13 Dec Mortgage valuation or survey?
So, you’ve found the home of your dreams…what next? Well, one of the things we always get asked is what is the difference between a mortgage valuation and a survey? If you want to find out what lies beneath the surface of the property, a valuation alone just won’t cut it. And here is why. Many people wrongly assume that a mortgage valuation is the same as a survey and can often use the term interchangeably – but the two are very different. Therefore, I’m going to set out the differences so it’s very clear.
A valuation is purely for the mortgage lender’s benefit. The real purpose is to satisfy the lender that the property you are looking to buy is worth the amount you’re looking to pay for it – or at least the amount they are lending on it – before they finally approve the mortgage.
A valuation is just a cursory inspection which can be completed in less than 15 minutes. In fact, many mortgage lenders do not even visit the property – they will carry out a remote desktop valuation instead using a tool that measures comparable data of properties sold in the area of similar age, style and size etc.
This is NOT for the benefit of you, the buyer, and a valuation won’t point out any structural problems or issues, such as damp or dry rot.
However, if you’re buying a property outright (without a mortgage) you won’t need to get a valuation done.
Before buying a property, it’s a really good idea to appoint a RICS accredited professional to carry out a survey.
A survey is a health-check on the property and will provide you with a completely independent account of its condition and highlight any problems. The level of detail in your report will depend on which level of survey you opt for, as well as the size, age and condition of the property. Also bear in mind that a survey is only a visual inspection of a property. While you might assume the surveyor will climb into the loft or up on the roof, this will not happen unless you have paid for that level of inspection and resulting detail in the report.
There are three main types of survey you can opt for:
RICS Condition Report
An RICS Condition Report is the most basic and least expensive survey available. It is best suited to conventional properties and newer homes that seem to be in a reasonable condition and are built from common building materials. This survey reports on the condition of the property only, flags up matters for your legal advisors and gives a basic summary of problems that need attention. It doesn’t include advice or a valuation.
RICS HomeBuyers Survey
A HomeBuyers Survey is suitable for the same property types as a Condition Report. It involves a more extensive visual inspection and goes into greater detail. It also includes extra information, like a valuation, insurance rebuild costs and advice on repairs and maintenance.
RICS Building Survey
Formerly known as a structural survey, a Building Survey provides a greater amount of detail than any other survey. A Building Survey is highly recommended for older, unusual or altered properties and those in need of work, or if you have doubts about the condition of a property. This type of survey doesn’t usually include a valuation, but a surveyor may also include this as an additional service.
The onus is on any buyer to get the most out of the survey they choose. Buying a house is usually one of the biggest investments you will ever make, so it makes sense to get a survey done, to ensure there are no surprises ahead. If the survey does uncover any problems, you can factor the cost of any repairs into your home budget or negotiate with the vendor to reduce the price to cover any repairs. If the findings are severe, you may pull out altogether – a lucky escape! Imagine if you hadn’t booked to have a survey done – you would certainly be out of pocket in order to get things repaired.
By Ray Smith FRICS
Senior Partner, Watsons
At Watsons, our talented team of Chartered Surveyors and Registered Valuers are all members of the Royal Institution of Chartered Surveyors (RICS). We have surveyors based throughout the East of England, operating in Norfolk, Suffolk, Essex, Cambridgeshire, Lincolnshire, County Durham and Tyne & Wear.
For more information on the services we offer or to obtain a quote, please contact our Survey Team on 01603 751577 or email: firstname.lastname@example.org