely event of there being a major difference between this valuation figure and the price you have agreed to pay, do please talk to us for there is probably a simple explanation or a misunderstanding which we can help to correct.
If buying a new property, offered complete with carpets and many other fitments, then the valuation may include a discount for these extras – and relate merely to the bricks and mortar which is the main investment you are buying. Legally these white goods cannot be covered by the mortgage charge.
Please remember that the primary purpose of a valuation is to provide an opinion of the price a property might achieve if it were sold, while other types of survey and inspection (discussed above) may focus on condition, constructional issues and associated remedies.
A valuation inspection normally precedes a valuation, which advises on the value of a legal interest in property.
Of course valuations may also be made for a variety of other reasons. Three issues need to be understood and pre-agreed between the parties before the valuation is carried out: the purpose and date for which the valuation is required; the extent and tenure of the property to be valued; and the specific assumptions on which the valuation will be made. A valuation inspection should then take account of relevant factors affecting condition, location and aspects of construction which are readily observable on a walk-around inspection.
With a simple property valuation the professional is not any contractual duty to advise in detail over defects or as to their remedy, neither will they be obliged to uncover, open-up or investigate individual features of a property.
Finally, a valuation should not be interpreted as, or used in substitution for, a survey report. Generally, the scope of a valuation inspection, and any measurements taken, will be confined to what is necessary to establish aspects and factors material to value.
Incidentally, under the round of procedural reforms being proposed by the Government with the introduction of Home Information Packs and the associated Home Condition Reports, the Council of Mortgage Lenders is under pressure to allow its members greater use of desk-top valuations drawing on data-base information and placing less reliance on an actual site visit which is time-consuming and more costly. Some lenders already adopt this approach where the advances represent less than 75% or 80% of the sale price. After all no buyer is going to pay substantially over the fair market value and the sale price is usually about right.