From Rick GiffordIn a buoyant market valuers are only too keen to value properties up and on many occasions actually enhance the valuation. After all, if they can increase the valuation it has a nice knock on indexing effect on their fees. I blame valuers for the gross increases in property prices in the 1980s and again in recent years. Had they had the guts and professionalism to state that the property is worth what it was, say, six months ago (in both instances ) we would have had a much steadier and stable housing market right through to today. I also feel lenders have been hoodwinked into accepting almost willy-nelly the valuations from these people. Now that the market is stagnant they have adopted a ‘cover your back’ mentality and are down-valuing at an alarming rate. A client in Manchester whose property was estimated at 485,000 had a valuation of 450,000 despite the fact that across road in the same cul-de-sac an identical property was selling for 499,950. Any appeals were met with disdain. Another client had a 120,000 property down valued to 90,000. How can valuer justify such wild percentage swings? The market in these price ranges has hardly moved – and certainly not in proportions like these examples. The last straw, and the main trigger for this letter, was a valuation on a converted property on the South Coast – 10 one-bed flats on the sea front going for 125,000 each in a newly refurbished building. The lender stated it would consider flats in blocks of over four storeys. The valuer made the statement that the flats were in good condition in line with the extensive refurbishment of the building but were not mortgageable since the block was over four storeys high. He didn’t even give a valuation. In my opinion this is an underwriting decision and not one a valuer should make. The ‘consider’ aspect of the application immediately became a negative. The valuer told the lender it was not suitably secure. And if you think about the implications of that statement, it means that in the valuer’s opinion all flats in blocks of over four storeys are not mortgageable. That must upset about 20% of the housed population that actually live in these flats – and have mortgages on them. But here’s the scary bit. These valuers are the same people who next year will be involved in the dreaded Home Information Packs. Can you imagine what’s going to happen? On top of saying “I will do your HIP valuation for free as long as you sell your property via the estate agent with whom I am affiliated”, they will be writing whatever value suits for a quick sale. As a broker I’m worried about this trend and the intransigence of these people. And finally, why do valuers charge a fee in proportion to the value of the property? Surely valuing a four-bed house in Torquay is the same as a similar house in Newcastle? Only the venue has changed and for values, as a separate sum they look for regional comparisons. The actual time for the valuation is the same. Identical BMWs for sale in different parts of the country surely do not attract different AA inspection fees even they are being sold for different amounts? I have outlined only some of the down valuations and am sure many of you out there will have experienced similar situations. The market may be cool but these guys are unreal. Mind you, most are estate agents so I suppose there’s your answer.
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Financial advisers around the world face a new frontier of challenges, including increased fee pressures, tightening regulations, growing competition from automated advice platforms and continued market volatility. In order to better position themselves for business growth, advisers will need to assume three key roles. Click to download full article
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