What does a (mortgage) valuation achieve?

Beige

I'm wondering about exactly what a mortgage valuer is measuring and hoping someone can shed some light.

Is the valuer providing an independent opinion of the full value of the property?
Or is she/he just ascertaining whether the property will be able to be sold for enough to recover the loan amount in the event of repossession?

Also - is the valuer informed of the agreed sale price before they undertake their valuation?

I'm asking this because I'm a bit worried about the agreed sale price and am wondering if the mortgage valuation will provide a useful second opinion as to whether it is fair.

kingstreet

The surveyor is told the agreed price and mortgage amount beforehand.

He is simply confirming to the lender that the price is reasonable for the amount being borrowed and that the property is reasonable security for the loan.

The mortgage report & valuation is to represent the lender's interests only and you should not relay on it in any way.

StuC75

The lender is only interested in being able to recover there investment - so if paying over the top, but with a large enough deposit then the bank would be less interested as long as they can recover there exposure and that the product they are offering you falls within the LTV limits..

E.g. £110K purchase price - 25k Deposit -85k Mortgage = 77% LTV which seems ok if applying for a product with max 80% LTV..

But if the valuation comes in at £100k, then the 85k mortgage is 85% LTV, so wouldn't qualify for the 80% LTV.. the lender would only lend 80% of that valuation at max - so unless the seller budged on price you would have find the extra deposit, or pick a different mortgage product where the LTV fitted..

Beige

Thanks to both of you.

I'm a FTB and finding this process very difficult. Feels like the market is very opaque, information is out-dated (land reg) or from unreliable sources (EA's) and there is no informed adviser acting in my interest.

Very unusual compared to other important investments such as pensions etc.

eddddy

Marty13 wrote: »

... and there is no informed adviser acting in my interest.

Hi Marty

To put it fairly bluntly, if you want an adviser to act in your interest, you have to instruct one (and pay them) - like you would a financial adviser.

- The mortgage valuer is acting for the mortgage lender.
- The EAs are notionally acting for the sellers (but primarily acting for themselves).

The normal route would be to find a property you want to buy, then instruct a surveyor to do a report and valuation for you.

If it were me, I might use a RICS surveyor attached to a local EA (as long as the EA was not involved in the sale). As well as the usual survey info, he/she may be able to give some insight into the local market... e.g. how easy/difficult it may be to resell the property, how often similar properties come onto the market etc.

Beige

Don't get me wrong - I'm absolutely not averse to instructing and paying someone.

I'm wasn't planning on using a surveyor for a building survey because a good friend who is himself a building surveyor has already given it the once over (and found no real problems), but I will consider it for an independent valuation.

I got the hometrack valuation report yesterday and the valuation from their report came in a long way below the price we've agreed. I just need to know a surveyor could add value beyond this hometrack valuation.

Is your thinking behind appointing one attached to an EA that they have better access to current market information?

pjread

Marty13 wrote: »

I'm wasn't planning on using a surveyor for a building survey because a good friend who is himself a building surveyor has already given it the once over

Unless you think he'd be too soft so as not to hurt your feelings or make you feel like you're over-paying, you should have at least some idea then from this friend,,,?

eddddy

Marty13 wrote: »

Is your thinking behind appointing one attached to an EA that they have better access to current market information?

Yes, exactly right. They will have inside info from their own EA business, and they will be following what all the other local EAs are doing for research and competitive reasons.

One other thought, which is important to some people - if you pay a surveyor for a report, and he/she is negligent and fails to notice that the roof is about to fall down, you can sue the surveyor. You can't sue your friend if he is negligent (and you probably wouldn't want to anyway!)

Beige

Unless you think he'd be too soft so as not to hurt your feelings or make you feel like you're over-paying, you should have at least some idea then from this friend,,,?

He works in a different area, usually on commercial buildings, so, whilst he is able to assess the quality and condition of a building doesn't know much about valuations.

if you pay a surveyor for a report, and he/she is negligent and fails to notice that the roof is about to fall down, you can sue the surveyor. You can't sue your friend if he is negligent

Thanks for pointing this out - I did considered this. From what I hear because of 'caveats' etc (to the survey report) it is quite difficult to actually take action against a surveyor for missing things. Given this, and that I trust my friend to be a high quality surveyor I'm pretty comfortable with this bit