R I C S: Start To Clampdown On Optimistic Valuations

[feefifofum]

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.

I was thinking exactly the same. Lived round the corner from there in the 80's. What a s***hole it was then.

feefifofum

[Ah-so]

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'.

6% interest only on £164k would be £820p/m. The most you could get in rent for that would be £600p/m, the interest equivalent on £120,000. This is closer to what that place should be worth and what it will be worth in a year or two.

[Bearfacts]

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

The same thought went through my mind when I read this article ... no doubt they did a little bit of cut and paste. I simply couldnt believe it when I saw that program first time around but I am very willing to belive that Foxtons are still up to it. The amazing thing is that the valuers and banks actually fell / fall for it .... f***wits - if they end up getting sued then they desereve every claim that is heading their way.

[HonestEA -]

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!

Local EAs are of course going to ramp since they are paid by the seller to achieve the best possible price. We are not, nor are we ever going to be unfortunately, the social conscience of the nation. If I take instructions on a house in a street for £200K and sell it in a week for asking price, then if I go to value another identical in the same street I will advise 210K etc. I will continue to do this until I take one on that does not sell, when I will then start to offer lower figures. My duty of care is always to achieve the best price for the client seller. I do not give "valuations" but market apprasials or opinions as opposed to the RICS member who may be held legally accountable for the accuracy of his price.

Many people do not realise that for many years until the wider availablity of internet data the The RICS Chartered Surveyor has simply phoned around 3 local EAs and asked them for comparable evidence to support his target valuation. As a long serving EA in one area, I used to get up to 10 calls a day from Chartered surveyors asking for comparable evidence to support their valuations and asking for my opinion on the direction of the market, getting to know many of the surveyors very well. These calls are not so frequent these days due to the transparency of data available , basically most comparables can be found with a professional membership of Rightmove which allows access to every property which has ever been on Rightmove, its status (Sold, On Market or Withdrawn) and the exact dates (ie how long it was on the market). Standing instructions to surveyors from Lenders used to be that they had to find 3 similar properties that had sold in the preceding 3 months within 5% of the proposed valuation or they must downvalue the property by 5%. Trouble is that a surveyor who goes around dilengently downlvaluing everything in sight in a rising market such as the last few years would not keep his job for very long because the lenders would lose too much business even if he has strong reservations about the prices. There is a lot of internal pressure on Chartered Surveyors who work for the large firms not to "rock the boat" so to speak, so the rising market is not constrained by "inconvenient" valuations.

The real difficulty as we all know lies with New Builds ,particularly flats. When a new development first opens, the builder will often sell Plots 1,2, and 3 at the nominal contract price they want, with a significant cashback incentive in place which lowers the true price paid which is not disclosed to the lender or anyone else. However, a rock solid precedent in "achievable" price is set for the development. When the Chartered Surveyor turns up to do a valuation on plot 4, he may have severe reservations about the sale price, but what can he do when presented with the "irrefutable" evidence of Plots 1,2,and 3? Recently , however, the lenders are wising up, and are refusing to accept evidence from the same development, instead insisting on sold comparables from other developments. This is allowing the Surveyors to be more circumspect and is acting as a break on house price inflation on new builds, but it is a sign in itself of significant credit tightening as the lenders rediscover the concept of prudence.

[Realistbear]

Local EAs are of course going to ramp since they are paid by the seller to achieve the best possible price. We are not, nor are we ever going to be unfortunately, the social conscience of the nation. If I take instructions on a house in a street for £200K and sell it in a week for asking price, then if I go to value another identical in the same street I will advise 210K etc. I will continue to do this until I take one on that does not sell, when I will then start to offer lower figures. My duty of care is always to achieve the best price for the client seller. I do not give "valuations" but market apprasials or opinions as opposed to the RICS member who may be held legally accountable for the accuracy of his price.

Many people do not realise that for many years until the wider availablity of internet data the The RICS Chartered Surveyor has simply phoned around 3 local EAs and asked them for comparable evidence to support his target valuation. As a long serving EA in one area, I used to get up to 10 calls a day from Chartered surveyors asking for comparable evidence to support their valuations and asking for my opinion on the direction of the market, getting to know many of the surveyors very well. These calls are not so frequent these days due to the transparency of data available , basically most comparables can be found with a professional membership of Rightmove which allows access to every property which has ever been on Rightmove, its status (Sold, On Market or Withdrawn) and the exact dates (ie how long it was on the market). Standing instructions to surveyors from Lenders used to be that they had to find 3 similar properties that had sold in the preceding 3 months within 5% of the proposed valuation or they must downvalue the property by 5%. Trouble is that a surveyor who goes around dilengently downlvaluing everything in sight in a rising market such as the last few years would not keep his job for very long because the lenders would lose too much business even if he has strong reservations about the prices. There is a lot of internal pressure on Chartered Surveyors who work for the large firms not to "rock the boat" so to speak, so the rising market is not constrained by "inconvenient" valuations.

The real difficulty as we all know lies with New Builds ,particularly flats. When a new development first opens, the builder will often sell Plots 1,2, and 3 at the nominal contract price they want, with a significant cashback incentive in place which lowers the true price paid which is not disclosed to the lender or anyone else. However, a rock solid precedent in "achievable" price is set for the development. When the Chartered Surveyor turns up to do a valuation on plot 4, he may have severe reservations about the sale price, but what can he do when presented with the "irrefutable" evidence of Plots 1,2,and 3? Recently , however, the lenders are wising up, and are refusing to accept evidence from the same development, instead insisting on sold comparables from other developments. This is allowing the Surveyors to be more circumspect and is acting as a break on house price inflation on new builds, but it is a sign in itself of significant credit tightening as the lenders rediscover the concept of prudence.

Where do you see the market heading in the next 3-6 months?

[CapeFear]

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

So the buyer should valiantly step in and take on the negative value themselves instead, is that the logic?

[HonestEA -]

Where do you see the market heading in the next 3-6 months?

Stagnation on falling volumes leading to initially small price falls which gain momentum in direct proportion to the number of repossessions. I do not think it will be an overnight crash such as in 1988, more like death by a thousand small cuts which could play out over years.

[29929BlackTuesday]

I do not think it will be an overnight crash such as in 1988

I do.

[stonethecrows]

Local EAs are of course going to ramp since they are paid by the seller to achieve the best possible price. We are not, nor are we ever going to be unfortunately, the social conscience of the nation. If I take instructions on a house in a street for £200K and sell it in a week for asking price, then if I go to value another identical in the same street I will advise 210K etc. I will continue to do this until I take one on that does not sell, when I will then start to offer lower figures. My duty of care is always to achieve the best price for the client seller. I do not give "valuations" but market apprasials or opinions as opposed to the RICS member who may be held legally accountable for the accuracy of his price.

Many people do not realise that for many years until the wider availablity of internet data the The RICS Chartered Surveyor has simply phoned around 3 local EAs and asked them for comparable evidence to support his target valuation. As a long serving EA in one area, I used to get up to 10 calls a day from Chartered surveyors asking for comparable evidence to support their valuations and asking for my opinion on the direction of the market, getting to know many of the surveyors very well. These calls are not so frequent these days due to the transparency of data available , basically most comparables can be found with a professional membership of Rightmove which allows access to every property which has ever been on Rightmove, its status (Sold, On Market or Withdrawn) and the exact dates (ie how long it was on the market). Standing instructions to surveyors from Lenders used to be that they had to find 3 similar properties that had sold in the preceding 3 months within 5% of the proposed valuation or they must downvalue the property by 5%. Trouble is that a surveyor who goes around dilengently downlvaluing everything in sight in a rising market such as the last few years would not keep his job for very long because the lenders would lose too much business even if he has strong reservations about the prices. There is a lot of internal pressure on Chartered Surveyors who work for the large firms not to "rock the boat" so to speak, so the rising market is not constrained by "inconvenient" valuations.

The real difficulty as we all know lies with New Builds ,particularly flats. When a new development first opens, the builder will often sell Plots 1,2, and 3 at the nominal contract price they want, with a significant cashback incentive in place which lowers the true price paid which is not disclosed to the lender or anyone else. However, a rock solid precedent in "achievable" price is set for the development. When the Chartered Surveyor turns up to do a valuation on plot 4, he may have severe reservations about the sale price, but what can he do when presented with the "irrefutable" evidence of Plots 1,2,and 3? Recently , however, the lenders are wising up, and are refusing to accept evidence from the same development, instead insisting on sold comparables from other developments. This is allowing the Surveyors to be more circumspect and is acting as a break on house price inflation on new builds, but it is a sign in itself of significant credit tightening as the lenders rediscover the concept of prudence.

Thank you very much as you have just outlined PERFECTLY the argument for far stricter regulation of the industry and the abolition of dumbfvck estate agents like yourself

Edited August 26, 2007 by stonethecrows

[HonestEA -]

Thank you very much as you have just outlined PERFECTLY the argument for far stricter regulation of the industry and the abolition of dumbfvck estate agents like yourself

I am all for stricter regulation of the industry, "dumbfvck" or not. Bring it on. In fact lets go for the US realtor system where the EAs are strictly regulated and the fees are nearer 5% rather than our no barriers to entry open market 1-2%.

[the end is a bit nigher]

I am all for stricter regulation of the industry, "dumbfvck" or not. Bring it on. In fact lets go for the US realtor system where the EAs are strictly regulated and the fees are nearer 5% rather than our no barriers to entry open market 1-2%.

Or better still, the £99 supermarket system which will get rid of most EAs altogether.

Nothing personal but your attitude of "I sell one for £x so the next must be £x+y" is the real thing I hate about EAs. You are fine while you are getting it but when things start going against you, you start bleating about IRs, HIPs etc. etc. The one thing you never do is say "well IRs have gone up and ......... so this must be worth £x-y". Just bleat, bleat bleat. That's what gets you your reputation.

[@contradevian]

Or better still, the £99 supermarket system which will get rid of most EAs altogether.

Nothing personal but your attitude of "I sell one for £x so the next must be £x+y" is the real thing I hate about EAs. You are fine while you are getting it but when things start going against you, you start bleating about IRs, HIPs etc. etc. The one thing you never do is say "well IRs have gone up and ......... so this must be worth £x-y". Just bleat, bleat bleat. That's what gets you your reputation.

These "£99" things have been tried before, and I remember in the late 90's, before the last crash, when just about everyone was trying to get on the bandwagon, a spate of shops opening which did little more than put adverts for houses in their windows, and print up particulars (indeed I considered setting my own up).

The new twist on this is the internet, but even good internet promotion costs these days.

A good estate agent (and I think HonestEA is one) has to actively market and sell your property, and no ones going to get off their backside, for you the seller for £99.

[HonestEA -]

Or better still, the £99 supermarket system which will get rid of most EAs altogether.

Nothing personal but your attitude of "I sell one for £x so the next must be £x+y" is the real thing I hate about EAs. You are fine while you are getting it but when things start going against you, you start bleating about IRs, HIPs etc. etc. The one thing you never do is say "well IRs have gone up and ......... so this must be worth £x-y". Just bleat, bleat bleat. That's what gets you your reputation.

With respect please reread the first paragraph of my post more carefully. In a falling market, "X-y" is exactly what we do which what I meant when I said I offer lower valuations when properties start to stick. I am doing quite a lot of "X-y" at the moment as it happens. No bleating , just responding to local market conditions as all good EAs should do.

[the end is a bit nigher]

With respect please reread the first paragraph of my post more carefully. In a falling market, "X-y" is exactly what we do which what I meant when I said I offer lower valuations when properties start to stick. I am doing quite a lot of "X-y" at the moment as it happens. No bleating , just responding to local market conditions as all good EAs should do.

I'm sorry if I'm tarring you with the same brush and I tried not to make my post personal. I am referring to the organisations who represent the VIs in general, and this is not only EAs but retailers too. These organisations had been happy enough to embrace the boom on the back of the IR cuts, but now they are creeping up again, we have bleating. When the first IR rises came through we had EAs and retailers bleating about how profits would be hit and the market stall, so you would think when there was the unexpected cut, they would be happy just to have good turnover at a decent price. But no, as soon as they were off the hook then prices had to start rising again just as you described. Now rates are on the move up again we get more bleating. This time EAs and retailers won't get off as lightly.

[crash2006]

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.

http://www.telegraph.co.uk/money/main.jhtm....xml&page=3

oh how kind of foxtons