Does using lender's surveyor for full survey increase risk of undervaluation?

moneysavingplumber

Thrugelmir wrote: »

The valuer is working for the lender. So will value the property in accordance with any instructions given to him. The valuer wil use professional judgement in valuing the property. Professional people don't normally work on the basis of covering their own backs. If thats all they did they wouldn't last in their choosen professions long.

Would you be happy to overpay for the property?

http://www.knowyourmoney.co.uk/house-sellers-beware-of-undervaluation/

I don't believe everything I read, but I consider it on its merits, and there are many other articles out there on the same subject.
Whilst the attached article is aimed at sellers, it affects buyers also. Yes I would be prepared to overpay, up to a point, on a property that I really wanted. Nobody really knows the true value of any property, it's dictated by what it sells for and is always easier to value in hindsight.

Edit: http://www.totallymoney.com/news/index.php/2009/08/properties-undervalued-by-lenders/
Another one..

chucky

Thrugelmir wrote: »

The valuer is working for the lender. So will value the property in accordance with any instructions given to him.

that's misleading and very untrue thing to say... surveyors are registered with the Royal Institute of Chartered Surveyors.

An independent, not-for-profit organisation, RICS acts in the public interest: setting and regulating the highest standards of competence and integrity among our members; and providing impartial, authoritative advice on key issues for business, society and governments worldwide.

http://www.rics.org/site/scripts/documents.aspx?categoryID=190

please refrain from telling lies and misleading people

opinions4u

chucky wrote: »

that's misleading and very untrue thing to say... surveyors are registered with the Royal Institute of Chartered Surveyors.

http://www.rics.org/site/scripts/documents.aspx?categoryID=190

please refrain from telling lies and misleading people

It makes no difference who the professional body is.

A surveyor who is instructed to value a property on behalf of a mortgage lender has been employed by that mortgage lender. They have a professional duty to that lender.

I see no lie being told and I think you should apologise for questioning somebody's honesty in such a way.

chucky

opinions4u wrote: »

A surveyor who is instructed to value a property on behalf of a mortgage lender has been employed by that mortgage lender.

that's not really the same as saying this... is it?

So will value the property in accordance with any instructions given to him.

opinions4u wrote: »

I think you should apologise for questioning somebody's honesty in such a way.

feel free to think what you like and also question whatever you like... but the answer is quite short... No

insinuating that a surveyor will do what a lender instructs is very misleading and not true...

opinions4u

You highlighted the phrase "The valuer is working for the lender" and responded with "that's misleading and very untrue thing to say" and then stated the the poster was a liar. But the valuer is working for the lender. They are not working for RICS.

insinuating that a surveyor will do what a lender instructs is very misleading and not true...

Lenders issue surveyors with guidelines which highlight how they want the report wording, what key issues they want addressing and what would/wouldn't be adequate security.

They don't tell them to "overvalue" or "undervalue", but they do clarify what issues they believe will impact on a property as being adequate security for mortgage.

chucky

opinions4u wrote: »

They don't tell them to "overvalue" or "undervalue", but they do clarify what issues they believe will impact on a property as being adequate security for mortgage.

so when the value they take instructions from the lender

So will value the property in accordance with any instructions given to him.

that's a bit different than issuing guidelines - when a property is valued it is related to price or value.

issuing guidelines is related to putting together a report.

the poster said that they will "value the property in accordance with any instructions given to him."

he specifically indicated value - nothing else, nothing more...

moneysavingplumber

Speaking to the BBC, Peter Bolton King, chief executive of the NAEA, said that surveyors may once more be worried that they will have to defend themselves in court if they are too kind in assessing a property.

"They are perhaps worrying about the market and almost deliberatively knocking off ten per cent almost regardless of what the property sold for," Mr Bolton King commented.

However, he added: "They are perhaps worrying about the market and almost deliberatively knocking off ten per cent almost regardless of what the property sold for."

A consultation with NAEA members has revealed that in several separate cases, mortgage lenders gave surveyors specific instructions on how they should value the property, Mr Bolton King claimed elsewhere.

There seems to be some disagreement here about whether this practice actually goes on or not. I posted the question working on the assumption that it does sometimes, and is a risk I need to be aware of during the valuation process, especially as property prices are indeed beginning to fall. If anybody has experienced a greater level of supposed undervaluation in direct proportion to the level of survey carried out by the lender, then it'd be helpful to hear about it.

chucky

moneysavingplumber wrote: »

If anybody has experienced a greater level of supposed undervaluation in direct proportion to the level of survey carried out by the lender, then it'd be helpful to hear about it.

here's an example from last year

Properties are typically being undervalued by at least 10%, said the National Association of Estate Agents.

It said surveyors afraid of being sued by lenders were being overcautious.

it also goes on to say

"The other reason, which I found more worrying, is that we are hearing anecdotally that lenders are giving specific instructions to their valuers as to how they should approach these valuations."

http://news.bbc.co.uk/1/hi/uk/8191007.stm

this is anecdotal information not saying that lenders specifically "will value the property in accordance with any instructions given to him".
which is not the case and opposite to what some posters are trying to imply incorrectly

opinions4u

chucky wrote: »

so when the value they take instructions from the lender

that's a bit different than issuing guidelines - when a property is valued it is related to price or value.

issuing guidelines is related to putting together a report.

the poster said that they will "value the property in accordance with any instructions given to him."

he specifically indicated value - nothing else, nothing more...

The discussion was around valuation reports for mortgage purposes.

There is more than a number to a valuation report for mortgage purposes. Always has been, always will be.

To call somebody a liar because of your interpretation is poor form.

Properties are typically being undervalued by at least 10%, said the National Association of Estate Agents.

Perhaps estate agents are overvaluing properties by 10%.

moneysavingplumber

Many properties are actually overvalued by the vendors against their agent's advice, as we have certainly given such feedback regarding properties we have viewed and have not been met with disagreement by the agent.

Ultimately, I'm posing the question on the assumption that most things are equal, the sale price is a accurate as it can be, and that there may be some instances of the aforementioned practice.

Thanks in advance.