Knowing when and how to challenge valuations can keep cases alive – Arnold

by: Joe Arnold, managing director of Arnold & Baldwin
  • 13/12/2018
  • 0
Knowing when and how to challenge valuations can keep cases alive – Arnold
Whatever the outcome of Brexit, there is little doubt that the current political uncertainty is contributing towards a subdued property market.

 

I believe once we move beyond this period of transition that activity will pick up. But what if it doesn’t? What are you doing to Brexit-proof your business?

The latest Royal Institution of Chartered Surveyors (Rics) UK Residential Market Survey has shown a continued weakening in national new buyer demand, citing a mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises.

Rics says sales expectations for the coming three months are the lowest since the EU referendum while at the same time the number of people looking to sell has fallen sharply.

If this stalemate continues and transaction activity does not significantly pick up, it will become more important for brokers to maximise the value they can achieve from every case.

A referral relationship with a surveyor could provide you with additional income for passing on client leads and may generate leads for your business.

On top of this it could also improve conversions by ensuring that inaccurate valuations do not stand in the way of your cases proceeding.

 

Challenging valuations

For example, a broker considering an application to a particular lender on a property in a high-rise block may call to ask whether it’s the sort of property they would be happy lending on.

Or, brokers can get in touch if they have received a valuation from another surveyor they think is incorrect.

In these instances, we would carry out a desktop valuation and if we think it is unjust, we can provide some comparables that a broker can use to contest the valuation.

If a surveyor is presented with three robust comparables that they did not have sight of initially, they are allowed to change their opinion and valuation.

Often, however, it is the case that brokers get frustrated and contest valuations with comparable properties that are not actually comparable.

This compounds the frustrations further, but with a reasoned rationale you may have a more fruitful outcome.

 

Charmless computers

I have a recent example where a sale was agreed on a unique period property in Epsom for £750,000.

The lender carried out an automated valuation model (AVM) which valued the property at £700,000.

As a result of this AVM the buyer got cold feet and pulled out of the deal, then two days later the property was sold to a cash buyer for £765,000.

A computer tried to work out the value and got it wrong as it couldn’t factor in the unique charm and character.

The lender lost the opportunity to advance £500,000 and the broker was not a happy chap, whereas he may have been able to challenge the AVM and proceed with the case if he were able to consult with a surveyor.

Nobody knows what the outcome of Brexit will be, but you can prepare for most eventualities by ensuring that your business is more efficient and robust.

Partnering with a surveyor could help you to do this by delivering extra income and helping to maximise your conversions.

 

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