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Down valuations hit one in five mortgage cases, brokers estimate

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  • 02/02/2018
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Down valuations hit one in five mortgage cases, brokers estimate
Down valuations are scuppering up to one in five mortgage cases, with the surveying process lacking consistency and clarity, according to brokers.

 

In some recent cases, brokers have seen staggering six-figure down valuations.

The huge differences in surveyors’ approach is frustrating and time consuming for advisers.

Yorkshire-based broker Daniel Clayton estimates around 15-20% of his remortgage cases are currently ending in down valuations or downgrades to rental yields.

This is despite researching prices with resources such as Zoopla, to try to eliminate the risk of the client overvaluing, before submitting applications.

Nathan Stacey, a Bristol-based adviser and co-owner of Continuum, told Mortgage Solutions his experience is similar.

Last month one of Clayton’s clients in South London was hit by a down valuation of £130,000 – the largest change he has ever come across.

He told Mortgage Solutions: “It’s really frustrating… I was gobsmacked.”

The downgrade means the loan to value (LTV) the client wants to achieve isn’t possible and they can’t have the product they want, Clayton added.

In this case, he will likely approach the lender to try to have the decision overturned.

Clayton has tried to challenge a few decisions before but has never been successful.

In many cases an appeal won’t be considered unless there are three comparable properties that have been sold within the last six months for the value put forward by the brokers, according to Stacey.

He said: “Unless the property is on an estate it’s impossible to find three – especially for unique properties.”

Stacey has also seen six figure down valuations.

 

No consistency between surveyors

The lack of clarity about the reasoning behind surveyors’ decisions is one of the biggest points of frustrations for advisers.

The rework is time consuming and leads to a lot of “awkward conversations” with clients, Clayton said.

He said: “There seems to be so much disparity from the values that come back.”

Some lenders’ surveyors were found to be better – or worse – than others.

One surveyor of a major lenders allows brokers to call and makes check on the house before a mortgage application is submitted, according to Stacey.

But too often he finds the process is “pot luck” and “random”.

He said: “There’s no consistency between surveyors.

“If valuers were open it would be better.”

 

A Royal Institution of Chartered Surveyors (RICS) spokeswoman said: “A valuer takes into account market conditions and will look for supporting comparable evidence when producing a valuation.

“The values given by an RICS valuation professional are based on interpretation of the market, and all RICS Registered Valuers work to the Valuation Global Standards and the International Ethical Standards. RICS members are regulated against these standards.”

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