Bank valuation for property

Why Does a Bank Need a Valuation?

If you are considering purchasing a new home or want to remortgage your current property, your mortgage lender or bank will carry out a valuation survey on the property to ensure that the amount of money that you want to borrow to make the purchase or remortgage is in line with the amount that the property is worth. If you are in the process of selling a property, you can expect the buyer’s mortgage lender to carry out a valuation survey on your property in order to make sure that it’s worth what you are asking for it.

How is a Bank Property Valuation Conducted?

The bank or mortgage lender will instruct a chartered surveyor to evaluate the property. There are two ways in which surveyors will do this. Traditionally, they would need to visit and inspect the property in person, but the rise of online information that is currently available on properties and local selling prices has made it possible for surveyors to get a valuation for the property without leaving their desk.

Which Bank Valuation Methods Will Be Used for My Property?

When you are buying a new property, it is often impossible to tell whether the bank will instruct a surveyor to visit or carry out a desk valuation. However, there are several circumstances that will often make it more likely that an in-person visit will be required. If you are purchasing a property that the lender is likely to consider high risk, such as a property with an unusual layout or a house that is constructed with non-typical materials, an in-person inspection is more likely. In addition, if you are borrowing money to buy the house from a bank or mortgage lender that does not have much knowledge of the area, they may instruct a surveyor to visit. They may also decide to pay a visit if they are unable to find much information about the property or the surrounding area online that they can use to make the valuation.

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Bank Property Valuation UK – What Happens When the Surveyor Visits?

In some cases, the surveyor may only need to drive past the property and take a look at it from the outside to confirm what they have already found online. But in other cases, they may ask to come inside the property and take a look around to confirm what they already know and inspect the house for anything that could have an impact on its value. The inspection will typically take around 15-30 minutes, depending on a number of factors including the size and the condition of the property. Once they have inspected the property to get a better idea of its value, they will then assess its market value by looking at sales of other similar properties in the area over the past six months.

How a Bank Valuation is Conducted in the Office:

More commonly today, a surveyor will not be required to pay a visit to the property in order to value it.  They will go online to analyse local house prices using an index such as the Land Registry to come up with a valuation.

Why Do Banks and Mortgage Lenders Need a Bank Valuation for Property?

Your bank or mortgage lender will require the value of your property to be confirmed by a professional surveyor before they will agree to lend to you. They will have the survey carried out so that they can reduce their level of risk by making sure that they are not providing the buyer with a mortgage that is higher than the property itself is worth. In the case of the valuation report showing that the home is worth less than the asking price or the offer that the buyer has put in, the bank or mortgage lender may only agree to lend up to the amount of the value provided by their surveyor.

How Can the Buyer Use the Bank Property Valuation Report?

While the bank valuation report is most often considered to be for the benefit of the lender, it can also have several advantages for you as the buyer, including preventing you from purchasing a home for much more than it is worth. It can often be easy to believe that something is worth the amount that we are willing to pay for it, especially if you have found your dream home.

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What Happens if the Bank Valuation is Lower Than Purchase Price?

In some cases, the surveyor that has been instructed by your bank or mortgage lender might down value the property, where the value that they provide is lower than the asking price or the offer that you have put in for the home. In this case, the mortgage lender is likely to only agree to offer you the amount that the home is worth, which can cause issues with the sale. There are several options to consider in this situation, including making up the difference with savings or borrowing elsewhere. But if you are not in a position to do this, you may need to renegotiate with the seller to reduce the asking price so that you can afford to purchase the property with the mortgage offer that you have been given. Whether or not this is successful will depend on the situation and how eager the seller is to sell. In some cases, if the postponement or falling through of the sale will prevent them from moving onto their own new home, they may be willing to accept a lower offer.

Remortgaging Bank Valuation of Property UK:

If you want to remortgage your current property, your bank or mortgage lender will carry out a valuation to determine the current value of the home, which is likely to be different to the value of the property when you first purchased it, especially if you have improved the property and carried out renovations since then. Since there is no seller involved in this process, if the valuation of your property comes back at less than the amount that you want to remortgage it for, you will need to negotiate directly with the lender or in some cases, consider applying with a different mortgage lender who uses different surveyors to try and get a different result.

Is a Bank Valuation Report the Same as a Homebuyer’s Survey?

No. Although it might be referred to as a valuation survey, the bank or mortgage lender’s valuation is not the same as a homebuyer’s survey, which is carried out by a chartered surveyor before you purchase a new property in order to ensure that you are completely aware of any issues with the property such as damp, subsidence, rot, or the presence of asbestos that might cause issues for you later on. While some of the issues that are found in a homebuyer’s survey could impact the value of the home and enable you to negotiate a lower asking price, you shouldn’t confuse the two surveys. The mortgage valuation survey carried out by your bank or lender is purely designed to determine the value of the property and will not make you aware of any defects, hazards, or repairs that need to be made.

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If you are in the process of purchasing a home, don’t rely on the valuation survey alone before you go ahead with making the purchase. It is always a wise idea to get an additional homebuyer’s survey carried out using a surveyor of your choice in order to make sure that you can make a completely informed decision about the purchase. There are three levels of RICS homebuyer’s surveys to choose from – a condition report, homebuyer’s report, and full structural survey. The one that you choose will depend on the type and condition of the home that you want to buy.

A homebuyer’s report is the most common type of survey. This will inspect all major exterior and interior features of the home to find any defects or issues that you will need to know about. It will typically take around 2-4 hours, costs around £700 for a home of average value, and is recommended for homes of reasonable age and condition. Condition reports are an ideal choice for a newer home that is unlikely to have the defects and issues that are common in older homes. These surveys work on a traffic light system that the surveyor will use to rate the various areas of the home based on their overall condition. Finally, for older homes, homes with obvious defects, listed buildings, or a home that you plan to renovate in the future, a full structural survey is recommended. This is the most in-depth type of survey that requires complete access to the home and will ensure that you have all the information that you need about the property before you go ahead.

If you are going to buy a property, your bank or mortgage lender will need to conduct a survey to make sure that the property’s value is in line with what you plan to pay.