Insurance Rebuild costs, valuations and EA's!

ds1980

What a load of crap these people make up.

I had 2 rics approved surveyors at my new house.

How can this be..............

1 has said £189k rebuild the other £129K!!!!!! I thought they that have standards to work to!

It shows me that these people are just as hap hazard as everyone else making a living.

A friend had 4 valuations done the other day of a house valued between £189k and £250k!!!

I had valuations about a month ago valuing a property at £200-£205k i have just accepted £215 after putting it on for £220k.

This world should not have these people in it!!!

courtjester

Valuation is a very broad subject much misunderstood, particulalry when it comes to valuing houses for sale and is dependent on the interests involved and the purpose of the 'valuation'.

The key building valuations are:

insurance (valuation to rebuild)
market valuation (valuation to sell /attract interest)
lending or mortgage valuation (historic pricing for agreed sales)

The rebuilding cost valuation is probably the easiest to calculate and there should be little variation between experts as this is based essentially on construction and measurement which is pretty straightforward. The cost to rebuild a house varies only slightly between areas as it is not dependent on fashion but the availability of labour, materials and access to the site. So a property in London may cost the same to rebuild more or less as a property in the surroundings counties, subject only to access problems or over-pricing by builders for 'luxury' areas. Rebuilding cost is what you insure the building for.

Market value is an estimate of the expected sale price and this is largely driven by 'fashion' and location - hence a building in London will be valued far higher than the same building in Essex, for no reason other than the additional demand in London driving prices up.

Market value is supposedly what estate agents offer, although their use of the word 'valuation' is debatable to say the least as it is far from a professional value. It is merely an estimate (or a guesstimate) of what a buyer *might* consider paying for the property as a starting price - the trouble is that this is highly subjective and subject to (1) opinion which of course will vary widely, (2) the agents situation and interests, whether they have ready buyers that they know will buy only at a certain price point, or worse some dodgy dealing involving brown envelopes with developers (3) if the agent needs to get their sales figures up that month, they might suggest a lower than normal value for a quick sale or a higher than normal value in order to play the 'greed' card to attract the client to sign up...

If you look at research by companies like Hometrack, they will show that the offer to asking price ratio is often about 90-95%. This varies according to demand.

Mortgage valuation is based on actual sale prices, that is the definite value agreed for similar or identical property in the same area - this value is therefore founded on hard pricing for real transactions not on any value aa vendor or agent may aspire to achieve.

Before accepting any so-called 'valuation' from an estate agent, all vendors should do their own research into sold and asking prices for competing property in their area - it's not hard to find. The asking price must be attractive to buyers looking at that price band and (traditionally) would include a supplement to allow negotiating room as few properties attract offers at their asking price.

WHICH? have reported in the past the huge disaparity between values obtained from different agents for the same property which shows the level to which agents colour their values with their own interest and that, in fact, it is not based on any real professional judgement on their part.

A property is worth the price that a willing buyer and a willling seller will agree at a particular time and market condition - there is no 'right' price point.