Valuers report on state of market, but don’t influence it

I sympathise with Jonathan Burridge\'s concern that he was quoted out of context in the February 9 issue of Mortgage Strategy (Mortgage Strategy Letters February 16).

I believe my comments for the same article were also truncated, losing some of the message as a consequence. This is perhaps always a risk when space is at a premium but on the positive side it’s a powerful incentive to those of us lucky enough to be asked to comment to avoid verbosity.

I refute the suggestion that valuers (or is it e.surv?) are arrogant. After 18 years in the industry I have learnt this is a guaranteed route to lost business, as I am sure Burridge would agree.

I would also respectfully point out that e.surv is the only national valuer that regularly engages with the intermediary industry both in the pages of Mortgage Strategy and elsewhere, often responding to criticisms which are the result of other firm’s actions.

We do this as we feel we have an obligation to communicate and represent our industry in the absence of comment from our peers. Sometimes this means that as the messenger we get shot but we think participating in the debate is worthwhile nonetheless.

In respect of the issue raised, let me revisit the facts I originally shared and which Burridge seems to acknowledge exist:

  • Property prices have on average fallen around 15% in the last 18 months, in some areas by over 20%.

  • New-build property has fallen far more than this, city centre developments further still.

  • Appetite for new-build has been depressed for reasons such as inappropriate stock, dubious incentive schemes and a higher than average association with known mortgage frauds.

  • Developers have largely stopped construction on new developments as they understand that in many cases the return is not commercial at this time.

    A Google search will confirm that all the above points, plus other factors, have been reported in Mortgage Strategy and the wider press for at least two years.

    As a result, lenders are cautious and with a number of them now using taxpayers’ money, I for one am pleased this is the case.

    The fact is that the typical instruction from the lender market to the valuer sector is to provide a second-hand value for new-build cases. Valuers are required to act on the written instructions from their lender clients.

    We have no leeway to interpret requests and provide any other figure – to do so would contradict the rules laid down by the Royal Institution of Chartered Surveyors.

    E.surv has never been asked to provide a forced sale figure in respect of new-build valuations by a lender. But developers generally ask for a different figure – the market value including new-build premium and any incentives.

    This is the likely explanation for the differential Burridge draws attention to.

    So while I appreciate the frustration of Burridge and others, valuers do not seek to influence the market down – after all lower valuations generally equate to lower valuation fees. Our role is a passive one that takes account of all the above factors to merely report the state of the market at the time of asking, not influence it.

    I would welcome an open debate with anyone who disputes any of these facts but if one accepts them as largely accurate, one also has to accept the likely impact on reported values.

    Far from being arrogant, I am humbled by the devastating changes in our market as are others who are weathering the storm.

    An ongoing dialogue between brokers and valuers is a healthy thing. I encourage Burridge to pick up the phone on this and other matters. No valuer has a magic wand that can make these factors and their consequences disappear.

    A poor market doesn’t do any of us much good but neither does pretending that it doesn’t exist.

    Richard Sexton

    Director of Business Development

    E.Surv

    By email