Did you know that by law that most lenders are required to carry out a property valuation on a property before making a mortgage offer? Although this does not apply to banks, they will without a doubt insist on a property valuation being carried out anyway.
A property valuation is a property inspection carried out with the sole purpose of determining the value of the property so that the lender can assess how much they may lend the purchaser on it, hence almost all lenders insist upon the basic property valuation. A property valuation is not necessarily a survey. The buyer would normally pay for the house valuation and in most cases be privy to a copy of the report.
A valuation is a very limited inspection, and usually forms merely a part of the mortgage application as opposed to a property survey, although it may identify areas that require more detailed inspection by a specialist.
Survey types
There are three types of survey or house valuations – a ‘Mortgage Valuation Report’ a ‘Home buyer Survey' and 'Building Survey'. Choosing what type of house valuation, Survey or property valuation is correct for you depends upon many things including the age and condition of the property.
A property valuation and/or a survey should be undertaken and the results taken into consideration before you enter into any kind of contractual agreement with either the vendor or lender. This way, if, as often happens, the survey or property valuation highlights defects or problems with the property you are in a position to discuss or indeed, negotiate the asking price – either directly or via your solicitor if required. For example, repairs can then be factored into the value of the property before you finally agree any sale price. Also it is possible that your lender may require any repairs being completed before they release the full mortgage fund, i.e. they may well retain some of the funds until such time as the works have been completed.
Mortgage Valuation Report
It is true that as a house buyer, you do in pay for a mortgage valuation report in order to secure a mortgage offer. However, this should not be confused with an independent house valuation or property survey. The mortgage valuation report does what it says on the tin, it merely confirms to the lender that the property is worth more than what they are lending you – what it does not do, nor is it responsible for, pointing out any repairs that need doing or any defects that may need to be corrected in the future which would be the case in a property valuation survey.
Homebuyers report
This type of survey is designed for particular types of homes, defined by the Royal Institution of Chartered Surveyors as "conventional in type and construction" and "apparently in reasonable condition". This type of survey is less expensive than a building survey (although more expensive than a valuation) and provides a report that highlights any immediate problems or defects that will have an effect on the value of the property.
Building Survey
This type of survey is a full property valuation and as such is suitable for any residential property and provides- a detailed report on the construction and condition of the property. The level of detail is higher than that found within a Home buyer's Report and as such, a building survey is more expensive but you must also ask for a property valuation as part of the package.
Remember the survey is a very important part of the buying process and should not be neglected. A few extra quid spent now may save you thousands in the long run and help to reduce the value of the property if any defects are found and work required.