Reduced Mortgage valuations

[pacoryan]

Thought I might throw this out there, we have recently had a significant increase in mortgage activity but this has coincided with a number of down-valuations by surveyors, some by as little as £5k on a £230k property ( a bit fussy?), others by as much as 30%!!!!

Geography has varied from Wiltshire/Dorset to North and East London, and property type varied also.

Any idea if the RICS are playing safe in fear of a bubble???!!

[Perec]

pacoryan said:

Thought I might throw this out there, we have recently had a significant increase in mortgage activity but this has coincided with a number of down-valuations by surveyors, some by as little as £5k on a £230k property ( a bit fussy?), others by as much as 30%!!!!

Geography has varied from Wiltshire/Dorset to North and East London, and property type varied also.

Any idea if the RICS are playing safe in fear of a bubble???!!

What I HAVE found is that lenders are now insisting upon large national firms doing valuations, instead of local firms. This tends to result in poor local knowledge and an unduly cautious valuation. Some banks who are trying to offload real estate customers are using this tactic to force borrowers into breach of the loan to value covenant. I can well imagine retail lenders are doing the same in pursuit of arse-covering.

[Sarnie]

pacoryan said:

Thought I might throw this out there, we have recently had a significant increase in mortgage activity but this has coincided with a number of down-valuations by surveyors, some by as little as £5k on a £230k property ( a bit fussy?), others by as much as 30%!!!!

Geography has varied from Wiltshire/Dorset to North and East London, and property type varied also.

Any idea if the RICS are playing safe in fear of a bubble???!!

Any correlation with the lenders?

Purchases or remortgages?

I find the majority of down valuations are remortgages and down to unrealistic valuations given by clients rather than the big bad surveyor that people like to hide behind.

[pacoryan]

Sarnie said:

Any correlation with the lenders?

Purchases or remortgages?

I find the majority of down valuations are remortgages and down to unrealistic valuations given by clients rather than the big bad surveyor that people like to hide behind.

Nope, a mix of the two, but Perec's point rings true; about national firms and valuers travelling to areas that are unfamiliar. I do quite a lot of work with older properties in pretty little villages, and there can easily be a 20% swing in comparative values from one village to the next, but it if you don't "know" your villages taking an average will give you an inaccurate figure.

[Perec]

pacoryan said:

Sarnie said:

Any correlation with the lenders?

Purchases or remortgages?

I find the majority of down valuations are remortgages and down to unrealistic valuations given by clients rather than the big bad surveyor that people like to hide behind.

Nope, a mix of the two, but Perec's point rings true; about national firms and valuers travelling to areas that are unfamiliar. I do quite a lot of work with older properties in pretty little villages, and there can easily be a 20% swing in comparative values from one village to the next, but it if you don't "know" your villages taking an average will give you an inaccurate figure.

Individual properties in villages give valuers a lot of scope for taking a position that's not easily challenged. On a road of identical terraces arguing the toss about a low val is quite easy. When it's a 4-bed ex farm cottage in Chipping Buggery it's a lot harder. I have been successful arguing up valuations in such situations, but it has always involved a lot of work and rarely has a poor valuation turned into a sparkling one.

[Burgmeister]

Do you guys not use a 'downvaluation' for a HP as a bargaining chip with the vendor?

Most large lenders do use the big corporate firms; Countrywide, Esurv, Connells etc along with a small compliment of their own emplyoed surveyors.

Most of the surveyors working for the large corporates are based from home and as such are usually local to the area in which they're valuing. Just because Countrywide are based in MK doesn't mean that each time a valuation needs doing some bloke sets off from MK to Fife.

There hasn't been any guidance from the RICS or from lenders which would result in an increase in the number of 'downvaluations' you're seeing.

[pacoryan]

Absolutely, but for my London clients there's a queue of cash buyers at the asking price, no lender's valuation required so they will probably lose that property.

Not necessarily a bad thing of course, but the 20% difference is quite substantial.

[blank]

Have had a £200k new build in Milton Keynes valued at £200k.

Sister had her £160k house in Nottingham down valued by £5k due to an imminent tram line behind the garden.

[Irrotational]

Apologies for jumping in this thread as a customer/mortgagee...but is their a cheap/free way to get a reliable valuation for a re-mortgage?

It sounds like the answer is No...as even if the valuation is "right" the bank will come up with their own one?

So the only way to really find out is to try and re-mortgage?

[pacoryan]

The lender will always obtain their own valuation. You can argue the toss if you have substantial evidence of comparable values etc but it isn't easy, and they are unlikely to lift their valuation by much in any case unless a major oversight was made.

Paying for your own valuation in addition to the lender's one is unlikely to be worthwhile.

[Perec]

Burgmeister said:

Do you guys not use a 'downvaluation' for a HP as a bargaining chip with the vendor?

Most large lenders do use the big corporate firms; Countrywide, Esurv, Connells etc along with a small compliment of their own emplyoed surveyors.

Most of the surveyors working for the large corporates are based from home and as such are usually local to the area in which they're valuing. Just because Countrywide are based in MK doesn't mean that each time a valuation needs doing some bloke sets off from MK to Fife.

There hasn't been any guidance from the RICS or from lenders which would result in an increase in the number of 'downvaluations' you're seeing.

Agreed but it is my experience that valuers working for the large nationals are especially clueless and particularly risk-averse. Don't get me started on Colley's!

Though on the one occasion when I was looking to revalue twenty or so properties I asked the local valuer for one national firm for an advance opinion on how she would see the properties. She came up with astronomically high figures. I presume she was targeted on how much business she encouraged through the door. I have since encountered her now she is working for a major BTL lender in a staff position and she has become oddly cautious in her valuations. Funny what a regular salary and company car does to a girl.

[Burgmeister]

Perec said:

Agreed but it is my experience that valuers working for the large nationals are especially clueless and particularly risk-averse. Don't get me started on Colley's!

Though on the one occasion when I was looking to revalue twenty or so properties I asked the local valuer for one national firm for an advance opinion on how she would see the properties. She came up with astronomically high figures. I presume she was targeted on how much business she encouraged through the door. I have since encountered her now she is working for a major BTL lender in a staff position and she has become oddly cautious in her valuations. Funny what a regular salary and company car does to a girl.

One of the problems the valuers have is that each lender has a different valuation form and different criteria which can make for a rather confusing time. But there are those who are clueless and there are those who just value at the PP for an easy life. Most of the time that's ok but when it goes wrong it goes wrong spectacularly.

On the off chance, don't suppose her name is Jayne?

[Burgmeister]

Irrotational said:

Apologies for jumping in this thread as a customer/mortgagee...but is their a cheap/free way to get a reliable valuation for a re-mortgage?

It sounds like the answer is No...as even if the valuation is "right" the bank will come up with their own one?

So the only way to really find out is to try and re-mortgage?

First of all lenders don't produce the valuation figure, the valuer does. Lenders do not instruct, contrary to popular belief, valuers to value oddly or cautiously for the sake of it. Chances are you believe your property is worth more than it actually is.

[Perec]

Burgmeister said:

Lenders do not instruct, contrary to popular belief, valuers to value oddly or cautiously for the sake of it.

Oh yes they do.

One major lender, I cannot name them because the matter is sub judice, has been engaging specific valuers for the precise reason that they will low-ball valuations. The lender has then been allowing the same firm to be LPA receivers for the properties they have just down-valued. I hope and expect people will go to prison for what is going on.

I should stress that this relates to commercial debt.

[dvs_dave]

Perec said:

Oh yes they do.

And as you go on to explain, doing so is illegal as the perpetrators are finding out.

There'll always be crooks around, irrespective of the trade. It's spotting them that's the hard bit.