Surveyor Report - Restatement Cost

CinderKona

Hello,
i have just had a homebuyer survey on a property I have been trying to buy since March and the surveyor's report has just come back with a restatement cost substantially less than the agreed amount in March. I know this is the replacement value if the whole thing was to burn down etc but is this related to the current value?
The properties around the area have fallen but this replacement cost is some 66% of the amount I agreed to pay. Is my potential purchase a little overvalued?
thanks

princeofpounds

Do you mean the reinstatement cost (i.e. rebuild?).

This is a value for insurance purposes - you know what you need to insure the building for so it can be rebuilt if, for example, it burns down.

It is only very indirectly related to the purchase price of your property or the market valuation. Most importantly, it does not include the value of the land, which you would still own. Land prices vary a lot depending on where you are in the country and your specific location, but they are typically a large part of the market value - sometimes even a majority. So it's not at all odd that the reinstatement value would be significantly lower than the price you are paying for the property.

davidmcn

The reinstatement value is what it would cost to demolish and rebuild the property on the plot. It has nothing to do with the market value of the property (for example, it doesn't include the value of the land), it's only of use for insurance purposes. Doesn't the report also tell you the market valuation?

CinderKona

davidmcn said:

Doesn't the report also tell you the market valuation?

Thanks for your reply. A closer look and I can see the market valuation is also on there although this is also slightly lower than I agreed 8 months ago. Oh well, I need a home!

hazyjo

CinderKona said:

davidmcn said:

Doesn't the report also tell you the market valuation?

Thanks for your reply. A closer look and I can see the market valuation is also on there although this is also slightly lower than I agreed 8 months ago. Oh well, I need a home!

Are you needing a mortgage? Do you have the cash to make up the difference?

Why such a delay. Were you all waiting for the chain to form or something?