Valuations and Surveys

 

 Which type of valuation or survey will I need?

Basic Valuation

Your mortgage lender needs to know that it is not lending you more than the property is worth, and that when you sell the mortgage will be redeemed. Although this is often referred to as a survey, it is little more than a valuation for the lenders purposes and (apart from major faults which would affect its value as security for the loan) cannot in itself be relied upon as evidence that the property is worth what the vendor is asking for it. (so best practise is to get a “home buyers report” (see below) which will consider structural issues in more detail advise about whether the house is overvalued by the vendor). You still pay for a basic valuation. It costs approximately £100 to £300 depending on the price of the house but some lenders waive the fee as part of the mortgage deal.

If the house is valued lower than the mortgage requested then your mortgage offer may be withdrawn, or offered on condition that specified work is carried out first. Alternatively you may be able to renegotiate the price, but first double-check with the surveyor how the value given was reached, and that he or she is certain you are paying too much.

 Royal Institution of Chartered Surveyors’ Home Buyer Report

This type of report is more than just a mere valuation for the lender providing important information on structural defects that might call for a reduction in the purchase price. In order to comply with RICS standards the report  has to provide this information in plain English and use colour coded “Condition Ratings” (referred to as the ‘Traffic Lights System’) to indicate the importance of structural issues as follows:

  • Condition Rating 1 (green)     – No repair is currently needed.
  • Condition Rating 2 (amber)  – Defects not considered to be either serious or urgent but will need repairing or replacing.
  • Condition Rating 3 (red)   – Defects that are serious i.e. need to be repaired, replaced or investigated urgently.

The report is divided into sections:-

A. Introduction to the report

B. About the inspection

C. Overall opinion and summary of the condition ratings

D. About the property

E. Outside the property

F. Inside the property

G. Services

H. Grounds (including shared areas for flats)

I. Issues for your legal advisers

J. Risks

K. Valuation

L. Surveyor’s declaration

Section C is most useful to the buyer as it gives the surveyor’s overall opinion of the property and whether the surveyor considers the agreed purchase price to be reasonable.

Section D includes a section related to energy efficiency and the Energy Performance Certificate that must be prepared before a property is marketed.

Section G a summary of the condition of the services based on a visual inspection only note: the surveyor will not test the services unless the vendor is present. The surveyor will recommend further investigations if these are considered appropriate. It is advisable to have gas, electric and central heating systems tested in older properties.

Section J identifies dangers as potential flooding, the presence of asbestos, or an unprotected garden pond or swimming pool etc.

 Full Structural Survey

The most expensive type of survey but essential older buildings (75 years and upwards); those built out of unusal materials or in an unusual way; and properties which have had significant alterations or extensions, or which you want to alter.

The surveyor will carefully inspect the property, checking everything visible or easily accessible to examine the integrity of the structure, its condition and any faults. The surveyor will advise if further specialist surveys are needed into such matters as services, the foundations, dampness issues, and subsidence caused by trees.

The report will estimate the cost of repairs and how this affects the value of the property.

A buildings survey can cost up to £1,000 depending on the price of the house. Given the detail of the report it can take a couple of weeks to prepare and is more technical than a Homebuyers survey to read.

 

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