Firstly, and most importantly a Valuation is not a Survey. A valuation would generally require a registered valuation surveyor to carry out an inspection to obtain the necessary information to determine value. Some of the factors include the property’s setting in relation to its location, condition, floor area (ie its size) number of rooms and so on. It is through the surveyor’s knowledge and experience of the property, location and market that they are able to determine value based on comparable evidence.
The valuer is not carrying out a detailed inspection of the condition of the property and is not reporting upon it. If there are material factors effecting value such as a significant structural defects or the presence of an abattoir next door, you would expect the valuer to mention this and factor it into the valuation.
Mortgage Valuations, Remortgage, Further Advance.
For the purposes of clarity, all the above are the names attached to report types which include a valuation figure and are used by lenders for mortgage lending purposes. Each Mortgage Lender has their own report format and specific requirements as to what is to be reported on and the emphasis to be placed on various aspects of the property. This will depend upon the Lender’s individual lending policy, tolerance to risk and proposed use, (such as Buy to Let mortgages).
Despite the common misperception, Mortgage Valuation Reports are not designed for the prospective purchaser to make an informed decision as to whether or not they should proceed with their property purchase (i.e. they are not Surveys). They are intended for the client (i.e. the Mortgage Lender) in order to understand the risk and be able reach a decision as to whether or not to lend.
It is therefore recommended that as a Purchaser, you should always commission your own Home Survey. The report is prepared with the individual Purchaser’s requirements in mind. The report will highlight whether there are any major misgivings, which will be reflected in any Valuation; assuming that one is to be provided.
Valuations are carried out by RICS registered valuers. All valuation reports, whether for a mortgage lender or privately commissioned, comply with the Red Book Practice Statements and Guidance Notes (hence, Red Book Valuation). The process of gathering and recording data is essentially the same for all valuations, and certain minimum levels of content must be reported. Therefore, the only real difference in the various valuations is what information is reported and the format, which depends on the client and specific use of the report.
Market Value is defined as:
‘The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’
