In this blog post, I am going to be discussing bank valuations. A Bank Valuation is commissioned by the buyer’s lender and in most cases is paid for by you (the property buyer).
So, what information is contained within a Bank Valuation?
The objective of the valuation is to confirm that the amount of money the lender has offered you is well protected and that you (the buyer) are paying fair market value for the property being purchased.
Ultimately, the bank wants to ensure that if they need to repossess the property, they can recover their money and sell it quickly on the open market-clearing their mortgage charge.
It is often the case that the surveyor conducting the bank valuation may undervalue the property, as they aren’t comfortable with the agreed sale price as it doesn’t match the current market value for comparable properties sold within the last 6 months. This is obviously a very frustrating position to be in and in most cases will scupper the sale.
During their inspection, the surveyor will also flag certain defects within a property that is visually apparent and can affect the property’s value. This could include:
- Pest infestation
- Damaged chimneys
- Damaged roofing
- Cracking on internal and external walls
Generally, the level of detail regarding defects will be limited to comments regarding the overall condition and the surveyor will unlikely give the lender recommendations on how to rectify them.
Depending on the defect located, it could stop your mortgage lender from agreeing to lend on the property and grant you a mortgage. This could include properties with:
- Dry rot
- Wet rot
- Structural problems
It is worth noting that the bank valuation is not intended to be a detailed defect report. Instead, it is a simple summary for the bank to make their lending decision. It is also worth bearing in mind that in most cases, you will not even get to see this report so will have no idea of the issues that the surveyor noted during his time at the property.
Therefore, we will always recommend property buyers have an independent survey undertaken before they proceed with the purchase.
Generally, these tend to be in the form of an RICS Homebuyer Report or Building Survey.
What is an RICS Homebuyer Report and Building Survey?
An RICS Homebuyer Report is normally purchased by a buyer looking for a general view of the property. Mostly a flat, a bungalow and standard construction house built post 1900. It is a visual inspection conducted by a surveyor who will look to provide a detailed report about potential concerns with the property you are buying. It will also include a current market valuation and reinstatement cost.
A Building Survey is normally purchased by a buyer looking for a comprehensive review of the property. Mostly larger properties, older properties built pre 1960 or rundown, unique properties and/or if you are planning major works.
Building Surveys are the most detailed RICS surveys and the highest standard of visual inspection you can get for a residential property. The surveyor will focus on providing a thorough review of any current or potential defects and are non-invasive, meaning that the surveyor won’t be pulling up floorboards or drilling holes in walls.
There are a number of defects that the surveyor will cover in the report and comment on the condition and severity. This would include:
- Subsidence – Looking out for signs of cracking internally and to the external walls.
- Damp – The surveyor will use a damp meter and assess the condition of the property and report on whether they feel the property is affected by damp.
- Infestation – The surveyor will look for visible signs of mouse droppings, damage to floorboards (when visible) and damage to wiring, carpets or skirting boards.
- Asbestos – Before its use was banned, asbestos was a commonly used building material. If disturbed and inhaled, it can cause cancers such as mesothelioma and lung cancer and other lung diseases such as asbestosis. The Surveyor will confirm if they suspect any materials in the property have asbestos and if so, suggest getting an asbestos surveyor to test and advise on the process of removal.
A Bank Valuation is not as detailed and informative as an RICS Homebuyer Report or a Building Survey.
If you are planning on purchasing a property and want to ensure you are fully aware of its condition pre-purchase, why not instruct Berry Lodge Surveyors to conduct either an RICS Homebuyer Report or a Building Survey for you. Our Surveyors are members of leading governing bodies including; The Royal Institute of Chartered Surveyors (RICS) and The Chartered Institute of Building (CIOB).
Give us a call now and take advantage of the offer and speak to one of our experienced surveyors free for 30 minutes. They can talk you through the options available and provide impartially and no strings attached advice.