Surveys– a necessary good
Do you know the difference between a survey and a valuation? Geoffrey Milnes does.
I
n these austere times, with public spending cuts, unemployment and banks demonstrating an increasing reluctance to lend, no one has money to waste. Sellers are cutting prices to attract interest and purchasers are haggling
more fiercely than ever, looking for ways to get their dream property at minimal cost. However, whilst buying a house is the most expensive purchase most of us make, many people do so with alarmingly little information about the property. Buyers tend to rely on the relevant professionals to take care of everything and many see the survey as an unnecessary extravagance at a time when they are paring costs. In fact, many people do more research buying everyday items like a washing machine than they do buying a house. Many then live to regret the fact that they didn’t have a proper independent survey carried out before committing to buying.
Misplaced trust The first misconception that many buyers have concerns the mortgage company valuation. It is commonly believed that, if the mortgage company have given an application the go ahead, then everything must be satisfactory. However, in reality the valuation process may involve simply
24 FEBRUARY 2011 PROPERTYdrum
asking a valuer to drive past the house in question to see if it looks OK, or carrying out a computer check to see if the price matches up with changes in the house price index. What buyers tend to forget is that the mortgage company carry out a valuation, not a survey, and that this is for their own lending purposes and not for the buyer to rely on as a statement of condition. The buyer is given a copy of the report as a courtesy but the information is limited, and no advice is given about repairs, any legal issues or the significance of any problems. Other than on the question of value, there is very little comeback on the valuer if the buyer finds a problem with the house post purchase.
Many people put more time
and effort into research before buying a washing machine than they do buying a house.’
NeglectiNg the survey aNd couNtiNg the cost The Royal Institution of Chartered Surveyors (RICS) recently carried out research which suggests that homebuyers are losing thousands of pounds by neglecting to have a proper survey prior to purchase. The reasons for this vary, but include issues with cost and misconceptions about what the valuation report actually shows. But, despite these times of austerity, cutting financial corners can have significant financial implications for purchasers. The RICS research concluded that a quarter of all homebuyers who only had a mortgage valuation report had to make unplanned building works to their property after purchase. The average costs of these works came to £1,818 – and in some cases were even higher. The survey also found that 58 per cent of respondents erroneously believed that a valuation report included an assessment of the building’s condition and a search for damp and structural movement.
a solutioN to the probleM The RICS has addressed these misunderstandings by producing the ideal survey – the HomeBuyer Report – which provides an easy to read, understandable
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