Valuation accuracy

robbiejustice

Hi there,

I am in the process of selling a flat. The buyer had their mortgage approved for the agreed sale price. The buyer had a separate homebuyers survey, which down valued the property by 4% (11k). The buyer is now lowering the offer based on this.

Interest in the property was extremely high and we had to go to best and final offers. I could easily put it back on the market and achieve the same again. The buyer has sent the report to me and it does clearly state that they consider that they are paying a premium.

There doesn't appear to be any caveats about accuracy, I am struggling to see how the surveyor can give a single number and not a range? A property valuation must be very difficult and I struggle to see how a valuation can be that accurate as to say a 4% difference between sale price and valuation is not within normal tolerances. Does anyone know how accurate these valuations are?

Cakeguts

It actually doesn't matter. If the property is valued for less then the buyer has to make up the difference from savings. If they aren't prepared to do this put the property back on the market and find someone who will.

Fiesto88

Exactly the same thing happened with the house we’re buying. Mortgage valuation came back fine, independent survey came in significantly lower with no essential repairs recommended. We knew when we agreed the sale price that we were paying at the top end, so we didn’t go back and negotiate. The house is worth what we’re paying to us.

With regards the accuracy, it comes down to a combination of human nature and the individual quirks of properties. Some are very easy to put a cast iron figure on (identikit new builds or bog average semis with lots of comparable sales), others are more difficult to pin down because the right buyer will pay a premium. Some surveyors will be flexible and willing to take a risk, others won’t.

I work in mortgage underwriting and I’ve seen cases where properties are downvalued by £500!

davidmcn

If they've disagreed with the amount offered I would view the valuation as being what the surveyor thinks the top end of the range is (or as high as they are prepared to go and not risk being sued).

eddddy

robbiejustice wrote: »

The buyer had their mortgage approved for the agreed sale price. The buyer had a separate homebuyers survey, which down valued the property by 4% (11k).

Fiesto88 wrote: »

Exactly the same thing happened with the house we’re buying. Mortgage valuation came back fine, independent survey came in significantly lower with no essential repairs recommended.

My view on this is...

The buyer has instructed a surveyor, and so the surveyor is acting in their client's (the buyer's) best interests.

This includes providing a 'low end' valuation for the buyer, because the buyer can then use it to try to negotiate a lower purchase price.

The lender has done their own valuation, so this won't affect the mortgage.

Tom99

According to the RICS:-

"It is has been left to the courts to decide what is a permitted margin of error when carrying out a valuation of property. Generally, case law precedent refers to a margin of between 10% and 15% depending upon the facts."

westernpromise

Say you've had your own survey done and it has concluded the house is worth 4% more. Suggest splitting the difference.

sevenhills

Tom99 wrote: »

According to the RICS:-

"It is has been left to the courts to decide what is a permitted margin of error when carrying out a valuation of property. Generally, case law precedent refers to a margin of between 10% and 15% depending upon the facts."

I would say a difference of 10-15% is rather high, but flats maybe more variable. Perhaps a similar flat has recently been sold?

G_M

All irrelevant. All that matters is

* do you believe you can relatively easily find another buyer at the price agreed?
* are you in a desperate hurry, such that looking for a new buyer is a non-starter

If the aswers are yes and no, then a polite rejection of the their lower off is all that is required. If they then walk away, so be it.

davidmcn

sevenhills wrote: »

I would say a difference of 10-15% is rather high

Yes, I thought it was more like 5% for "standard" properties, higher for newbuild or properties without much in the way of comparables.

robbiejustice

Thanks all for your responses. I said no, and the buyer agreed to the original sale price.


I feel there should be a statement in the standard report about accuracy based on comparables and market conditions. People see a single number and don't question it when it clearly is a range.