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R I C S: Start To Clampdown On Optimistic Valuations

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http://www.telegraph.co.uk/money/main.jhtm...mproperty25.xml

Surveyors clamp down in the wake of US housing crisis

Last Updated: 9:29pm BST 24/08/2007Page 1 of 3

As fears grow
that the problems in the property market could cross the Atlantic, valuers are becoming more cautious with their valuations. By Faith Archer
Surveyors are starting to clamp down on mortgage valuations, as lenders prepare to protect themselves against the risk that
house prices may falter and even fall
.
:o
As fears rise
that the housing crisis under way in America could soon cross the Atlantic, it is more important than ever that vendors should consider all their options when trying to obtain the best price possible..../
"But now the market is moving into an environment where house prices are flat-lining or even going down, valuers are much more likely to be cautious.
"
Surveyors have to be careful not to put themselves in the firing line in case the property is repossessed in the future, and ends up being sold at a loss
.
..../
James Scott-Lee, spokesman for The Royal Institution of Chartered Surveyors, confirmed: "Surveyors need to look at the whole market and not just the particular property.
Because prices are cooling
, we may well see more instances of down valuations."

What a wonderful indicator. The fear of lawyers is setting in! Seems it has taken this to get some truth into the market. Great stuff. :lol:

Edit: Just had a pleasant thought. What if this policy spills over into the RM data which relies on optimistic asking prices? We could see a huge drop in their next report. With the good 'ol lawyers circling like vultures it is nice to see the VIs sweat.

Edited by Realistbear

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IMO this news from the surveyors is perhaps the most bearish thing I have seen in weeks. Its almost like an insider's whislte blowing exercise to reflect what has really been going on in the market with regard to bloated valuations and "asking price" data. Market realities lower the bovine excreta levels?

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[What if this policy spills over into the RM data which relies on optimistic asking prices?

I've just thought - are the HIPs avoiders going to push this index down when they have to ask a more realistic price come sale time?

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This was interesting:

Luckily for me, the buyer did not immediately head for the hills. We both knew that an almost identical flat in the same listed building sold for well above this amount, at £385,000, at the end of last year. My buyer challenged the valuation, supported by the estate agent, Foxtons, who sent off evidence of similar properties that had sold recently in the area, to justify our opinion that the flat was worth substantially more.

The market conditions and economic background in London at the end of last year and now are vastly different.... would be difficult to justify on this data now..... :o:o:o

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What to do if your property is down-valued

Ask for details of why the surveyor came up with a lower valuation, such as details of similar properties they relied on for comparisons

What a crock of crap! Surely with this logic, property prices would only ever go up or at best, remain flat.

The value, is determined by the buyer, which in turn is determined by how much they want to buy the property for.

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This is very good news.

Sentiment has changed and is echoed by the VI's. With the lenders now becoming risk aversed and prompting Rics to act it is another nail in the coffin of HPI.

I was interested in the comment on BTL. So lenders are no longer willing to turn a blind eye to the investor who's sums don't add up. ;)

I am sure in the next 3 months there will be plenty of BTL property coming onto the market with no investors able to get a mortgage and priced out FTB I think we could see a very sharp turn down in prices that will surprise even the most grizzily of bears.

November 2007 MoM Falls

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What a crock of crap! Surely with this logic, property prices would only ever go up or at best, remain flat.

The value, is determined by the buyer, which in turn is determined by how much they want to buy the property for.

I think you correct.But the lenders know that the game is up and don't want to be caught out.

Edited by equitystasher

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What a crock of crap! Surely with this logic, property prices would only ever go up or at best, remain flat.

The value, is determined by the buyer, which in turn is determined by how much they want to buy the property for.

Surely the value of any property is determined by the amount of money the buyer has access to.

Over the last few years cheap credit has driven the market up and now restricted credit will drive it down.

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The value, is determined by the buyer, which in turn is determined by how much they want to buy the property for.

Indeed. What surprised me most about this article was that it suggested that buyers themselves should challenge a survey if the valuation is too low!

I mean, how stupid would you have to be to say "You know what, I won't lower my offer in the light of this revelation of how much the bank believes the property to be worth for the purposes of securing a loan on it - I'm paying £50,000 over the odds whether they like it or not!"

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Indeed. What surprised me most about this article was that it suggested that buyers themselves should challenge a survey if the valuation is too low!

I mean, how stupid would you have to be to say "You know what, I won't lower my offer in the light of this revelation of how much the bank believes the property to be worth for the purposes of securing a loan on it - I'm paying £50,000 over the odds whether they like it or not!"

Problem is lower valuations may place the property in negative equity and then the seller cant sell anyway!!!!!

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Some surveyors have been downvaluing newbuilds particularly flats all year. One of my clients had several apartments downgraded by £30K in January. At that time my client was able to merely recommend another valuer who valued the property at asking price but I suspect there are not many surveyors left now prepared to put their neck on the block.

After the last crash, building societies like the Bristol & West and Nationwide launched class actions against lawyers in a desperate attempt to recover the money they had lost. I suspect it will be the surveying profession in the firing line this time.

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Problem is lower valuations may place the property in negative equity and then the seller cant sell anyway!!!!!

Only if they've ridiculously max MEW'd up on the property.....oohhh...errr......now who would do such a thing? <_<:lol:

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A place is only worth what a lender is prepared to lend you for it...any extra you pay is down to you...any loss it makes will then be your loss. ;)

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Indeed. What surprised me most about this article was that it suggested that buyers themselves should challenge a survey if the valuation is too low!

I mean, how stupid would you have to be to say "You know what, I won't lower my offer in the light of this revelation of how much the bank believes the property to be worth for the purposes of securing a loan on it - I'm paying £50,000 over the odds whether they like it or not!"

Excellent!

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Excellent!

I agree its excellent news but perhaps 3/4 years too late during which they have earned nice fee's for basically doing sod all or at least plucking a figure out of the air. Now its backside covering time.

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Would you pay £165k for this?

http://www.rightmove.co.uk/viewdetails-890...=1&tr_t=buy

For those of you not familiar with the area, this block of flats is on the corner of a stretch of road in Hackney eloquently referred to as the 'Murder Mile'. :huh:

I honestly wouldn't give you 65k for that, never mind the rest.

If my surveyor agreed that was worth 165 I'd be asking a lawyer to comment.

That's assuming a surveyor made it to the flat in the first place & not get shot as he crossed the car park.

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I honestly wouldn't give you 65k for that, never mind the rest.

If my surveyor agreed that was worth 165 I'd be asking a lawyer to comment.

That's assuming a surveyor made it to the flat in the first place & not get shot as he crossed the car park.

:lol::lol::lol:

Note to mods... should go in overpriced shi*hole thread :lol:

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I agree it's excellent news but perhaps 3/4 years too late during which they have earned nice fees for basically doing sod all or at least plucking a figure out of the air. Now it's backside covering time.

What qualifications do you need to be a surveyor? What does it mean when one of these guys in a cheap suit puts a value on a house, really?

The bank is interested in knowing that they will be able to get back the money they lent out (or as much of it as possible) should they be forced to sell the mortgagee's house in the event of a default. So the "value" of the house as far as they are concerned ought to be some price that they might reasonably expect to re-sell it for in future.

How does having some bloke come in and poke around at the floorboards and pop his head through the loft hatch help the bank to decide what this number should be?

The "quality" of the property in terms of the soundness of the bricks and mortar would seem to be probably the least significant factor in the house price equation. We know the housing market is mostly about sentiment and affordability. Is the surveyor supposed to take those into account? Surely the answer is yes, otherwise house valuations would not have rocketed away at an inflation-busting rate over the last ten years.

So these people are not assaying houses to discover their true inherent underlying worth. They are, and always will be, plucking numbers out of thin air. When prices are going steadily up, they can extrapolate what the next buyer will be willing to pay, and may well be right a lot of the time. When prices are going steadily down, they may well be able to do the same. But in times like this, when we're at a turning point, they will run around like headless chickens.

They deserve to be sued. Ostensibly they provide a supposedly vital service to the UK economy, but really it's just a big game of let's pretend. The lenders should make these charlatans sign legally binding contracts that force them to pay up any shortfall between the survey price and the actual selling price in the case of a repossession. That might make them think twice.

Although something that made them think just once would be an admirable start.

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What qualifications do you need to be a surveyor?

I've always believed surveyors to be upstanding professionals, who have studied hard, bound to have a degree. Know what they're talking about.

So I googled it... and found this:

http://property-careers.com/surveyor.html

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Luckily for me, the buyer did not immediately head for the hills. We both knew that an almost identical flat in the same listed building sold for well above this amount, at £385,000, at the end of last year. My buyer challenged the valuation, supported by the estate agent, Foxtons, who sent off evidence of similar properties that had sold recently in the area, to justify our opinion that the flat was worth substantially more.

This wouldn't be the same "Foxtons" who were exposed on prime time national TV as making these "comps" up would it?

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To be fair the distinction has to be made between a RICS qualified chartered surveyor and the tw@ts from the local EA with at best a NAEA qualification (not worth a whole lot IMO). My experience has usually been that the RICS blokes will try to be more realistic and conservative in valuations than a lesser qualified EA and have a duty to try to maintain market stability as opposed to the EA out and out ramp-merchants. The problem arises however when enough idiots are ramping so that a RICS surveyor has little option but to value according to the overly ramped market otherwise they are potentially doing their client out of what could be achieved by the other EAs. Its a tricky balance and I sure wouldnt want to be doing this work especially at the moment with the market being in the mess it currently is!

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