A Guide to Property Valuations in London
If you want to purchase a new property or re-mortgage your current one, then a valuation survey will usually be carried out on your property by the lender as a means of determining what the property is worth, and to make sure that the value is the same as the amount you are going to pay or re-mortgage it for. If you are in the process of selling your property currently, you can usually expect the mortgage lender for your potential buyer to carry out a valuation survey to make sure that the value is not too different from the price that you’re asking for it.
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How Does the Bank Carry Out House Valuation London?
Lenders use different methods to conduct a valuation survey on a property. Sometimes, lenders will instruct a surveyor to visit the property to see it in person and put a short report together. However, most of the time, lenders conduct valuation surveys on properties without the need for an in-person visit. Instead, they will use recent online data about the property and the surrounding area to determine how much it is worth. Sometimes the surveyor might drive past the property to check it from the exterior to ensure that it is as expected, but they will not enter the property as part of the valuation.
The method that you can expect your lender to use when valuing the property you hope to buy will vary based on the risk level. In the majority of cases, valuations can be carried out from behind a desk. However, if there is anything that might lead to issues with lending such as the property age or construction materials used, the surveyor will visit in person. An in-person valuation survey might also be instructed if the lender is new to the area or if they are struggling to find much information about it online.
Desk Valuation
When providing the loan does not involve a lot of risk to the lender, a desk valuation rather than an in-person visit is likely to be chosen. To do this, a surveyor will analyse local house price data using the Land Registry or other house price index, along with algorithms that provide automated valuation figures based on the information available. The surveyor may also briefly drive past the property to make a final check on its condition before settling on a valuation figure.
In-Person Visit
In some cases, valuing the property without actually going inside and getting a better look at it might be too risky for lenders. In this case, they may instruct a surveyor to visit in person. This will usually involve visiting the property for between fifteen and thirty minutes to look for any obvious defects and confirm the main details regarding the property. The surveyor will assess the property’s market value after the visit by finding three similar properties that have sold nearby in the past six months and analysing the local property market.
When the Property Valuation is Lower Than the Purchase Price
A down valuation, or when the valuation figure given by the lender is less than the price being asked for the property, is not uncommon. This happens if the surveyor determines that the property is actually worth less than the price it is on the market for or the agreed sales price. This can leave buyers in sticky situations as sellers have no obligation to reduce their asking price after a down valuation, but lenders are unlikely to offer to lend any more than the amount they have valued the property to be worth.
A down valuation may happen if the house price is not in line with current market prices. For example, when property prices in an area are falling faster in comparison with other properties nearby, there will often be a gap between what a surveyor values the property at and what an estate agent prices it at.
The first thing to do is renegotiate the price with the seller if you receive a down valuation and are buying a property. Since other lenders are likely to value the property at the same price, the seller will be aware that buyers are going to struggle to purchase their property at the asking price and may be more willing to reduce it down to the valuation figure, especially where a quick sale is needed. However, things can be trickier if you are dealing with a seller who won’t negotiate or are re-mortgaging your own property. In this case, you might have to challenge the valuation by gathering evidence regarding the property to support that it is worth the same as the amount you have applied to borrow. However, bear in mind that not all lenders will be willing to accept a valuation challenge.
Researching Before Your Property Valuation London
Whether you are buying a new property, re-mortgaging your current property, or are a property seller, there are several things that you can do before the property valuation is carried out to be in with a better chance of things running smoothly and avoiding a down valuation. A down valuation can be quite a stress-inducing situation and may put a lot of strain on buyers and sellers during the process. Whether you are buying, re-mortgaging, selling, or even looking for a commercial property valuation London, it’s a good idea to understand what you can do to avoid down valuations.
For Buyers
If you are buying a property, the last thing that you want is a down valuation since this will mean that you are not going to be able to borrow enough mortgage to cover the asking price of the property. If you are buying, some things to do to avoid a down valuation include:
Research the Property Value Yourself
The good news is that a lot of the information that surveyors use to carry out a valuation on a property is available free of charge online. It’s a good idea to spend some time looking at property price indexes like the Land Registry and other online records of properties in your area over the past few months to get an idea of how much the one you are interested in buying might be valued at.
Choose a Suitable Lender
If you know that the property you want to buy might be considered a higher risk in comparison with others when it comes to how the lender is going to view it, then it may be worth researching lenders that have a specialisation in this kind of property. A good mortgage broker will be able to help you with finding a lender that is experienced in valuing and lending to buyers of properties like the one you are considering.
Make a Realistic Offer
Use any research that you conduct beforehand to make a realistic offer on a property. Don’t be afraid to go lower than the asking price if you have found that similar properties in the area are selling for less than this one is on the market for. This could help save you a lot of issues later down the line if the property is eventually downvalued by the lender.
Selling or Re-mortgaging
If you are selling or re-mortgaging your property, it is in your best interests for the valuation figure to be as high as possible. Before you jump into the re-mortgaging or selling process, there are a couple of things that you can do to ensure that the valuation runs smoothly.
Check With Your Existing Lender
If you are planning to sell your property, you may want to ask your existing lender for any figures that they have on the value before you put it on the market. This can often be more accurate compared to estate agent figures and having it to hand can be useful when it comes to determining how much you are going to ask for when selling, or how much to apply for when re-mortgaging the property.
Get an Expert Opinion
Before you sell or apply to re-mortgage your home, there are several ways to get an expert opinion and a better understanding of the value of your property before the lender’s surveyor steps in to conduct the valuation survey. One good idea is to hire a surveyor yourself to carry out an up-to-date valuation. You may also be able to get a good average figure by asking at least three local estate agents who have recently sold similar properties in the area to conduct a valuation and work out the average.
How to Get Free House Valuation London
If you are buying or re-mortgaging a property, then you may be able to get it free of charge. If you are selling, then it’s usually the buyer who will be required to foot the bill. Many lenders offer free valuations as a way to encourage more buyers to apply.
If you are buying, selling, or re-mortgaging a property, then you can expect the lender to conduct a property valuation survey for the purpose of ensuring that the property is worth the asking price before they commit to lending the money for it.
