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Down-Valuing Surveyors Reappear In The Market

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The RICS says surveyors are becoming increasingly cautious as house prices rise, basing valuations on comparables that have not ‘caught up’ with today’s market. “If property prices rise quickly, comparable evidence never catches up” says Peter Bolton King, RICS’ residential director. The result is that lenders are willing to offer mortgages on less than the asking or agreed sale price of a property, leaving would-be buyers with a shortfall which they have to either make up themselves, or otherwise forcing them to walk away from the purchase.

Back in 2011 the NAEA - which then had Peter Bolton King as its chief executive - said sales and remortgage deals were collapsing because some lenders and surveyors were ‘deliberately undervaluing homes’, in some cases by as much as 10 per cent. At that time the RICS denied that surveyors were being over-cautious.

Research by the Daily Telegraph in 2011 showed that surveyors were facing large numbers of legal actions by lenders over valuations made before the downturn in 2008; earlier this month EAT reported that in 2012 LSL Property Services had to set aside £17.9m to deal with over-valuation claims relating to what it called a period of “high-risk lending” between 2004 and 2008.

Now with values rising sharply in some areas - but with the fear of a bubble and consequent price falls - it appears that surveyors are being cautious to avoid a repeat of the legal action of past years.

Ties up nicely with the last RICS report that the latest price rises are already running out of steam...

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If this is the reason that prices are running out of steam then it's not good HPC news. It's not because demand is being curbed, or supply increased. It's just that the valuation system can't keep up with the pace of price rises.

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One for the excuse-givers who mentally damaged me, and brought massive financial harm onto my family, with 1000000s excuses for buyers who paid £100,000s more for a houses than I thought it was worth, years before.. staying safe renting. Allowing the VI to just go straight to QE, fasttrack SMI and everything else now.

Markets don't have morals you excuse givers for people paying insane high prices, who might lose out if values fell (as they were doing in 2008). You don't put those who made bad decisions before others.

Today, 11:23 AM
Lost 25K in 2yrs due to valuers - can I do anything about it?
http://forums.moneysavingexpert.com/showthread.php?t=5036396

We bought our house 2yrs ago for £215K (the estate agents had it up for offers over £225K but we knew the owners and they wanted a quick move). Santander valued the house at £215K and we got a 75% LTV mortgage (I still have the valuation paperwork). We've spent about £10K on the house upgrading the single glazed areas to double and put in a new bathroom. The mortgage has just come out of its deal and so we've shopped around and gone with HSBC. However, their valuer valued the house at £200K so we've lost £15K on the valuation, £10K of improvements plus whatever the housing market should have increased by over the last 2yrs (for my area this is 4%). We could have started the whole process over again and tried a different lender but this takes time and we had already made 2 payments on the mortgage at the higher rate, so we agreed to proceed. So my question is; do I have any recourse with Santander for overvaluing my property 2yrs ago. Its hard for me to comprehend that I have lost at least £15K on my house in what's supposed to be a rising market......TVM
You're the one who agreed to pay £215k for the house - maybe you should take it up with yourself?

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I can't see why it is ever not in the interest of the bank and surveyor to value conservatively - if they come back saying it's worth less than you thought, the LTV is higher than you thought, and so the bank can charge you more interest if they can pop you into the next LTV band!

This isn't meant to be a cry for buyer sympathy, but given that you are pretty much forced to use the bank's surveyor, it does rather stink of fish to me!

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I can't see why it is ever not in the interest of the bank and surveyor to value conservatively

Yeah, that's what they used to say at the Northern Rock Christmas party. :P

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I can't see why it is ever not in the interest of the bank and surveyor to value conservatively - if they come back saying it's worth less than you thought, the LTV is higher than you thought, and so the bank can charge you more interest if they can pop you into the next LTV band!

This isn't meant to be a cry for buyer sympathy, but given that you are pretty much forced to use the bank's surveyor, it does rather stink of fish to me!

Or, you dont get a mortgage with them.....

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I can't see why it is ever not in the interest of the bank and surveyor to value conservatively

Unless the banks are crooks, passing on the debt or the liabilities to other inverstors, or the public, or even eventually the taxpayer, so they can play larger and larger gambles with leveraged money that they pull out of a hat.

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If this is the reason that prices are running out of steam then it's not good HPC news. It's not because demand is being curbed, or supply increased. It's just that the valuation system can't keep up with the pace of price rises.

Don't forget supply of credit also pushes up prices, it's not just physical supply and 'demand'. This is the banks restricting credit!

If you gave everyone £1m mortgage offers then next month the cheapest house would be £1m!

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Who can blame valuers for being cautious when they will be on the hook for legal action in the event of a downturn. It already happened in the commercial lending sector (and to a limited extent residential) between 2007 - 2009. It will happen again.

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I can't see why it is ever not in the interest of the bank and surveyor to value conservatively - if they come back saying it's worth less than you thought, the LTV is higher than you thought, and so the bank can charge you more interest if they can pop you into the next LTV band!

This isn't meant to be a cry for buyer sympathy, but given that you are pretty much forced to use the bank's surveyor, it does rather stink of fish to me!

Lots of surveyors are also estate agents or get work referred to them from EAs.

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It says they are reappearing as if they ever went away.

One wonders if they ever disappeared as down-valuing surveyors have been present for decades and have been present through booms, busts as well as through flat periods.

Is this sort of news a possible ploy to try to cool the market for a period before a last gasp attempt by the Conservative and LibDem coalition to try to give a boost to the market before the May 2015 general election.

Edited by billybong

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