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Buy today at, say, £250,000; sell tomorrow for less (regardless of market conditions).

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According to “new thinking” (post-Credit-Crunch) the answer is NOW – an immediate fall in reported value can be expected.

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Developers and Lenders have noted valuation inconsistencies over many years now despite their attempts to QA out certain historic bugs-in-the-system. EG: once upon a time all parties came together and established the concept of “New-Build-Premium” on brand new homes; this has since been rescinded and no longer exists.

Valuation uncertainty can be traced to many factors, such as – market volatility, poor professional direction (to Valuers), differing policies adopted by the many lenders/valuer-chains, lack of transparency on Builders’ buyer-incentives, etc…..

Indeed, Valuation nowadays seems to have drifted from a professional opinion of what the local market will bear to simply what can be inferred by comparison with historic transactions. The result? Over-cautious Valuations by “directed” Valuers (as opposed to the Valuer exercising free-will and giving a true professional opinion).

Nationwide has been operating a New Homes Valuation guidance scheme that includes an opinion of “resale value*” as well as “current value” (*market value but upon the special assumption that the property has already been occupied – for six months, at least: making the home “second hand”).

This resale value means that any element of premium being paid because the home is “new” is to be discounted from the figurework.

This is a real grey area and official guidance by Royal Institution of Chartered Surveyors, and others, is not entirely clear and not nearly comprehensive enough to currently protect its members from claims of negligence.

The problem for Valuers is that the second-hand market that produces comparables may not have the same design features, low-maintenance materials, low-energy-consumption figures (etc…) as the new home.

This now causes the Valuer to have to identify exactly (1) what creates the value of the new home, (2) of those factors, which are unique to the particular new home and (3) which of those factors should be excluded, (4) how is each excluded factor to be assigned an element of value, plus (5) which new home features disappear after six months (when the condition of the home is not perfect any more).

A new science is in the making – how much additional value does a door-bell create? What deduction should be included for having a non-porous driveway in a floodplain area? You could easily disappear in dispair at the complexity of these matters.

The answer is always simple – look at Valuation holistically and ensure any significant new features are then identified and considered: make notes to explain your logic, any evidence you have to support that logic and then value accordingly.

One feature that has seemingly had its own solution is the 2008 introduction of the Council of Mortgage Lenders INCENTIVES DISCLOSURE FORM. The Valuer must ask to see this document on all New Home valuations. The Form lists the sale incentives used – discounted mortgages, cash-back schemes, no-fees mortgages, free gifts, nothing to pay for a period, carpets and curtains included, etc…. However, for clients who have revealed their financial affairs to us PROinspect has seen many of these Forms and it is our opinion that the actual sale price remains less than transparent.

Another, and topical, factor to mention is that in poor market conditions Auction Sale results can be viewed as distressed-sales and not wholly indicative of the overall local marketplace (and repossessed homes can often be in poor condition).

Another problem is that the world is imperfect and knowledge is not freely shared. Each Valuer will have comparables, but not all comparables. FACT – imperfect knowledge creates valuation variations.

The latter feature is the basis of why most Loan Companies have in-house or controlled PANELS of Valuers. Each valuation instruction to a Panel Member goes with a list of known comparables.

This practice creates a closed cartel of Valuation instructions. This is not necessarily a bad thing: any system is as good as its weakness link – if the instruction data is good then the valuation opinion output is capable of being accurate.

In an ideal world all Valuations would be placed on a national database and be freely available within days of completion. Each Valuation instruction would come with all known data.

In essence valuation will have moved away from expressing a professional opinion to be replaced with data analyst skills. Is this the first shot of the creation of a two tier valuation and mortgage market – (1) 100% mortgages based upon data analyst Reports and (2) restricted mortgages based upon all other opinions?

As always, part of the answer is focused in market education: most of the public will be unaware of the politics of the art of valuation (and they may not even care about such matters) and therefore may be happy to continue to blindly accept whatever the Loan Company tell them and not elect to pay for an independent assessment of worth, perhaps also not even commissioning a private condition survey, to assess the real risks of purchase.

Credit Crunch showed how financial Institutions can be systemically rotten and not put the client first: New Home loan Valuations and Valuers are in danger of being sucked into a similar vicious cycle unless true leadership can be shown by the Royal Institution of Chartered Surveyors (the leading body that regulates Valuers) who need to rise above the dictates of the Council of Mortgage Lenders.