Valuation report

[Deleted User]

We had our mortgage offer from Precise- all happy- and have just received the formal offer and copy of the valuation report through the post. All looks fine, recommends getting the damp looking into which is fine as we're getting our own survey done anyway- and they say the damp isn't sufficient enough to affect the value of the house, so we're not too worried.

However on the first page it lists the current market value at £305,000, which is what we offered- but then underneath it says Projected Market Value (90 days) £290,000. What does this mean?

eddddy

It's probably best to ask the bank (as they instructed the valuer).

But it general, 'Projected Market Value' means the market value at some time in the future.

So, from what you say in your post, the surveyor thinks the market value today is £305k, but it will drop to £290k in the next 90 days - which seems very strange.

Just a thought - is there any reference to repossession in that section of the valuation? Is the valuer saying that the property has a market value of £305k if sold under normal conditions, but only £295k if it had to be repossessed in 90 days time and sold?

davidmcn

eddddy wrote: »

Is the valuer saying that the property has a market value of £305k if sold under normal conditions, but only £295k if it had to be repossessed in 90 days time and sold?

That's right, it's the price you'd expect if you wanted it sold within 90 days. Usually I only see that in commercial property valuations, I don't think it's normal for residential mortgage valuations - maybe just a requirement of this lender.

eddddy

So I wonder which figure the lender uses as the basis for their LTV limit?

I suspect it's the PMV - which means their LTV limit may not be as generous as it seems, when compared to other lenders.

robatwork

Would be interested to know what town or area of the country this is in, where the valuer expects a 5% drop in value in 3 months.

davidmcn

robatwork wrote: »

Would be interested to know what town or area of the country this is in, where the valuer expects a 5% drop in value in 3 months.

Think you've misunderstood - they mean you'd get 5% less if you had to sell quickly, not that prices are actually heading down.

[Deleted User]

Thanks for the replies.

Sounds like it's not something that'll apply to us then- which is good.

Now to get the timber and damp report done and hope it's not bad news!

robatwork

Well here it is from the horse's mouth:

Valuation (RICS)/Home Report/market appraisal (estate agents)

RICS

All lenders will obtain at least one RICS compliant valuation. Additional valuations may be obtained.

All lenders must obtain a Home Report produced by a RICS qualified surveyor prior to placing a property on the market for sale.

Basis of valuation: Market Value (MV) or Projected Market Value (PMV)?

Both of these are specifically defined in the RICS Red Book. Valuations of residential property on the basis of PMV must be completed in accordance with the definition settled by RICS and CML, “The estimated amount for which a property is expected to exchange at a date, after the date of valuation and specified by the valuer, between a willing buyer and a willing seller, in an arm’s-length transaction, after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.” N.B. Exchange in Scotland shall mean Conclusion of Missives.

Projected Market Value is recommended for this purpose because it looks forward to settlement taking place at a date in the future, whereas Market Value provides a valuation which assumes settlement taking place on the date of the valuation.

If additional valuations are obtained, they should be valued on the same basis, whether MV or PMV, and if PMV they should take into account the same length of time prior to settlement.

With PMV reports, if the lender does not specify a prospective marketing period the recommended good practice for sales of repossessed properties to be achieved is 90-days to settlement. In all PMV reports the surveyor should specify the number of days or weeks basis on which the valuation is based.