Mortgage valuations are sometimes mistakenly called ‘surveys’

So what’s a survey?

Most buyers require a mortgage. And before handing over shed loads of cash, the mortgage lender will want to be sure that the property you’re buying with their money really is worth the squillions you’ve agreed to pay. They will sleep easier at night knowing that they would get their money back if they had to repossess your home (ie their security).

So a qualified surveyor is normally instructed by the lender to take a brief mooch around the property and complete a simple mortgage valuation form, declaring an independent opinion of the property’s market value.

This figure will often, but not always, concur with the agreed purchase price. To pay for this, lenders usually charge the applicant a valuation fee (not all of which is passed to the surveying firm doing the job).

Most lenders send the buyer a courtesy copy of their valuation report, and this is where confusion sometimes arises, because buyers may assume that a proper survey has been done. Part of the problem is that staff in banks routinely refer to mortgage valuation inspections as ‘surveys’.

But valuation reports are nothing like a genuine survey. Many simply state that:

The property appeared in a general condition consistent with its age and type although parts of the property are ageing and likely to require attention.’

Which basically tells you very little.

To qualify for a mention in valuation reports, defects usually have to be quite extreme as well as fairly obvious.

This may explain why eight out of ten buyers traditionally haven’t bothered with a survey. But times are changing.

Ever keen to find ways of boosting their profits, many banks are instead instructing external ‘drive-by’ valuations, which at best are an educated guess. Worse, some lenders are relying on computer-generated valuations known as ‘AVMs’ (Automatic Valuation Models), a recent US import implicated as being open to manipulation, and fuelling the sub-prime lending crisis.

So it’s increasingly likely that no qualified surveyor will be setting foot in the house that you’re buying unless you instruct one yourself. However, the property in question will most likely have already received the attentions of a Domestic Energy Assessor for the purpose of producing an Energy Performance Certificate.

So never mind if the property is visibly subsiding and riddled with rot and beetle, at least you’ll know its carbon footprint.

Instructing a private survey is therefore becoming more important. Although money will inevitably be tight, the justification for spending a few hundred quid on a survey is that it could well save you thousands later.

Any significant defects that come to light can provide useful ammunition to renegotiate the price, or have the sellers pay for any urgent works that would otherwise have been down to you.

Our next blog – coming soon …….

The different types of  inspection


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