Are valuations "blinded"?

Timewarp

Just wondered if the surveyor who is doing a basic valuation of a property for a lender knows the agreed sale value beforehand?

Probably a naive question I know, and the sceptic in me says probably yes. I know the company will know as they are instructed by the lender, but does the actual person that does the report know the target figure for the property valuation?

Thanks

kingstreet

The surveyor prints off a lender-specific valuation report form via "Quest" pre-populated with the information supplied by the lender. It will contain the property details, purchase price/estimated value and mortgage required.

The inspection done for a mortgage involves the surveyor agreeing with the price being paid (or not) and establishing the property is suitable security for the amount of mortgage being requested.

The_J

Of course they know the agreed sale price beforehand. They have to say whether it is justified.

Timewarp

The_J wrote: »

Of course they know the agreed sale price beforehand. They have to say whether it is justified.

If the were truly valuing a property, they would come up with a figure and the lender would compare it to what they were lending.

The_J

If they were truly valuing a property they would take as evidence negotiations between two parties on the open market.

After all, something is only worth what someone is prepared to pay for it.

kingstreet

Timewarp wrote: »

If they were truly valuing a property

But that isn't the purpose of the report you mention. It is prepared for the lender to establish the basics of security and price accuracy.

Timewarp

My point was if they know the market they should be able to come up with an accurate figure without knowing anything about the actual sale price.

The_J

They would be able to, if asked.

The point is they are being asked to confirm that the purchase price agreed is reasonable.

DVardysShadow

Timewarp wrote: »

My point was if they know the market they should be able to come up with an accurate figure without knowing anything about the actual sale price.

The ONLY accurate figure is the figure agreed between buyer and seller. Everything else is a guess as to what another buyer might think. And the valuation will not go beyond the agreed price - because an assumption is that the seller is acting rationally and has had a good stab at getting the highest price. But the valuation could go lower because the buyer might more easily pay over than the seller accept under. The valuation may go under if the valuer thinks that the next most able and willing buyer will pay substantially less.