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The True Value of a Survey

23 June 2011

 

It is interesting to see that the Council of the Residential Property Surveyors Association (RPSA) has written to Hector Sants the Chief Executive of the Financial Services Authority calling for an investigation into the advice mortgage lenders give their borrowers. It claims that only one in five homebuyers obtain a survey or condition report on the property they are buying, yet 80% of homebuyers believe that they get a survey. Apparently the main reason for the discrepancy is that most mortgage borrowers believe that their lenders’ valuation is a survey – which it is not. However its claim that lenders do little, if anything, to disabuse their customers of this notion, because they make so much money out of valuation fees is not true. Lenders would make money even if their borrowers chose to invest in a more detailed survey. Personally I think that the surveying industry should do more to educate the general public on the immense value that a more detailed survey would give homebuyers. It should also spend some time educating mortgage brokers, as they play a key part in the distribution of the majority of mortgages in the UK.
 
Brokers are often nervous at suggesting more thorough surveys as the homebuying process is expensive enough before additional fees are added. However this argument fails to take account of the fact that a better survey will give homeowners a more accurate picture of the true state of the property, in many cases this may allow them to negotiate some money off the purchase price if work is needed to be done to the property. Last year a report from Royal Institution of Chartered Surveyors (RICS showed that analysis of more than 1,000 property purchasers where a quarter of those who relied solely on mortgage valuations needed unexpected building work after completion, at an average cost of more than £1,800. People pay for detailed reports when they buy second hand cars so why wouldn’t they spend a few hundred pounds more when they are buying a house for several hundred thousand pounds? Clearly a homebuyers report won’t be good value for every property, but for the majority of older houses the cost of peace of mind to know the true condition of the home you are buying isn’t as much as you think. When you sit down with your mortgage adviser ask what you are getting for your valuation fee and then ask how much it is to get a better report. 
 
Jonathan Cornell (in association with Colleys, Surveyors) 
 
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