A mortgage valuation is carried out by your mortgage lender and checks for anything that could impact the property’s value. This is only a brief inspection: it isn’t the same as the homebuyer survey and should not be used as a substitute.
If the result of the valuation is that the property is worth what you’ve agreed to pay then all well and good. However, if the report values it at a lower price than you have agreed, you can either go back to the seller with a new offer based on the lender’s suggestion or provide evidence to the lender that proves the property’s worth. This evidence could be examples of similar properties in the same areas that have recently changed hands for the same (or a higher) price.
Mortgage valuations can cost up to £1,500 but many lenders offer them as part of their service.
For a homebuyer survey, you’ll need a qualified surveyor who’s a member of RICS. They should have either MRICS or FRICS after their name but you can also check on the Royal Institute of Chartered Surveyors (RICS) website.
Estate agents, lenders, conveyancers and mortgage brokers often recommend surveyors but they might get commission for doing this, which could mean you end up paying more.
Shop around locally and get quotes from a few firms. There is always room to negotiate.
Whoever you go for, make sure your surveyor has the right qualifications. Surveyors accredited by RICS are fully vetted and carry professional indemnity insurance.
You should commission a homebuyer survey to examine the condition of the property you are buying. There are various types of these surveys.
Don’t be afraid to ask for copies of previous reports of the level of survey you want to see how useful the report is.
A condition report is an overview without much detail that essentially backs up the mortgage valuation. It’s most suitable for new-builds or properties that are in good condition.
It uses a traffic light system to explain the state of different parts of the property. Red means there are serious problems that need to be addressed, amber means there are non-urgent issues, and green means everything is fine.
According to RICS, this is the most popular survey level. It is more in-depth than a condition report and offers you greater security.
There are two types of homebuyer report, both offered by RICS: a homebuyer report with a survey, and a homebuyer report with a survey and valuation.
They both highlight obvious problems such as rot, damp and subsidence but are non-intrusive. This means the surveyor won’t drill holes to check the state of the walls, lift floorboards or move furniture. So if a chest of drawers is covering an area of damp, a homebuyer report won’t reveal it.
The surveyor advises on any necessary repairs and how much they will cost.
A homebuyer report with a valuation includes all of this plus a valuation and tells you how much it would cost to rebuild your property from scratch.
A similar service, called a home condition survey, is offered by the Residential Property Surveyors Association (RPSA).
This is the most thorough, in-depth survey you can get. It’s most suitable for older or larger properties or if you’re planning to do a lot of work, such as building an extension or completely remodelling the property.
Like the homebuyer report, it lists defects and gives advice on repairs, but the details are more extensive.
The surveyor checks in the attic, behind walls and under floorboards and you can ask them to project repair costs and estimate how long things will take to fix.
You can use the results to renegotiate the overall cost of the property, but beware: if the results of the survey are dire, you may need to rethink buying the property altogether. Ask yourself if it is really worth the time, money and energy to fix all the problems to make it liveable, or if you’d be better off looking elsewhere.
A mortgage valuation is compulsory because no lender will give you the mortgage without one.
A homebuyer survey, on the other hand, is not legally required but is highly recommended. If you buy a property without commissioning a survey, you could later uncover problems that are expensive to fix. Once contracts are signed and exchanged, there’s no such thing as a refund!
Worst case scenario is you’re so out of pocket because of costly repairs, you need to take out an additional loan or immediately run into arrears as you struggle to meet the mortgage payments.
Damning surveys can lead to sales falling through, but they don’t have to.
If the surveyor has advised certain repairs are absolutely necessary, call in an expert. Ask a builder or tradesman you trust to accompany you to the property and give you a better idea about the size and scope of the problem. Get a couple of quotes to get a clear idea of the cost.
If you have any questions about the survey itself, ask the surveyor to talk you through it. As you’ve already paid for the survey, this won’t cost extra.
You can then use the results to try to renegotiate the price with the seller. For instance, if the report states the property requires £5,000 worth of repairs, you could ask for that amount to be taken off the agreed selling price.
Alternatively, if the results of the survey are dire, you may need to rethink buying the property altogether. Is it really worth the time, money and energy to fix all the problems to make it habitable, or would you be better off looking elsewhere?
Ultimately, it will come down to what you can afford so it’s imperative you remain realistic and don’t become blinded by a house you’ve fallen in love with.