Home Valuations and Surveys
Before you buy a home, your mortgage lender will want to make an assessment of the value of the property you intend to purchase, before making any mortgage offers. This may take the form of a basic valuation, a home-buyer’s report or a buildings survey (sometimes known as a full structural survey). Although the basic valuation will be a mandatory feature of the mortgage approval, the main purpose of a home-buyer’s report or building survey, is to protect your interests as a home-buyer – to ensure potential risks are identified before agreement concludes. In boom times, buyers often reduced offer prices if they discovered a defect with the property they were about to buy. This article looks at the practical processes of mortgage valuation, types of building surveys and home information packs, to provide a short overview of the issues buyers must consider, before taking that first step onto the property ladder…
Mortgage Valuations a mortgage valuation survey forms a mandatory part of the mortgage application process. The lender sends their own surveyor to the property to conduct a valuation to validate the information provided on the mortgage application. The surveyor may not enter the property but simply drive to the front of the property and to visibly assess it’s surroundings and general state of repair and exterior. Lenders tend to charge a fee for this service, which is added on to the cost of the mortgage application. The basic valuation provides the lender with an estimated market price for the property. their aim is to ensure that they are not lending more money than the property is actually worth. In other words, if you fail to keep up mortgage repayments and the lender chooses to sell the property, lenders want to make sure they will recoup their borrowed monies, via selling the property.
The surveyor will compare the property, by looking at the other properties in the area and assessing and comparing the quality of those properties, to one for sale. The surveyor is usually based in the local area and subsequently will have a good local knowledge of market prices, types of accommodation, local history and local market demand from home buyers. If the valuation concludes that the price is less than the offer price, than the mortgage application may be rejected by the lender. The lenders surveyor will only spend up to an hour at the property, and the lender will charge approximately £200 for the service, which is added on to the mortgage application. unforeseen structural problems may be completely unnoticed by the surveyor, in the course of his valuation. Despite the fact that his report may be forwarded to the home-buyer, the home-buyer should remember that this process is not for their financial benefit, but for the mortgage lenders.
Homebuyers Report a home buyer survey is undertaken by a qualified surveyor from the Royal Institute of chartered surveyors (RICS). This is a chargeable service which the home-buyer should undertake as a bare minimum. It provides more detailed information than the basic valuation, and is designed for the home-buyer’s interests and not the mortgage lenders interests. It is most commonly associated with the new homes where the likelihood of structural problems fewer than that of older properties. The survey details all visible elements of the property such as the roof, guttering, access and garden areas, if appropriate. He details any areas that require immediate maintenance or repair as well as recommending further surveys. these may include an electrical survey, heating and gas survey, damp proofing, or tree roots survey. The surveyor places their own value of the property which should be roughly aligned with the mortgage lenders space at valuation.
Some home-buyers choose to pass this information on to the seller when negotiations are stalling or there is a minor dispute regarding an area of potential cost of the buyer. Home-buyers reports carried out independently and are therefore credible reports to base assumptions of value on. Lenders sometimes often offer to provide the service of arranging the home-buyer’s report for the home-buyer. This has been used as an added value service from lenders attempting to differentiate themselves from their competitors. Home-buyers do not have to do take lenders up on that offer and may choose to employ their own surveyor to carry out the home-buyer’s report.
The home-buyer’s report is not usually suitable for all the properties where repairs and faults relating to wiring, drainage or gas may be commonplace. The home buyer survey report is more suited to modern properties, where there is less of a likelihood of major structural problems (which would normally is necessitated the need for buildings survey). Where properties have fallen into complete disrepair or where there are major renovation or property development work is planned on site, a home buyer’s report will not be suitable.
Full Structural Buildings Survey– this type of comprehensive buildings survey includes a full structural inspection and can cater for any type of property. The survey is undertaken by a qualified surveyor from the Royal Institute of chartered surveyors (RICS). The comprehensive results of the building survey can form the basis of negotiation, and can assist in reducing the price it major faults were found, (such as subsidence or major repairs required to the roof). Although undertaking a valuation and survey will cost money, it is an essential first step to avoid unexpected costs which the new owner of a property would be liable for, following the sale. It also has the added benefit of providing a qualified second opinion on the asking price. Many house sales go through at higher than market rate values, because the buyer falls in love with the property and rushes to make an offer to secure the property, without going through due diligence first.
A full structural building survey is appropriate for any older properties, any type of property that is in need of complete rebuild, renovation or major building improvement works. They are undertaken on behalf of the home-buyer and not the mortgage lender. this survey is detailed plans subsequently the most costly form of survey. The survey will remain on site for a long period, checking all visible elements of the property, both inside and out. He will check for major as well as minor faults and examined the basic structure of the building for major problems such as substance, movement and so on.
In the survey, the home-buyer will receive a detailed report on, laid out in a consistent format, outlining the results of the survey. Surveyors will be extremely risk averse to ensure that all defects whether minor or major, pointed out, as they must do so by law. The surveyor will produce recommendations as to any repairs and maintenance buildings work which is suitable to rectify defects listed. They may also provide buildings estimates against each recommendation.
There are many chartered surveyors available to carry out local structural building surveys. Prices vary but an average building survey will cost between £800 and £1000. The overall process will take a couple of weeks (to undertake the survey to delivering the final report).
Home Information Packs (HIPS) – In the UK, one in three property sales fall through as a result of either the buyer or seller withdrawing from the negotiation. In an attempt to reduce unnecessary professional fees such as surveyors, valuations and so on, the government introduced the Home Information Pack, to assist buyers in making a more informed decision and pass some of the burden of the pre-sale cost, on to the seller of the property. Prior to the introduction of the HIP, potential homebuyers had to make a formal offer to the seller, before they could review detailed information regarding the state of the property. Now that it had been introduced, buyers can review this information from a range of sellers before spending money on professional services or making a formal offer, via their solicitor. The seller pays for the cost of the home information pack.
It is a legal requirement to have a HIP and you can’t market your property without one. The HIP lets buyers see important information on the property at the start of the process, free of charge. This means there is less chance of buyers becoming aware of any surprises at the end of the process that can cause delays and extra expense to the buyer and seller. A home information pack consists of evidence of the energy performance certificates, sustainability information, title deeds, local authority searches, and a sale statement. Sellers can will choose to include additional information to attract homebuyers such as a home condition report, contents form and legal summary. Buyers do not have to pay for receiving a copy of the HIP. It is a report which is produced by unauthorised HIP provider, on the hearth of the seller. It is now a legal requirement in England and Wales for sellers who wish to mark their property the sale.
For a Home Insurance Quote contact Assetsure. We are able to offer insurance for a wide range of Uk property types including nonstandard construction