Brokers - what's happening with valuations?

One of the benefits of the Scottish system is the fact that, for most purchases, down valuations are rarely an issue as with the Home Report providing a mortgage valuation from the outset there are no surprises.

Unfortunately, however, with purchase prices typically still landing above the mortgage valuation figure this does mean that the amount of deposit required by buyers can be significantly higher as any loan to value is based on the lower of the two figures.

Re-mortgage valuations have tended to still be in line with reasonable client expectations and as these are often automated and not property-specific generally tend to be more generous than an actual physical inspection may have been.

Where downvalues can be an issue is with buy-to-let (for which the Home Report is not accepted) and for both re-mortgage and purchases, surveyors' opinions of on-paper rental values can differ significantly from what the actual market rent that landlords are achieving.

We are a brokerage based in Leicester, with 95% of our clients being local. When it comes to down valuations, we have very rarely experienced this, even in the current climate

In certain pockets of Leicester, demand has remained steadfast, creating a market where buyers not only meet the asking price but also adeptly adjust their budgets to accommodate higher interest rates.

In a recent instance where a down valuation did occur, a property was downvalued by £20,000. it became evident that the initial price was somewhat optimistic for the area. This event prompted our client to reevaluate their purchase, ultimately leading to a prudent decision to withdraw from the purchase.

It feels like down-valuations are becoming a common narrative. Valuers are adopting a cautious stance, prioritising the lenders' safety. This scenario means certain homebuyers are unable to continue due to their existing financial commitments. While the landscape appears challenging, it does nudge consumers to make more considered decisions, potentially avoiding problems later down the road. It's essential to sail these fluctuating waters with caution.

Let's face it, surveyors are a pessimistic bunch at the best of times, so in a turbulent market down-valuations are par for the course. We've certainly seen an increase recently, but to be honest they've not been significant enough to pose problems for most of our clients.

We have seen a number of down valuations however these peaked around 2 months ago and have settled now. The reason for this settling is because buyers have negotiated lower prices from sellers and have been more realistic on what they expect the property to value at. A down valuation could kill a deal for so many, even if they have savings they might not be willing to pay the original agreed purchase price after a downval. What we see often is the buyer going back to the seller post valuation and asking for the purchase price to be dropped in line with the valuation. Brokers can help by understanding the valuation process such as what can cause down valuation and how to appeal these if need be as well as educating the clients to check the local area for comparable properties to see what these have sold for.

Based on my own experience there have been very few downvaluations recently. Certainly no more than usual. I would put this down to purchase prices being at a realistic level taking price changes into account.

We work closely with estate agents in the area via our introducers and from our clients we are definitely seeing them able to offer below asking price offers and they are being accepted, has become a buyers’ market at the moment. Which is a big change from 18 months ago where everyone was having to offer over the asking price and it was a bit of a bidding frenzy.

With all out clients when we are meeting them to discuss their purchase mortgage, be that first time buyer or home mover we discuss with them the possibility of the property being down valued, the implication that this will have and their options if this were to happen, I believe having this information early allows them to mentally prepare for it.
What most in the industry forget is that valuers work on behalf of the lender, so its their role to reduce risk to the lender, hence in a depressed market like this that they are being overly cautious and we are seeing and increase in downvaluations