Since 2007, active residential valuer numbers have fallen by an estimated 70% while average fees dropped around 30%. The industry came close to implosion due to a tidal wave of PI claims, driven by a legal industry which spotted an opportunity to leverage lender discomfort with its own difficulties to launch recovery actions against allegedly negligent valuers and solicitors.
The industry teetered and in all honesty, not many parties had time to show too much interest – until demand rose and the man on the street found it was going to take a month to get his valuation done.
Lenders, valuers and insurers are now beginning to respond, with much well-intentioned engagement between the parties to build a model for the future.
The wheels of change grind slowly in such big industries and the representative bodies such as the CML, BSA and Law Society have a central role in protecting their own members’ interests as this change is being implemented. Equally, there is a hope and expectation amongst valuers that RICS will step up to the plate for its members and ensure they get a more equitable relationship this time around.
To say these bodies have a lot on their respective plates would be an understatement but lack of co-ordinated action will inevitably see individual organisations take the lead and there is already some evidence of co-operation between specific lender and valuer firms to build a model for the future that suits them both best.
There is an understanding that things need to be different. Is it really reasonable to expect £10m of liability cover when the fee paid is just £100? I’d like to visit a Casino with those odds.
As lenders begin to differentiate their offering by moving into niches, terms and conditions will vary according to risk. So if a lender decides to lend say only above 95%, the increased risk for the valuer will be taken into account in some way. Part of the solution to capacity will be novel forms of appraisal which free up valuer time but if these new approaches are applied to low risk cases, valuers will expect recognition that they are left with the most difficult or risky cases.
Insurers too will likely offer cover which varies on a case-by-case basis. All of these changes should ultimately feed back into to fees being charged to an applicant and perhaps paid to the adviser.
Being paid for the amount of work you do – now there is a novel idea – will it ever catch on?
Richard Sexton is director of business development at e.surv
