Watsons are Estate Agents and Chartered Surveyors, so I read with interest the recent BBC news reporting a significant rise in homes being valued at less than the price that buyers had agreed to pay. Down valuations, on the estate agency side of our business, do happen from time to time, but to-date we have seen not seen anywhere near the levels being reported of ‘I in 5 sales’ as suggested by Emoov and London & Country reporting their advisers are seeing down valuations on a daily basis now “outweighs” those who do not. I would be interested to know if there is a geographical bias toward London, which has been the hardest hit in the UK property market, and I don’t agree properties being valued at less is ‘surveyors predicting a financial crash’.
Our surveyors have seen a trend in ‘down valuation’ but revolving around re-mortgaging, equity release and properties offered by pure online agents. Re-mortgaging and equity release require the home-owner or perhaps broker (if handling equity release) to supply a predicted value of their home and likely making use of one of the online valuation tools (we have one on our own website) and property portals such as Zoopla. Such tools must always be used with some caution, with average prices being applied to arrive at suggested values. They may provide a very rough guide but will often fall well-short with unusual, period or one-off properties. Home-owners are naturally optimistic about the value of their own home. Even two similar ‘estate-type’ properties on the same road could have £50,000 – £75,000 difference in value from the extreme of unmodernised to super contemporary. Surveyors carrying out valuations on behalf of lenders must always provide comparable market evidence of 3 properties within 10% of the agreed price, sold or under offer within the last 6 months and ideally as close as possible location-wise, to support the selling price of the property in question. The higher the value, the more difficult this can get, especially with sales in excess of £1 million.
Online DIY estate agency can be equally floored with representatives working over large geographical areas or having little knowledge of the locality they are valuing within and/or taking the lead from the home-owner as to ‘their idea on value‘ seeing this as a cheap alternative to dispose of their home – without realising a good agent could negotiate a better sale price, equating to the extra fees payable to a high street agent. And of course, the online agent is being paid up-front to list/place the property on the market. There is no incentive to provide good quality, professional advice to ensure a sale follows through to completion. High street agents only get paid on completion of the transaction.
Even if a property is ‘down valued’ all is not lost. It may be the buyer is prepared to make up the difference or the seller might, depending on circumstances, be prepared to re-negotiate on the price.
There is little a home owner can do to influence a surveyor acting on behalf of a lender, other than making sure access is available at the agreed time and the surveyor can view all parts of the property. A private building survey commissioned by a buyer on their purchase goes into much more depth, so any available information; planning permissions, building regulations and certification relating to improvements such as wiring, new boilers, new windows, extensions, new flues, drainage work etc. will greatly assist and allow a much more informed opinion. And if you are thinking of selling, all this information is worth gathering together and keeping in a file anyway. Your lawyer will need to supply much of this information to the purchaser’s solicitor and completing enquires quickly can influence the length of a sale by 2 or 3 weeks.
For more information, please contact Nick Eley, Partner on 01603 751564 or email: n.eley@watsons-property.co.uk
