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Major lenders set to use automated valuations to ease delays

Three major lenders are looking to use desktop valuations for house purchase transactions – a move brokers believe will put an end to the severe valuation delays to hit the market over the past year.

Santander has launched a pilot scheme where it will use desktop valuations for purchase applications and Mortgage Strategy understands two other high-street giants are planning to follow suit. Desktop valuations are usually used for remortgage cases.

Over the past year, the market has been dogged by severe delays in the valuation market due to a lack of trained surveyors willing to do valuation work.

In April, a Mortgage Strategy mystery shop found that some major surveying firms had stopped taking on new instructions in certain hot-spots and others were quoting waiting times of two weeks or over.

Brokers have hailed Santander’s decision to switch to desktop valuations and believe it will put an end to the delays the market has witnessed over the past year.

Your Mortgage Decision director Dominik Lipnicki says: “The delays of the last year or two have been horrendous. We’ve had to wait weeks and weeks in some cases to get a valuation and anything that speeds that up is the right evolution for the market.”

Santander will use an Automated Valuation Model, which calculates property valuations using a statistical model. The lender will only use AVMs for “certain” property types and if the property is down-valued, a surveyor will be sent to value the property.

A Santander spokesperson said: “This approach will offer an improved customer experience; ensuring consistency and cutting property valuation times. It will also free up valuers’ capacity so they can focus on more complex cases.”

Coreco director Andrew Montlake says Santander has set up its AVM programme in the correct way as it says it will not down-value properties on the basis of a desktop valuation. He says: “This is definitely a good move for the market because Santander is doing it in the right way. To say they will not down-value a property based solely on a desktop valuation is the key point in this.

“There is nothing wrong with using AVMs as they speed up the process, which of course has been affected by surveying delays in recent times, and with lower LTV deals the risk is low.

“But if there is a mismatch between the automated valuation and the purchase price, it is absolutely right to then send out a valuer to carry out a physical inspection. Any other lenders looking at using AVMs should hopefully follow suit and run them in a logical way.”

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  • B Jones 16th October 2014 at 8:59 pm

    Hmmm. Homes that look like Yard of the Month from the outside and are Hoarder Central on the inside. Seen too many of the these over the years; AVMs are pie-in-the-sky in the real world; cheap, quick and frequently inaccurate seems to be the preferred direction.

  • Grey Haired Underwriter 3rd September 2014 at 3:09 pm

    Here we go again! the start of the stupid season is upon us already. Did none of these lenders learn anything from the past.

  • Paul Howorth 3rd September 2014 at 2:31 pm

    I once had a contact some years ago who who told me a that when working for the Land Registry he had to register a charge for a second tier lender over land based in London for £100k of mortgage finance. When he checked the details of the land on their records the loan was not actually on a residential property but the block of Flats Bin Store. Yep it was freehold land just not particularly good security. The wonders of desk top valuations and “saving” money.

  • Hibat Sheikh 3rd September 2014 at 1:52 pm

    Logical and sensible. Hope other will follow.

  • John Lacy 3rd September 2014 at 11:21 am

    This is going to make it a real priority for purchase customers to get their own valuation or upgrade to a survey if the lender’s valuer isn’t going to look at all as it is amazing what some inexperienced buyers miss when they view a property.
    I’m afraid that I’ve got to compare the lenders to the Wild West gunfighters of the past who also sacrificed accuracy for speed and paid a heavy price indeed!!

  • michael white 3rd September 2014 at 10:29 am

    Laughable…. “A surveyor will be sent out if ‘under-valued’….” This demonstrates that more lenders have lost sight of real credit risk analysis.