House hunters may be losing out financially and on the homes they want to buy because of a gap between the valuation of the property and the price they have offered to pay.
According to estate agents Emoov, “down valuations” are becoming more common because chartered surveyors are concerned about the property market.
A down valuation happens when a surveyor carrying out a survey of a property values it at less than the offer made by a potential buyer. The lender will only offer a mortgage based on the valuation, meaning the buyer may have a big financial bridge to gap or have to pull out of their bid altogether if they cannot increase their deposit.
Comparing the local market
In a report on the BBC’s Victoria Derbyshire Show, Emoov said one in five of the sales it negotiates is now resulting in a down valuation, compared to less than one in 20 two years. Mortgage advisors Town and Country confirmed that its advisors also believe down valuations are rising.
Chartered surveyors are members of the Royal Institution of Chartered Surveyors (RICS). All surveyors who are part of Surveyor Local’s nationwide panel are members of RICS.
A RICS spokesman told the Victoria Derbyshire Show: “The market value is based on comparable market evidence, usually a minimum of three sales transactions of similar properties in the local area, and also the professional’s knowledge of the local market including supply and demand dynamics.
“For this reason, it is quite possible that the valuation for the lender – the market value – does not match an asking price for a property that has been set by the seller or agent.”
Realistic value required
Those remortgaging their home are also affected by down valuations because the lender will demand an up-to-date valuation before agreeing to provide a loan.
UK Finance, which represents the banking industry, said: “Lenders have a responsibility to ensure that the value of property taken as security on mortgage loans is current and realistic.
“Although the valuation is carried out for the lender, borrowers also benefit from a realistic independent valuation as it could help them avoid paying over the odds for the property they are buying.”
To ensure the property you are buying is worth the money you are investing in it, talk to Surveyor Local’s expert team. They can advise on which survey is right for you and ensure you get a quick turnaround when required on the survey results.
Call now on 0800 022 4428. We’re available seven days. Or you can get an instant quote now.