Valuers face a range of challenges in a housing slump, as changing lending criteria and the departure of some players compound the usual factors that cause an imbalance between supply and demand.
Lack of comparable transactions and unreliable data make accurate valuations harder. And the pressure only increases as applicants are more likely to question valuations and the threat of legal challenges looms.
But there are things valuers can do to ensure valuations are as accurate as possible. All figures should be supported by at least three comparable sales, all of which should have been researched and appropriately documented.
Previous sales are by nature historic, so in a volatile market the gap between comparable sales and valuation date must reflect trends using knowledge of local factors.
In some cases not enough hard evidence is available, making it necessary to resort to soft evidence.
This can be in the form of reviewing asking prices and marketing periods, discussions with estate agents or comparing prices in similar areas.
It is vital to justify how comparables support valuations. Detailed documentation is the key to accurate valuation but to achieve this the industry and consumers need to recognise that speed and quality of service don’t always go together.
The price paid should reflect the work involved in providing an accurate and indemnified service, and this often takes longer in turbulent market conditions.