Posts Tagged ‘Credit Crunch’

Why choose an independent House Surveyor? Why choose PROinspect?

To those who have experienced the reasons why a Surveyor can make a big difference to a housing transaction I apologise for wasting your time. For those who look for cheapness and do not care who acts for them may I suggest you slow down and study the advice given below.

Blue sky thinking shouldn't be rushed. Choose your Surveyor wisely.

 

All Home Condition Surveyors should be at least working to a basic level of competence, carry at least the minimum level of insurances and have kept themselves reasonably up-to-date professionally and technically: the latest buzz words being Technical Due Diligence, or TDD.

Therefore, on the face of any one particular housing deal all Surveyors are equal.

WRONG. Some are more equal than others and provide a truly exceptional level of service designed to aid you to a swift and knowledgeable exchange of contracts with you in full control. Some are stuck in one gear and no matter what you want and need you will get what they always do: often this type of Surveyor is difficult to contact and is “protected” from client calls by a host of secretaries and customer services people (try attempting to actually talk to such a beast and you will see what I mean).

If all Surveyors train and generally work to a similar standard why do I need a better standard? Credit Crunch should have taught you what Bankers think of customers and how they cannot even make loans and mortgages on terms that most of us could even dream of finding acceptable. Self-interest is what I am defining: interests of the Bank are more valuable than mere customers interests. The same can be said of a lot of Surveyors.

What you need is a professional adviser who understands you, why you need a survey, what is happening in the marketplace and “know” the home type you are buying. Somebody who understands how most purchasers will not appreciate the mechanics of the chain of things that could go wrong and what can be done to protect their interests.

So what do I do that is over-and-above what the average Surveyor does?

1. I never accept a survey instruction without first personally talking to the client to ensure the product they asked for is relevant to the property and their budget. Other survey product options may be applicable.
2. I visit every relevant web-site that may give free data on the home being purchased so I have more that a cursory knowledge of the building and its history even before I see it. This allows me to easily focus on key issues and so better manage my time on your behalf. I even personalise my Site Notes template to reflect that initial property and risk-management data.
3. Where possible I interview the seller so I obtain detailed information on alterations, service histories, problems and possible disputes. This level of service acts as the eyes of the Solicitor acting for our clients.
4. In preparing your Report I pitch the words I use to my assessment of each clients technical property understanding: in other words I design advice to suit each client, as all clients are different.
5. I make sure you know that once you have your Report I am available to explain things to you, if you need that re-assurance.
6. If you need advice on what courses of action you could take I will advise you of your options.
7. If you need advice upon what Contractors to use I will make recommendations.
8. If your Solicitors or loan source need additional advice or information I can provide it.
9. If you need robust opinion to help re-negotiate the purchased price, just ask.

In other words, for the price of a survey you get a full Consultancy Service thrown in. I will not leave you stranded.

Practical, good communication is just as important to us as it should be to you. Our high service level not only helps you but also the seller because our actions do make the difference between actually buying and dropping out because “it all got too complicated”.

To some, our high service level is difficult to appreciate or understand. To those we have helped by these service standards we have customers for life and we have proved to be life-savers in a world of doom-and-gloom.

House of Horrors OR Home Sweet Home? The choice starts with who you allow to act for you. Do not get misled into requesting a simultaneous loan valuation and private survey: this is not the route to take for several reasons. Call us and we will explain.

Finally, let me provide a few examples of professionals who have been negligent and who cost clients thousands of wasted pounds:-

• Surveyor could not tell if the loft excrement was from vermin or bats: it was the latter and this caused redevelopment to be delayed nearly two years – (= technical incompetence).
• Valuer who over-valued a home by 55% – (= lack of local knowledge and quality control).
• Surveyor who did not detect that a house had been structurally underpinned three times: the effect of this was the client bought at an inflated price and was then denied Insurance cover and cannot now find a buyer at all – (technical and professional incompetence).
• A flooring contractor who laid a solid floor topped with hardwood: both failed and required replacement – (technical incompetence).
• A Solicitor who negligently conveyed a home that the seller could not then dispose of – (technical and professional incompetence).
• A Surveyor who did not know the difference between traditional construction and a home now designated as defective under late 20^th century legislation and is only worth half of what was paid for it – (technical and professional incompetence).

PROinspect have acted as Experts in preparing Court cases or in preparing evidence for Insurers in these and many other such cases. We are as pleased to act for you, an individual, as for acting for a large Company. Our standards do not vary.

High fee cost? Well no; we hope we are not cheap but above all we plan to be the best value-for-money. Many say we are safe-pair-of-hands in a wicked world.

Why chose an independent Home Condition Surveyor? It pays to not take the chance that cheap may be beautiful. You need expertise and certainty. We provide professionalism and robust, practical help.

When is a “new” home not worth what you paid for it?

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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.

Firstly, let’s dispel a myth: if you ask an Estate Agent to give you a Valuation what do you get? They call them a Free Market Appraisal and some might not put that opinion in writing. Why? Because what you get is simply an opinion: it is not a professionally binding opinion and liability does not stem from that opinion (you cannot sue them).

Secondly, let’s dispel another myth: if you request a Loan Company mortgage Valuation what do you get? One – the valuation is prepared for loan purposes and the sum quoted may be lower than market value for in-house Loan Company reasons unrelated to your needs. Two – if you are buying a brand New Home the chances are that in this post-recession world the loan company will have instructed their Panel Valuer to down-value your purchase because the security offered (the new home) is in its re-sale value when it is not “new”.

Football in the sun: before the rain.

Valuations can be needed for Court purposes eg: divorce settlements, Probate and Capital Gains tax purposes, Tax Planning purposes, to advise of whether alterations may be wise and economic, for sale or purchase etc……. The circumstances that surround the request may lead us to consider other market and property aspects that alter our opinions of worth.

So, what is the definition of market value?

The only way to get a professional opinion of value, one where you can sue the Valuer if he/she is wrong, is if you request that report yourself. The wise purchaser does this via either a request for a private valuation or asks for a private survey that includes an opinion of market value. The most popular form of survey product can fits this description is the R.I.C.S. Homebuyer Report (for details see elsewhere on this site).

PROinspect can provide Market Valuations. We would need to inspect the property and complete market research, including a analysis of price-paid data (that is historic) and take into consideration the market and the property.

Why would you need a professional opinion of value? This depends on why you need advice and whether you agree that independent opinion is of worth. Some might say that a Loan Company valuer can provide an impartial opinion – conversely, the credit-crunch has told us that millions of mortgagees are out of pocket because of the Banks and of home buyers had taken advice from professionals outside of the Estate Agency and Loan Company then perhaps the hole they are now in wouldn’t have been so deep.

If you believe that a Sellers’ Estate Agent and your own Loan Company place your best interests over their own then you do not need PROinspect.

If you don’t believe this then use the CONTACT FORM to ask for help and advice once you believe the time is right for you. Initial advice is free so what have you got to lose?