Mortgage Valuation: Is it really a bad thing if your house is down valued?

Unless you are happy to pay more than a house is worth, it may not be not such a bad thing if your mortgage valuation is less than you had been prepared to pay.

Is your mortgage valuation less than the agreed purchase price?

A number of buyers purchasing a property with a mortgage see the mortgage valuation as a potential hiccup in their purchase.  If a buyer is relying on a mortgage with a large loan to value they may not be able to proceed as planned if the lender’s Valuer provides a valuation lower than the agreed purchase price.   Similarly, some buyers are concerned that the mortgage valuation may lead to a buyer pulling out (or making a lower offer) if they don’t get the mortgage offer they had expected.

If you had your heart set on a particular property and find you are unable to proceed (unless you use some of your own funds) then at minimum this is likely to be a disappointment.  If you have to start and look for another suitable property this may cause a delay, which could possibly lead to problems with the chain and you may even lose your own buyer.

But is it really a bad thing if your mortgage valuation is less than the purchase  price?

If you spend the time finding out why the property has been valued lower than the price you have agreed to pay, you may find there is a good reason.  A Valuer will use details of similar properties which have recently sold or are under offer, in conjunction with their knowledge of the local area, to arrive at the valuation figure.  It is possible that you have made an offer which is too high.  Other factors which may affect value include:

  1. Condition of the property (remember that a valuation is not a survey).
  2. Tenure.
  3. Works carried out without Local Authority approvals.
  4. Planning proposals which may affect the property.
  5. Detrimental use of land/property in the vicinity.

Once you establish the reason for the lender’s valuation being less than your agreed purchase price, you may wish to revise your offer, or even reconsider the purchase.  So, unless you are happy to pay more than a house is worth, perhaps it is not such a bad thing if your mortgage valuation is less than you had been prepared to pay.

buying and selling a house

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DIY in the home

Remember to stick to the jobs which are within your capability and expertise and employ specialists where necessary to ensure works are carried out safely and to the required standard. 

Whether you’ve recently moved house, are preparing to put your house on the market or simply wish to catch up on maintenance or make some improvements, a Bank Holiday weekend gives an extra day to tackle some DIY in the home.  

But take care.  Many accidents in the home or garden could be avoided by taking necessary precautions.

  1. Ensure there is adequate ventilation when using paint, solvents, etc.
  2. Be careful when using ladders or step ladders. Make sure they are in a good condition, used not on a sound surface and have someone to foot when in use.
  3. Wear appropriate safety clothing when using tools such as goggles, mask, dust mask, gloves, footwear, etc, when carrying out DIY in the home.
  4. Take care when using tools.  Read the operating instructions and take note of safety. Only use tools for their intended purpose and which you know how to use safely.
  5. Keep children and pets at a safe distance.
  6. Do not attempt to carry out any works which require specialist knowledge and training such as electrical works, works to gas appliances, installation of wood burning stoves, etc.  Instruct relevant specialists for such work.
  7. Do not carry out any structural alterations without obtaining advice.  Structural alterations are controlled by Building Regulations and in many cases require design by an Engineer.
  8. Do not disturb any materials which may contain asbestos when carrying out DIY in the home.  Asbestos can be found in many materials used in houses built up to 2000, including cement soffit sheets, textured coatings to walls and ceilings, asbestos cement pipes and gutters, some types of insulation, and more.  If there is a possibility that a product contains asbestos then have it tested and obtain advice on it’s removal and disposal from a specialist.  Visit http://www.hse.gov.uk/asbestos/

Remember to stick to the jobs which are within your capability and expertise and employ specialists where necessary to ensure works are carried out safely and to the required standard.

 

 

buying and selling a house

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Choosing a survey: Does it really matter what your survey report is called?

When choosing a survey, the name of the survey report does not really matter.  The most important thing is to check what your report will cover and make sure it will provide the information you are looking for. 

What type of survey should we have?  This is a question many house buyers ask when choosing a survey, puzzled at the assortment of terms, including Building Survey, Homebuyer Report, Condition Report, and more.

Putting terminology aside, what do most buyers want from a survey?  A typical house buyer would want to be aware of any repairs needed, the urgency of any repairs and have an idea of costs involved.

Some buyers choose a property knowing that works will be required and the survey will help them plan the works and obtain estimates from contractors.  After all, there is little point going ahead with fitting out a new kitchen or decorating when more disruptive works such as rewiring need to be attended to first. On the other hand, some buyers seek a property which needs as little work as possible (although, inevitably it is likely that some work will be necessary).

Whatever the name of the survey, it is important to check what will be included.  Most pre-purchase surveys have a similar level of inspection, but the information within the report can vary from one surveyor to another.  This can be due to the level of knowledge and experience of the surveyor and the amount of time spent carrying out the survey and preparing the report.  Some firms place high demands on their surveyors and expect two (and sometimes more!) surveys to be carried out in a day, whereas other firms allow more time for each survey and are more likely to produce a more thorough and detailed report (which may be reflected in the cost).

In a nutshell, when choosing a survey, the name of the survey report does not really matter.  The most important thing is to check what your report will cover and make sure it will provide the information you are looking for.  And most importantly, make sure you choose the right surveyor, ideally someone who has been recommended to you and is familiar with the local area.

 

buying and selling a house

 

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Why do surveyors ask for further investigations?

An experienced surveyor will be able to use his or her knowledge and experience to assess whether there are likely to be any hidden defects which require further investigations.  

Some buyers may wonder why their surveyor has asked for further investigations or a report from a specialist.  Firstly, it is important to remember what the surveyor was instructed to do.  Typically, a surveyor would carry out a single inspection.  The property may be occupied, furnished, have floor coverings and in some cases there may be many stored items which hamper the inspection.   In most cases a surveyor would not carry out any opening up to inspect hidden areas such as floor timbers, wall ties, etc (unless previously agreed and with the permission of the vendor).

Most properties will have some restrictions to the inspection including:

  1. Roof spaces without access hatches or with unsafe access, for instance where a roof hatch is positioned above a stairwell.
  2. Floor voids without access and floor timbers generally.
  3. Areas covered by furniture and/or floor coverings.
  4. Areas at high level, such as behind parapets, stacks, or simply not visible due to the roof configuration or height.
  5. Flat roofs to upper storeys, including bay roofs.
  6. Wall ties within cavities.
  7. Underground drainage runs.

Even though not all parts of a building may be visible, an experienced surveyor will be able to use his or her knowledge and experience to assess whether there are likely to be any hidden defects which require further investigations.

For instance, a surveyor will recognise the distinctive pattern of cracking associated with wall tie corrosion and may recommend that a sample of ties is checked using a borescope (instrument to view within a cavity).

Similarly, if movement is noted and there is a possibility of defective drains which may affect the property, the surveyor may recommend a CCTV survey to confirm the route and condition of the hidden drains.

Also, a surveyor may suspect rot and/or woodworm to a timber floor even without an inspection, particularly if there is springiness, dampness and/or a lack of ventilation.  Further investigations may be recommended in the form of opening up, to establish the extent of defects and repairs needed.

In addition to further investigations, a surveyor may ask for one or more specialist reports, such as from an electrician, Gas Safe contractor or HETAS engineer.  This is simply because these are specialist matters which need input from the appropriately trained and qualified specialist.

After reading your survey report, don’t feel inconvenienced if any further investigations or specialist reports are recommended.  This is simply part of the process of finding out the true condition of the property you are thinking of buying so that you can proceed with the purchase in full knowledge of the condition.

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Property survey:  things to remember when reading a survey report

Consider the findings of the survey against your expectations, taking into account your budget and how much work you are prepared to carry out. 

Some people read their property survey report and think they should look for another property instead.  It may sound as though an endless list of repairs are needed and that the property is far worse than anything else they could have chosen. While this is possible, in many cases the property may not be significantly worse than others in the area. It is a case of putting things into perspective.

If a property survey was commissioned on every similar property in the area the chances are that many would have issues to some degree.  It is even possible that a survey on your present house may reveal some issues, even though you may not have been aware of them and these have not stopped you making the house your home.

It is important to remember that you have employed a surveyor to report on any items which may affect your decision to purchase the property or renegotiate the purchase price so that you can make an informed decision.

Highlight any major issues

A property survey report will always report some issues (I have never known one which hasn’t).  Some may be major issues which require urgent or costly repairs, whereas others may be matters which can be dealt with over time and/or with insignificant cost.  Read the report carefully and highlight  any major issues.

If the report identifies any major repairs are needed (or may be needed depending on the results of further investigation or enquires) you should obtain cost estimates before you commit to purchase (usually exchange of contracts).

Most issues will fall into one of the following categories :

  1. Further investigations/enquires which should be carried out/made prior to commitment to purchase/exchange of contracts.
  2. Costly repairs which are urgent (these may or my not affect your decision to purchase, depending on your expectations and budget).
  3. Costly repairs which can be spread over time  (again, these may or may not affect your decision to purchase depending on your budget and how much work you are prepared to carry out).
  4. Minor repairs/maintenance which can be dealt with after moving in (and should be anticipated for most properties).

The important thing is to consider the findings of the survey against your expectations, taking into account your budget and how much work you are prepared to carry out.  The final decision can only be yours.

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Advantages of using a local surveyor when buying a house

If you instruct a surveyor in a local practice you can be fairly sure that the survey will be carried out by someone with local experience.

Most prudent house purchasers will arrange a survey, but there are advantages in using a local surveyor when buying a house.  Some surveyors cover a wide area and inspect properties in locations which vary considerably.  However, if you instruct a surveyor in a local practice you can be fairly sure that the survey will be carried out by someone with local experience.

  1. Firstly, a surveyor who is already known to you or who has been personally recommended, either by a friend, family member or solicitor, is more likely to be a local surveyor.  Most people would prefer to instruct a local surveyor when buying a house who has been recommended to them by a reliable person rather than someone who is not known to them.
  2. A local surveyor is more likely to be familiar with properties in the area, their form of construction, local materials and associated defects.  A local surveyor may have inspected other houses in the same road, or possibly even the house you are considering purchasing.
  3. Local knowledge is important particularly for items which cannot be seen.  For instance, a surveyor from another area may not be aware that a particular housing estate has pitch fibre drains.  Sometimes the drains are not visible, eg, if a manhole cover has been concealed by paving or decking or is simply too heavy to lift.  A local surveyor who has experience of inspecting other properties in the area will be able to warn of the possibility of pitch fibre drains where present in the area, and recommend further investigations prior to commitment to purchase to avoid unforeseen costly repairs at a later date.
  4. Similarly, a local surveyor is more likely to be aware of areas where black ash mortar has been used, which may sometimes not be visible, eg, behind rendering.  It is important to know whether back ash mortar has been used as this can increase the risk of wall tie corrosion which requires costly repairs.
  5. A local surveyor is more likely to be aware of areas which may be affected by mining.  Be aware that not all areas affected by mining will be obvious, particularly to someone who is not local.  Some green rural areas and built up areas of cities, such as parts of Bristol, may have former mine workings, with no or few visible signs.
  6. Some surveyors from outside the area may not recognise ex-Local Authority properties which have been rebuilt.  A local surveyor is more likely to have such knowledge and be aware of which properties are traditionally built and which are non-traditionally built.  This is important as some non-traditional properties may be defective and not be mortgageable.
  7. Many purchasers view flood maps which show a potential risk of flooding, but a local surveyor is more likely to know whether a particular area has actually flooded in recent years or within living memory.
  8. Similarly, some searches indicate that properties in a certain postcode area have a higher risk of subsidence.  A local surveyor is more likely to be aware of areas with a higher incidence of subsidence and is able to warn of the risk even if there are no visible signs.

For indication of the cost of a survey visit how much does a survey cost? 

To find a local surveyor when buying a house visit RICS Find a Surveyor

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Buying a house in winter

If you are buying a house in winter which is vacant there are a few extra items which need to be checked, particularly if the water has been turned off.

If you are buying a house in winter and it is occupied then the chances are that it is being heated (at least in part) and the service installations are being used.  But if you are buying a house in winter which is vacant there are a few extra items which need to be checked, particularly if the water has been turned off and the heating system drained down.  

If the water has been turned off you will not be able to check the water pressure, working order of the fittings, watertightness of pipework or be able to check whether the drains are flowing freely.  Ask the selling agent to arrange for the vendor to turn the water on so that these items can be checked by specialists before you agree to purchase the property.  

When the water is turned on, arrange for a heating contractor (contact a Gas Safe Registered contractor if the heating is gas) to inspect and test the heating and hot water system.  Have its age and condition checked and make sure the boiler is a sufficient size to adequately heat the property.  

If the house is damp, check whether this is simply condensation due to the house not being adequately heated and ventilated, or whether there is rising dampness or penetrating dampness.  If there is rising dampness or penetrating dampness find out the specific cause/s of the dampness and deal with the defect/s.  Some replastering may be required if plasterwork has been affected by salts.  See also Buying a 1930s House.   Consider instructing a Chartered Surveyor to report on any dampness and/or condensation issues.  This can be checked as part of a detailed house survey.  Visit RICS Find A Surveyor to find a surveyor in your area. 

Check whether and drains or gullies have become blocked by leaves.  Check whether gutters need clearing to avoid overflowing and/or rain penetration which may lead to dampness internally and staining externally.  

See also Selling a house in winter.

 

 

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Renegotiating the purchase price of a property following a survey

Reasons for renegotiating the purchase price of a property

Renegotiating the purchase price of a property is an obvious thing to consider if your house survey reveals unexpected defects, particularly if they are going to be costly to repair.  Most purchasers would make an offer “subject to survey”, making it clear that firstly, they plan to have a survey, and secondly, if the survey reveals defects which they were not aware of they may consider revising their offer.   Visit the following:  https://www.gov.uk/buy-sell-your-home/offers

Renegotiating the purchase price of a property may also be necessary if you are seeking a mortgage and the mortgage valuation is less than the previously agreed purchase price.

 

How to renegotiate the purchase price

Renegotiating the purchase price of a property would typically be done through the estate agent.

After receiving the survey report, the buyer should obtain cost estimates from contractors for any recommended works prior to commitment to purchase.  The estimates can be used as a basis for negotiation.

It is important to remember that the seller is under no obligation to reduce the price, even if works are required.  Most sellers would have a minimum price for which they are prepared to sell their property.  This may be based on how much they need to repay a mortgage or how much they need to be able to buy their next home.  However, some purchasers may be in a position to agree a reduced price in order to achieve a sale.  The selling agent may know the vendor’s position and should be able to advise the buyer whether there is any room for negotiation.

Sometimes the selling agent or vendor will ask to see a copy of the survey report.  The survey report has been prepared for the buyer, and the buyer is under no obligation to provide this to anyone.  However, in some cases it may be helpful to show extracts of the report, along with quotations for the works, but this is entirely the buyer’s choice.

If the reason for renegotiating the purchase price is because the mortgage valuation is lower than the previously agreed purchase price then the purchaser may not be able to proceed with the purchase unless the price is lowered or the buyer has additional funds to put towards the purchase.

The success of negotiations will depend on a number of factors including the seller’s financial position, whether the seller needs to sell the property and whether there are any other potential purchasers on the scene who are in a position to proceed and are prepared to pay a higher price.

Remember that the seller does not have to reduce the price and may even decide to not sell the property if it does achieve  a particular selling price.  The success of any negotiation depends not only on the cost of any works but also on the individual circumstances of both the buyer and seller.

 

buying and selling a house

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Should I have a survey before selling my house? 

Some people consider having a survey before selling their own property as they think it might ease the sale process and prevent delays.  The survey itself does not typically result in a delay in the house buying process so long as it is arranged in good time and not left until the last minute.

As long as the property you are selling is in a reasonable order, in most cases it shouldn’t be necessary to have a survey before selling your home.

When you have agreed an offer (or an offer “subject to survey”) your potential purchaser will choose whether or not to instruct a surveyor to carry out a survey (if your buyer is buying the property with a mortgage then a mortgage valuation may also be undertaken, either at the same time as the survey or separately).

Reasons not to have a survey before selling your property include:

  1. Most prudent purchasers would instruct a surveyor of their choice to carry out a survey on their behalf, irrespective of whether you have already had a survey carried out.
  2. If the buyer instructs a surveyor then the report will be prepared in their name and will be for them to rely on.  If the seller has commissioned a survey then this would not typically be able to be relied upon by a third party, such as a potential purchaser.  It may be possible to transfer the report into the name of the buyer but this may incur a fee.
  3. If the buyer has particular questions about the property, eg, if the buyer is considering carrying out alterations, these points can be addressed during the survey.
  4. If the seller arranges a survey before putting the house on the market and if there is a time lag between the survey being undertaken and finding a buyer, then the report may not be up to date.

In summary, wait to see whether your potential purchaser wishes to have a survey, and if so, leave them to instruct a surveyor of their choice.  Allow the surveyor access to your property and be helpful with any questions he or she may have.  So long as your buyer arranges a survey in good time the survey is unlikely to result in a delay.

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Three things which might make your house more difficult to sell

There are some steps which can be taken to avoid your property being difficult to sell and avoid delays once you have found a buyer.

Alterations without approvals

Many homeowners realise that they may need Local Authority approvals for major works such as extensions, structural alterations, etc, but some works are controlled under Building Regulations which can easily be overlooked, including:

  1. Installation of a wood burner.
  2. Replacement of windows (FENSA certificate required).
  3. Works to drainage installations (above and below ground).

If you plan to extend your property or carry out any works which require Building Control approval make sure that the relevant aspects of the work are undertaken to meet the requirements of Building Regulations.  Ensure that you keep all documentation for any works you have carried out to reduce the risk of your home being difficult to sell.  Pass a copy of all documents to your solicitor so that copies can be forwarded to your buyer’s solicitor when requested.

If works are carried out without the relevant approvals, this may cause a delay or a problem if your buyer is taking out a mortgage to buy the property.  Also, a lack of approval may lead to your buyer questioning the quality of work and in some cases may put them off proceeding with the purchase,  and may result in your house being more difficult to sell.

Alterations which are out of character

When carrying out any works it is a good idea to do work which is in keeping with the age and style of the building.

  1. Replacement windows should match the style of the original windows as closely as possible.
  2. An older house which originally had slates or clay tiles is likely to be ruined if modern concrete tiles are used as a replacement.

For older properties, it is worth spending time sourcing suitable materials, eg, good quality used slates or roofing tiles from a reputable stockist or a reclamation yard.

Poor presentation

Perhaps the most obvious is poor presentation.  A property which has been well maintained is generally more attractive to most buyers.  While your property does not have to be professionally “staged” before putting it on the market, there are a number of things you can easily do yourself to make your home more attractive to a prospective buyer.

  1. Clear out any unwanted items.
  2. Tidy up.  Make sure everything has a home.  A tidier home is more attractive and can make rooms look larger.
  3. Spring clean thoroughly.  Don’t forget windows, mirrors, taps, etc.
  4. Tidy the garden.  Make sure it doesn’t look as though hours of work are needed as soon as someone moves in.
  5. Attend to any small DIY matters such as dripping taps.  Make your home look as though it has been looked after rather than neglected.

buying and selling a house

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