Posts Tagged ‘Mortgage Valuation’

Let me grab your attention……….

Which of these is the most astonishing statistic or comment (all are true)?

• Only about 1-in-10 home buyers get a private survey completed.
• Only 28% of Listed Buildings are insured: 55% are under-insured.
• 25% of all land is not “registered” despite registration starting in 1925.
• UK Housing stock is the oldest in the developed world.
• Only 1% of our housing stock is EPC Rated “A” or “B”.
• In 2001 new house building fell to its lowest level since the war.
• Social demographics reveal that although one-person-homes made up 19% of total housing stock in 1971, this stat increased to 31% last year (2010).
• Houses (NOT flats) represent 82% of the dwelling stock in England.

To me, two statistics leap out of the screen and shout at me:-

As a Surveyor I just do not comprehend why 9 out of 10 homebuyers do not get unbiased, independent Survey opinion. Surveys have proved to save buyers money (typically a x5 saving in relation to fee costs, perhaps a great deal more).

As a home owner and residential Surveyor I also find it staggering that only 1% of our total housing stock is reasonably good in saving energy or reducing carbon emissions.

It may surprise some readers that the trends towards desktop valuations, as opposed to visit-the-home-and-produce-a-real-valuation, is rapidly gathering pace such that soon buyers will not have anyone look at their purchases unless they can be educated NOW and elect to pay for independent opinion (always separate the loan/mortgage valuation from the private survey – these are two separate matters and only one is a “survey”; the survey should be completed after the Loan Valuation and loan offer is received, in writing ).

At any one time the forces and influences that combine to determine value or worth of an asset are shifting. Today we are entering a period of years whereby carbon footprint and energy performance profile will assert themselves and create a valuation premium.

Like it or not we will all need to far better understand the process of home buying and just what actually creates value.

All the usual candidates remain: a “top five” may look something like this–
1. Location
2. Condition
3. Size
4. Features
5. Modernity (in some cases)

However, word is out NOW that two new candidates are in the top five listing. These are:-
• Carbon footprint to build, plus
• Carbon and Energy footprint to live in.

These factors create “sustainability” and that state may help save our planet and help us save money (energy costs) into the long term future.

Fit-in-Tariffs and RHI (Renewable Heating Initiative) are just two examples of current schemes whereby the Government will underwrite an annual income to you if you change away from, or significantly reduce your consumption of, fossil fuels.

A Home Valuer must nowadays consider and reflect upon whether your home was carbon neutral in its creation and also whether it has a zero-carbon in-use footprint. Did non-sustainable trees and resources need to be expended to produce the home AND/OR can the home produce energy savings (or even create an energy flow into the national grid – an income stream) by clever design, systems and gizmos?

From now onwards these latter mentioned matters will rise and rise and create a new slice of home value leaving your own existing outdated home on the floor as far as “worth” is concerned. This process will be slow but would be kick started if loan and mortgage rates were switched to be lower if your home actually sold energy to, rather than used energy from, the national grid. Differentiation in favour of green homes cannot now be too far away.

Beauty, they say, is in the eye of the beholder. Buyers looking at identical homes, but where one has a Government backed 25 year income stream attached to it and will probably sell for a higher capital sum will be considered more valuable today. For buyers to see the worth of such new initiatives means they must understand what is happening around them and this can only start by education: reading this article marks the start of that process.

So: Read the EPC (Energy Performance Certificate) on the home you wish to buy (this remains a mandatory document on any sell or letting in England). Find out how, and at what costs and future benefits, you could improve the structure and its services to create income and higher value/worth. Plan how and when you could achieve this.

Take energy seriously and take extra value from it.

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?