Property valuation

LuckyTree

Is it normal for a Red Book Valuation to be noticeably lower than estate agent valuations? We got 3 estate agent valuations for probate but there was a huge range so thought we would go with a Red Book valuation to be safe but that is much lower than even the lowest valuation.

Also can anyone say what a Red Book Valuation report should contain? Ours only named 1 comparable property which actually was smaller. And the valuer never measured any rooms etc.

The house is left to several beneficiaries but will likely be bought out by a one beneficiary.

Marcon

LuckyTree said:

Is it normal for a Red Book Valuation to be noticeably lower than estate agent valuations? We got 3 estate agent valuations for probate but there was a huge range so thought we would go with a Red Book valuation to be safe but that is much lower than even the lowest valuation.

Also can anyone say what a Red Book Valuation report should contain? Ours only named 1 comparable property which actually was smaller. And the valuer never measured any rooms etc.

The house is left to several beneficiaries but will likely be bought out by a one beneficiary.

You can usually assume that there's at least one estate agent keen to get your business and thus quoting the highest 'sale' price, but your phrase 'huge range' suggests this might be quite an unusual property and/or there haven't been many recent sales in the same area/for similar properties.

Red Book valuations are typically lower than those provided by estate agents, but I'd go back to the surveyor and raise exactly the points you've made above - they should be given the chance to respond. 

librarylover

I have the same problem The RICS valuation is very significantly below three estate agents estimates. Surveyor stands by valuation but it is a unique property (house in need of renovation but very desirable location and  large garden) and we think the estate agents are nearer the mark. Am not sure whether to just ignore RICS valuation, or take average of all four (which could still be in the low side). We intend to sell asap and am thinking of using the option to use sale price as probate valuation, as this might help mitigate valuation issues. The estate is below IHT level even with highest valuation thanks to transferable nil rate/residence nil rate bands.  Does anyone have any thoughts as to how best to proceed?

Sarahspangles

librarylover said:

I have the same problem The RICS valuation is very significantly below three estate agents estimates. Surveyor stands by valuation but it is a unique property (house in need of renovation but very desirable location and  large garden) and we think the estate agents are nearer the mark. Am not sure whether to just ignore RICS valuation, or take average of all four (which could still be in the low side). We intend to sell asap and am thinking of using the option to use sale price as probate valuation, as this might help mitigate valuation issues. The estate is below IHT level even with highest valuation thanks to transferable nil rate/residence nil rate bands.  Does anyone have any thoughts as to how best to proceed?

How are you able to sell the property if you don’t have probate?

BooJewels

librarylover said:

I have the same problem The RICS valuation is very significantly below three estate agents estimates. Surveyor stands by valuation but it is a unique property (house in need of renovation but very desirable location and  large garden) and we think the estate agents are nearer the mark. Am not sure whether to just ignore RICS valuation, or take average of all four (which could still be in the low side). We intend to sell asap and am thinking of using the option to use sale price as probate valuation, as this might help mitigate valuation issues. The estate is below IHT level even with highest valuation thanks to transferable nil rate/residence nil rate bands.  Does anyone have any thoughts as to how best to proceed?

When we sold our parents house, we had it valued for Probate and went with the lowest value, as it just felt more realistic and honest - which was silly really, as we were waaaay inside IHT limits, so it made no difference whatsoever. That decision cost us about 900 quid in CGT - as it sold for more than the higher valuation.  So as long as you have some sort of paper trail of how you arrived at the figure, then I'd suggest you use the highest plausible figure on the Probate application.

Hoenir

LuckyTree said:

The house is left to several beneficiaries but will likely be bought out by a one beneficiary.

Is there disagreement over what should be paid? 

librarylover

We intend to put the property on the market as soon as we have probate, but in the meantime need a sensible value for IHT400/405, which will hopefully not entail a large capital gain when the property is,eventually sold.  I have to use IHT400 because of the transferable nil rate/nil rate residence bands even though no IHT will be payable.. The situation that Boojewels describes is exactly what I'm trying to avoid, so that shared experience is helpful. Will probably go for highest plausible valuation based on all available evidence, as suggested, and also tick the 'sale price as date of death value' as an additional precaution.

LuckyTree

Hoenir said:

LuckyTree said:

The house is left to several beneficiaries but will likely be bought out by a one beneficiary.

Is there disagreement over what should be paid? 

It has not been agreed yet. Would the house need to be revalued once probate is granted to ascertain value at date of sale? Beneficiary 1 is not 100% certain they will buy the property. They are keen because they feel it is a bargain at a low valuation.  If selling on the open market both beneficiaries would put the property on the market at the higher estate agent proposed price but beneficiary 1 believes they can buy out at the probate price.

LuckyTree

librarylover said:

We intend to put the property on the market as soon as we have probate, but in the meantime need a sensible value for IHT400/405, which will hopefully not entail a large capital gain when the property is,eventually sold.  I have to use IHT400 because of the transferable nil rate/nil rate residence bands even though no IHT will be payable.. The situation that Boojewels describes is exactly what I'm trying to avoid, so that shared experience is helpful. Will probably go for highest plausible valuation based on all available evidence, as suggested, and also tick the 'sale price as date of death value' as an additional precaution.

Do you know if it is possible to tick ‘sale price as date of death value’ if one beneficiary buys others out?

Hoenir

LuckyTree said:

Hoenir said:

LuckyTree said:

The house is left to several beneficiaries but will likely be bought out by a one beneficiary.

Is there disagreement over what should be paid? 

It has not been agreed yet. Would the house need to be revalued once probate is granted to ascertain value at date of sale? Beneficiary 1 is not 100% certain they will buy the property. They are keen because they feel it is a bargain at a low valuation.  If selling on the open market both beneficiaries would put the property on the market at the higher estate agent proposed price but beneficiary 1 believes they can buy out at the probate price.

You can play it both ways. Lower value for probate.  

List the property for sale with an Estate Agent and see what offers come in. You can then decide which route to take. 

librarylover

I really don't see why not, it's still a 'sale price'. The only restriction is that you have to 'intend to sell' within 12 months of the death. I pushed HMRC helpline on this - does it mean sold and completed - but was told definitely 'intend'. You would then have the option of submitting a C4 value adjustment after the sale. The only consideration (with regard to your Beneficiary 1's expectation) is that the Executors have an obligation to sell for a fair price.