equity Release

Verifying valuations

In the equity release market both advisers and providers need to address the issue of property valuation and client expectations and tackle it head-on

by

Alison Beeston,

group

compliance & risk manager, Bridgewater Equity Release

House price indices are big business

it would seem. In any given month, advisers and their clients are bombarded with national house price figures from lenders, estate agents, chartered surveyors, not forgetting the Government’s own data. All have different methodologies behind them, however it’s fair to say that when house prices are going in one direction they will all tend to reflect this. This has certainly been the case for the past year where house prices, according to the indices, have not just stabilised but increased. We now find ourselves at price levels

pre-credit crunch although it must be said that in any market where supply is still low, prices are likely to rise. For example, just last month Nationwide revealed that its annual house price inflation increase had gone back into double figures at 10.5% while Halifax put the figure at 6.6% albeit suggesting that in the past three months prices have started to fall again. The future for house prices is difficult

to predict; some believe house prices will continue to rise while others believe the ongoing economic and political uncertainty will result in little growth.

28 mortgage introducer JUNE 2010

Activity

Housing activity does remain low however and we must stress the localised nature of the market; some popular areas have seen good activity, but many others have not. Dwelling on positive house price headlines without studying the real figures behind them can give the general public a false perception of the value of their homes. This can cause significant problems and issues for advisers and providers in dealing with high expectations when the reality might be far different. With such low activity comparisons between properties is difficult and while homeowners in areas such as London or Exeter may be lucky enough to live in a stable area, elsewhere can be variable to say the least. The fact remains that many areas have seen no house price growth at all, indeed prices continue to fall.

vAluAtion

In the equity release market in particular we all, both advisers and providers, need to address the issue of property valuation and client expectations and tackle it head-on. Submitting applications with unrealistic property valuations leads to disappointment, loss of the valuation fee and wasted time.

Certainly advisers can help in this

regard by, for example, carrying out research online at websites such as www.ourproperty.co.uk or www.mouseprice.com which are free

and allow you to see actual property sale prices in your client’s postcode. This information, which comes from Land Registry data, may well be more reliable than using current asking prices; advisers should take the time to point out that asking prices often vary greatly to actual sale prices. Problems may be exacerbated with

home reversion business because the client is selling a part or all of their property so they will have a far keener interest in the final valuation figure that the valuer arrives at. Down valuations are causing problems and there is still a misconception that home reversion providers down value.

independence

As far as we are concerned the valuer is completely independent from the provider, customer and adviser and we rely on an independent valuer’s report which is carried out on the same basic basis as the mortgage report. The valuers we use are given no figures at all i.e. they conduct the valuation cold. As mentioned above, from an adviser’s point of view it makes little sense to send in applications where the client’s estimated value is nowhere near the real value. Not only does it potentially lose the client their valuation fee but it’s also time-consuming, It certainly makes sense for the adviser to work with the clients to establish a realistic estimate of value at the outset. This can be done using the websites mentioned before. Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48