We did discuss buying off-plan and the relative risks of doing so, and while discussing valuation issues surrounding new-build properties I laid some blame at the doors of surveyors, but I also explained that there were many other factors which were having an impact. All of these have been widely reported.
It would be nonsense to suggest that surveyors are solely responsible for the difficulties the housing industry is facing and that the fear of claims against their professional indemnity insurance alone is driving them to be cautious in providing their professional opinion.
But they have enormous influence and I can’t understand the ‘it’s nothing to do with us’ stance of e.surv’s Richard Sexton in the same article – a position that sits on the edge of arrogance and regrettably appears to be widely shared among members of the surveying community. Last October, on behalf of a significant developer we work with, we invited representatives from three leading surveying firms to a meeting to try to understand why there was such a disparity in new-build pricing.
We were told that lenders wanted properties valued in line with established stock prices, ignoring new-build premiums.
We then asked why – given the fact that the developer valued its properties every three months often using the firms present at the meeting – was it that the same property valued on behalf of the lender could produce a figure 25% lower than the price given to the developer?
Apparently, this is under lenders’ instructions, and valuers are giving forced sale values to lenders.
We asked if we could see the standard instructions given by lenders but were told this information was confidential.
We then questioned why they could not give a more accurate price at the outset to developers so they could market properties at prices that would be supported by surveyors working for lenders.
Well, this was apparently because they did not ask and were given ‘red book’ valuations – what a property could sell for on the open market.
So our next question was why, when these homes are being sold on the open market, are they not being valued at the price surveyors said could be achieved.
Apparently, this is a guide and surveyors must value for mortgage purposes on the instructions given to them by their clients. There’s a hole in my bucket, dear Liza, a hole.
So if I understand it correctly, surveyors guide developers on the value of properties. Surveyors guide lenders on the value of properties. Surveyors guide buyers on the value of properties. And surveyors value properties depending on who asks them.
Am I the only one who sees a common denominator here? Heaven forbid we might think that surveying firms are making stuff up as they go along.
Quantum Mortgage Brokers