Valuation + Survey?

The incidental costs of a home purchase add up very quickly so it’s no wonder that some flat and house buyers are lured into relying on a mortgage valuation.

After all, you might think “we are paying for it!” Unfortunately all is not as it might appear...

When you pay the lender your valuation fee, the valuation is often outsourced to a “panel manager” who in turn panels the work to either an “in house” valuation department (usually within the same group of companies as the “panel manager”) or to a separate firm of “panel valuers”.

Not surprisingly, by the time the fee that you have paid to the lender filters down through the lender’s hands via a “panel manager” and a valuation firm to the individual mortgage valuer there really isn’t that much left. Typically, in order to earn his meagre crust, a mortgage valuer will be carrying out somewhere between five and seven valuations a day.
So, having now prised some sympathy out of you for the plight of the humble mortgage valuer, you will not be surprised to learn that the time spent at your intended new home is relatively limited. Not only does he/she have to travel to, from and between the properties on his/her list for the day, he/she has to carry out the inspection, research values, write up his/her reports and answer queries from the previous day’s output.

“The time spent on site and the inspection undertaken will be sufficient to advise the lender on value and suitability as mortgage security.”

That, however, will be the sole function of the mortgage valuation. The time spent and the extent of the inspection will be nowhere near enough to carry out a proper pre purchase survey on which a purchaser can or should rely. That is one of a number of reasons why the mortgage valuation will carry disclaimers strictly limiting liability solely to the lender. You may be given an option to “upgrade” whereby the mortgage valuer will (at additional cost) also carry out a RICS Home Buyer Report or Building Survey at the same time as the mortgage valuation. Whilst this may seem a cost effective option it has pitfalls. Firstly, what would otherwise be an independent report for your sole use will be undertaken by a surveyor employed by the lender. Secondly, the lender will usually insist that it receives a copy of the report and will consider whether the more detailed contents should be taken in to account before making a mortgage offer. This can cause problems with mortgage finance as some lenders will impose monetary retentions on mortgage advances for the defects identified in reports that they would not have seen had they been commissioned independently by the purchaser.

There really is no substitute for obtaining your own Building Survey or Home Buyer Report from an independent Chartered Surveyor whose responsibility is to you alone.