Can a mortgaged buyer not have a survey/valuation?

Roy1234

I'm selling a house to a youngish first time buyer couple, who I know have a mortgage via their broker.  As we get a few months into all the legal paperwork, the buyer seems to think there will not be a survey or the simpler valuation variant.

My experience has been that mortgage lenders don't lend without satisfyingly themselves of the value of the property their loan is secured against.  I realise cash buyers can do as they please, but this is not the case here.  I don't know whether a reduced Loan to Value ratio, say if they'd been gifted a large deposit by parents, would change that?  Oddly, a workmate buying a home 4 years ago with mortgage from a major UK lender, borrowing most of the value, had at my suggestion her own private survey, but maintained she had no interest from the lender as to its contacts.

Brief as the free/cheap mortgage valuations can be, they always walked around inside & out to examine for serious problems, structural cracks, damp, ancient wiring etc.  So, have things changed, or is this young couple just misunderstanding the mortgage lender's need to inspect the property before they lend?

anselld

Some lenders to drive-by surveys, some even do desktop surveys.  They still charge the full survey fee of course but they dont necessarily have to actually show up.

Roy1234

anselld said:

Some lenders to drive-by surveys, some even do desktop surveys.  They still charge the full survey fee of course but they dont necessarily have to actually show up.

Aren't they worried that major faults could lurk inside, and so the property not be worth what they've lent if they ever had to repossess & sell?  Wasn't the lending market tightened up after the casual lending of the credit crunch 2008?

gazfocus

The buyer might be referring to the fact they have decided not to pay for a home buyers survey but the bank will still do a valuation survey of some description. As above, some lenders simply do a computer based valuation. 

The last house we bought was with a mortgage from Halifax. They did a computer based survey (from application to offer only took 2 days) so never went to the house.  

caprikid1

Could be a desktop valuation / automated valuation if it's a very standard property on a large newish build estate.

It could also be the buyer has not progressed with a mortgage yet.

Roy1234

gazfocus said:

The buyer might be referring to the fact they have decided not to pay for a home buyers survey but the bank will still do a valuation survey of some description. As above, some lenders simply do a computer based valuation. 

The last house we bought was with a mortgage from Halifax. They did a computer based survey (from application to offer only took 2 days) so never went to the house.  

Halifax was the workmate's lender of a few years back who I mentioned.  I was astonished they never visited her future home.  Her private survey raised concerns over subsidence, a traditional mortgage killler, which were only later reversed on more expert inspection.  All unknown to Halifax.

user1977

Roy1234 said:

anselld said:

Some lenders to drive-by surveys, some even do desktop surveys.  They still charge the full survey fee of course but they dont necessarily have to actually show up.

Aren't they worried that major faults could lurk inside, and so the property not be worth what they've lent if they ever had to repossess & sell?

There could be major faults which go unnoticed by a (cursory) physical valuation.

Bear in mind only something like 1% of mortgages end in a repossession, and only a fraction of those will end up with a shortfall caused by a structural problem which existed at the start of the mortgage, so it's a risk they can swallow. There's also an element of riding on the coattails of the more thorough due diligence which (most) buyers do.

Roy1234

user1977 said:

Roy1234 said:

anselld said:

Some lenders to drive-by surveys, some even do desktop surveys.  They still charge the full survey fee of course but they dont necessarily have to actually show up.

Aren't they worried that major faults could lurk inside, and so the property not be worth what they've lent if they ever had to repossess & sell?

There could be major faults which go unnoticed by a (cursory) physical valuation.

Bear in mind only something like 1% of mortgages end in a repossession, and only a fraction of those will end up with a shortfall caused by a structural problem which existed at the start of the mortgage, so it's a risk they can swallow. There's also an element of riding on the coattails of the more thorough due diligence which (most) buyers do.

What do you mean by 'more thorough due diligence which most buyers do'?  Last time I sold a different house to a first time buyer, the valuer (who did look in/out for 15 mins) said this was all that most buyers pay for.

user1977

Roy1234 said:

user1977 said:

Roy1234 said:

anselld said:

Some lenders to drive-by surveys, some even do desktop surveys.  They still charge the full survey fee of course but they dont necessarily have to actually show up.

Aren't they worried that major faults could lurk inside, and so the property not be worth what they've lent if they ever had to repossess & sell?

There could be major faults which go unnoticed by a (cursory) physical valuation.

Bear in mind only something like 1% of mortgages end in a repossession, and only a fraction of those will end up with a shortfall caused by a structural problem which existed at the start of the mortgage, so it's a risk they can swallow. There's also an element of riding on the coattails of the more thorough due diligence which (most) buyers do.

What do you mean by 'more thorough due diligence which most buyers do'?  Last time I sold a different house to a first time buyer, the valuer (who did look in/out for 15 mins) said this was all that most buyers pay for.

Well, even if that's all, they have at least looked at the property themselves, which the bank isn't doing!

gwynlas

Valuations can be done by deskto.

If your house is of fairly recent build ie less than 50 years they only need to check for planning changes and price comparisons within neighbourhood.

They are only interested in recovering the amount they have lent.

AskAsk

"a few months into the paper work" - by this time, they should really have had an offer of the mortgage, so ask the estate agent to find out if they have the mortgage offer now.

banks can do desktop valuations if the property is lower than a certain threshold and it is not an old building and the loan is small as the buyers are putting in a high percentage in cash.

having said that, most banks will send the surveyor round so i would advise you to contact the EA and ask for an update on whether the buyers have got their mortgage and if not, why not.