How to avoid low valuation disappointment

It's much better to get the valuer on site before the report than challenge the report later. so you need to provide evidence to support your case. FORGOT ASKING PRICES AND AGENTS FIGURES. The Valuer is looking for actual completed sales prices that are as recent as possible with property as similar as possible to the subject so if your property has a particular advantage over a comp point it out. The best comparable could be the last sale price of the subject property if you have done significant work prove it, I can imagine saying you purchased BMV will wash. If there are any building issues, movement, damp etc deal with them and prove it to the valuer. But remember the Valuer is going to be cautious

Some of you might find this blog and subsequent comments of interest. http://www.rd-surveyors.co.uk/blog/2011/03/what-ever-you-do-dont-ask-the-surveyor-what-its-worth/

Very interesting discussion. My own recent experience may be of interest.
Over the last two years I have bought more than 10 properties at auction and have achieved what I consider to be genuine BMV deals.
I have tried all approaches with surveyors from being 110% helpful and providing comparables to refusing to divulge any information and telling them to find the comparables themselves as they never pay attention to my figures. I have challenged valuations but have never got anyone to change their mind.
My worst recent experience is as follows.
I bought a property at auction for £143 000 and spent about £7K on a mini refurbishment, new kitchen, bathroom improvement, decoration throughout and new carpets. I organise all the work myself so keep costs to a minimum but do a good quality job.
I approached a well know lender to remortgage and with a survey cost of £700 expected a professional job. I only needed a valuation of £150K. The surveyor made a mistake and took the guide price at auction as the actual sale price. This was £110K. He hen added £10K for the refurb and gave a final valuation figure of £120K. The best part is that he actually wrote "the purchasers paid £110K for the property at auction" into the report.
I did of course appeal but neither the valuer nor the lender would alter the valuation.
I went to another equally reputable lender, paid £450 for the survey, and got a valuation of £155K
One final twist is that I am a Chartered Surveyor and Chartered Construction Manager. I have spent all my life in property, construction, or surveying and have been investing in property since the seventies. I bought my first property at auction in 1982. Having held various senior management positions I know that everyone makes mistakes including me. The important thing is to have the integrity to admit it.
BobG

I just had a valuation done on Wed for a property I purchased and renovated and let pre Christmas, at that time in this area as only a few streets within radius with exact same build type, I know as i grew up in one went up for sale at £110,000 in a lesser condition, he valued mine at £95,000 (i was looking for £99,000 as looking to re-borrow on it) I bought it for £74,000 and rent at £575.

I think the key for pricing is the market sale valuation will always differ from a mortgage valuation in regards to lending, as they will always value down a bit when trying to secure finance against it. I do see this as sensible even though we may expect more, but would probably go on open market for sale at £100-£110K.

A further problem is the poor fees the surveyor is paid. He receives a fraction of the arrangemets fee; often less than £100 yet the risk is enormous in comparison. A valuer is given the majority of his evidence electronically and if he doesn't follow the company procedure he will be held responsible. In previous years it was easier to appeal but today the surveyor is proteced by the lender and there is no pressure from a broker who in the past as a packager could have instructed him too; a massive conflict of interest that contributed to the credit crunch! Yes the valuer should do his job properly and be professonal, but you cant expect him to stick his neck out or spend more time than he has to when he is paid peanuts.This is precisely why my practice is not in the valuation business; we focus purely on condition and get paid appropriately.

Reply to the comment left by "Robert Desbruslais" at "11/04/2015 - 10:19":

Hi Robert

What an interesting blog and so much reader engagement, I'm impressed.

I need to take time out to read the entire thread, thanks for sharing.
.

Thank you Mark. Valuations are a minefield!

Reply to the comment left by "Robert Desbruslais" at "11/04/2015 - 11:37":

They are indeed Robert, which is why I started this thread.

There has been some good advice provided by members here as well as some very intersting stories, both here and on your own blog discussion which you very kindly linked to.

I don't blame you at all for focussing purely on structural type survey work. It's a real shame that valuers don't get paid what they are worth due to so many skim off's before the money reaches them. Nevertheless, those who choose to take the work should have the courage of their convictions and if they can't find comparables they should decline instructions as opposed to potentially frustrating a sale in my humble opinion. It simply isn't acceptable that a person buying or remortgaging should have to switch lenders just to get another valuation. The cost and lost time is horrendous.

I don't agree that mortgage packagers were conflicted, I ran the largest BTL packaging firm in the UK up to 2009. If a surveyor submitted a ridiculous valuation then we would give applicants the option to pay for another opinion without them having to switch lenders. In my humble opinion, that was the right thing to do, NOT a conflict of interests. Why should a borrower be compelled to obtain a mortgage from the second or third most appropriate provider just because the valuer appointed by the first provider was overly cautions about his PI insurance? Is that really "treating customers fairly"?

The reason that mortgage lenders rarely fund 100% of purchase price is that they want to allow a margin for error. If the valuers also allow a margin for error, especially a large one due to being overly cautious, is that reasonable?
.

I have been keeping an eye on this thread which has been interesting and, so far, it has been reasonably fair on the valuers.
I could go into a great long history lesson about valuation, professional indemnity insurance, confetti letter claims, the requirements of lenders and run-off insurance to explain the approach to residential mortgage valuations but suffice to say there are reasons for everything.
However a few bits of advice and some comments on previous posts.
1) I agree that it is best to get some evidence together but please do not overdo it. Keep it simple and to the point. 20 pages of print-out is likely to end up in the bin as there is insufficient time to pick the appropriate information in a sea of detail. It’s not worth providing anything which is not directly comparable as the surveyor will cross check anyway against Rightmove, Land Reg or with the agents. If the property is currently let make sure you have a copy of the lease handy for confirmation. If it’s the same rent as when you let it last year point that out so we can adjust for an improving market. (NB Prices can go down as well as up!)
2) Take care when you provide an estimated value. If, for instance the correct value is £200,000 but you need it to be £205,000, don’t estimate £220,000 as the value is likely to be put in at £200,000. If you use £205,000 it’s close enough that the valuer may let it through.
3) If you do meet the valuer please don’t tell him “it’s worth £x all day long”. We are protective of our expertise and my normal response is “that’s what I’m here to find out.” Such comments simply make me more careful and more likely to be cautious.
4) Buying below value is a concept which we understand fully and we therefore treat it with caution. If it were that easy to get a bargain wouldn’t we be at all the auctions making our fortune? Again it comes down to the evidence.
5) You may not be aware of it but valuers are expected to report if there is any sign of suspicious activity so trying to kid us that an HMO is a standard family letting could result in a report back to the lender. We are also expected to report any illegal activity such as the plants and bright lights in the roof void of a tenanted house I saw a few weeks ago.
6) I speak only for myself but I am always happy to consider a valuation appeal, either for market value or rent. However it is up to you to convince me. Any evidence you provide must be relevant, convince me but also convince my boss who has to agree and sign off any alteration to. This is a requirement of PI companies and cannot be avoided.
7) If you decide to appeal, you may depend on your broker to provide the evidence which is most likely to come from Rightmove Plus which is where all mine came from in the first place. The broker may be miles from the area and know nothing about it. It’s best for you to research as you know the area. I know that often the appeal stops at this point as an owner finds out that perhaps the valuer was not such a fool after all.

Comments on posts above:
Fees – As a consultant/zero hours valuer I will see approx 35% of the survey fee paid. Percentages go to my employers, the panel management company who parcel out the instructions and for some high value cases a contribution to the PI cover. Often I value properties at around £750,000 - £1,000,000 for a net to me of around £100. In terms of time that’s approx. 2-3 hours including the actual inspection, travelling, research typing etc. 25 inspections per week equates to a 6 day week.
Courage of our convictions – We don’t down value for fun as we get grief from owners, brokers, lenders and our own employers. In addition the fee is likely to be reduced if we drop into a lower charging band. Personally if I down value I will spend twice as long on the research and get many more comparables than necessary so that I have all the information to hand if I am challenged.
Preparation for inspection - I try to have the comparable evidence to hand in advance and will mention it if appropriate. However it’s often impossible to adequately research in advance as we simply don’t know exactly what we are seeing.
Drive past valuations – They are exactly that and they can’t now be done off the desktop. Many lenders and all valuation firms require a photo of the front and a street scene so we have to go to the property anyway. Just because we were not seen does not mean we weren’t there. However whilst I would normally get out of the car and see as much as possible, a rear extension or a roof conversion can be invisible and we can’t make guesses. Also bear in mind that the fees are pitiful (sometimes as low as£15) and there is just as much research required to come up with a value. If you really think the property is that much better than it appears to be or there are circumstances, such as a below value/re-possession sale which would suggest a lower value than appropriate then request an internal valuation at the outset.
Brokers – Brokers want to do the deal and in many circumstances they pay the valuation fee up front and don’t get it back if the deal collapses. For this reason many have now taken to requesting an estimated valuation (EV) prior to instruction the valuation. Some firms charge small fees for this (£20 or so) and others do it free (or rather I do it for free). An EV is a quick desktop exercise, researched on Land Reg and Rightmove or similar to give a value band. If your broker decides to go down this route it is useful to provide as much info as possible for forward transmission to the valuer, including external photos (Street View will do), recent internals if you have them, improvements/extensions, current rent and a link to old website details either sale or letting. A floorplan is also a great help so we can compare with other properties.
Rightmove – many valuers are using Rightmove Plus and now have access to records of many previous valuations including the value submitted. If your property has been valued 3 times in the last 3 months at below your estimate, the evidence is there for the valuer to see and it prompts a question why it has increased since.
Risk exposure – This is not a conflict of interest it’s a requirement of our PI insurance, all lenders and all employers. You could as easily accuse doctors, solicitors, accountants or most professions for that matter, of exactly the same attitude. We are subject to being sued and hauled up before professional bodies with the power to remove our right to work.
Rental valuations – Same research as for sales and most lenders insist that it’s based on a single assured shorthold tenancy to an individual or family. If there are 5 similar houses in the same road let for £750 that gives us a fairly good clue as to the current rental value and we have no justification to vary from that. If you subsequently let to 3 sharers on separate AST’s at £300 each I wouldn’t be a bit surprised but it does not alter the assumptions we are required to make at the outset.
Estate agent “valuations” – No they are not! They are opinions of value and have as much regard to the desire of the agent to get properties on the market as to their actual opinions. As my old boss used to say “You can’t sell it if you don’t have it on the market” and that’s the prime target. As to picking the most favourable of the bunch for the valuer, it would be of little use as we can’t use that as good evidence in court.
Generally I would comment that some owners think that we are idiots and can be easily bamboozled. After nearly 45 years there is very little I have not seen a hundred times before and any attempts to mislead me usually result in the most vigorous research and review of the case in hand, so simply be up front, open and helpful and most valuers will be happy to sign off and move on to the next one.

Reply to the comment left by "Robert Desbruslais" at "11/04/2015 - 10:49":

Liked the blog Robert - a lot of sense there and I have always thought that the valuation and the condition report (of whatever type) should be separate. I specifically think that the valuation should be excluded from the Home Buyer Report. As you say it's a personal thing and if the purchaser wants to pay more than for the next door house that's his prerogative. However if doing the mortgage valuation as well we have no option but to provide the lower valuation in the HBR as well. Had to do this yesterday and it will upset all parties to the deal.