What To Do Before Instructing a Property Valuation
With all property lending the lender will want to instruct and receive a full valuation report from a qualified surveyor. This is done to ensure the property is worth what the borrower says and to check that it forms suitable security for the loan.
The lender wants to ensure their risk is secured properly and that in the event of default the property is marketable without onerous issues.
There is a trend for valuers to down value property compared to what the borrower believes it is worth. In some cases there can be a large discrepancy between the two values. This is definitely something that is happening on a more frequent basis and one of the main reasons why property lending falls over.
It is easy to castigate the valuer for being too cautious, even if there may be some justification in doing so. However the valuer is acting in isolation and independent to the borrower and lender, they also have to consider their liability with the valuation so will naturally look to err on the cautious side of realistic.
Rather than find issue with a valuation after it has been paid for and completed there are a few things you can do to yourself before the valuation takes place.
Self Help Before a Valuation Happens
- Avoid what properties are on the market for as your guide to what you think your property is worth. Valuers will look at sold values only, not on-market values. Search for similar (genuinely similar!) properties that have sold and use these as comparables. If nothing has sold similar to and near you recently then you need to look at older sales, this may impact your valuation so look for supporting information about property price rises
- Check the physical state of the property. The big one here is damp. Check for obvious signs of damp and either get it fixed or if you know the source then tell the valuer what it is. Often a previous leak, burst pipe or broken roof tile are to blame. If the issue has been fixed then tell the valuer otherwise the report will show damp as an issue and the lender will want a further specialist report completed at your expense
- Describe accurately. This one is important with semi-commercial properties and semi-commercial mortgages. Take a typical mixed use property with commercial on ground floor and residential above. If there is no separate external access to the residential part then it cannot be let separately (in a lender’s opinion) and the valuation will reflect this. If there is separate external access then ensure there are the correct facilities in each part, being kitchen and bathroom in the residential and toilet facilities in the commercial. Shared use of facilities will be reported in the valuation so ensure the property is correctly described
- Correct use. Many residential investment properties are quasi HMOs. An HMO will often have two kitchens or bathrooms on different floors. This will be reported in the valuation with some lenders not wanting to lend where there are two kitchens, especially if the property has been described as a standard buy-to-let. Advise the correct use of the property, it won’t mean you cannot borrow it will simply mean you get the right lender rather than see things fall over after a valuation
- Tidy up. For the price of a paint brush, half hour with a dyson and new lightbulbs it can be well worth it. Whilst appearance doesn’t change the overall valuation it does present an image and can often mean minor things are overlooked. If there is some black mould in the hallway then paint it over, hoover and tidy up. This is especially relevant for let properties where the tenant has little interest in your valuation. Remember that a valuer takes pictures so cut the grass, sweep up and treat a valuation the same as you would if your were selling
The Bottom Line With Valuations
Please let us know the true facts behind the property. The more we know the more we can talk to the valuer about and advise them. They will always form their own opinion but getting things right can make a big difference to the time, cost and ease of getting finance in place.
By Dave Farmer