Surveys and valuations are essential components of the homebuying process. You can use them to determine the value of a particular property or to gain insight into its overall condition.
You’ll need a house valuation survey if you’re taking out a mortgage to buy a new house. Discover everything you need to know about it along with other surveys that can help you decide what to buy.
A house valuation survey is also known as a mortgage valuation survey or property valuation. Taking out a mortgage to buy a new home requires this step because your lender will require it.
A qualified surveyor will assess the house and estimate its value for them to ensure their investment is worthwhile. By doing so, they can make an educated decision about whether to approve your application or not.
The lender will approve your loan if the valuation report shows that the price you’ve agreed to pay reflects the property’s market value. Likewise, a lower price can help you negotiate a better deal.
In the event the surveyor determines that your desired home’s market value is lower than the agreed sale price, you may receive a down valuation. Banks will offer you a revised mortgage if that happens, but the seller may not agree to lower the price unless the bank offers you a revised mortgage.
Do house valuations and surveys differ?
A house valuation is different from a house survey.
You and your lender can use a property valuation to determine whether you’re paying an accurate price if you proceed with the purchase. Consequently, a property valuation report only provides an estimate of a property’s value.
It does not reveal structural issues, potential faults, or hidden problems that may require costly repairs. It also doesn’t tell you anything about the overall condition. Due to this, the estimate may not be accurate.
In contrast, a house survey is an assessment of a property’s condition that highlights potential damage, defects, structural faults, and anything that may need urgent attention. A value estimate can also be included.
The surveyor can uncover potentially problematic areas, estimate how they may affect value, and recommend professional repairs based on the type of survey. Also, they can assess repair costs, highlight what could happen if you don’t fix the problems, and determine if you should commission further inspections.
Qualified surveyors conduct both valuations and surveys.
Ensure that your surveyor is a qualified and registered member of the RICS (Royal Institution of Chartered Surveyors), one of the central accrediting bodies for home surveyors.
You can get a survey after you’ve made an offer but before signing a purchase agreement if you’re buying a home in England, Wales, or Northern Ireland. By doing so, you will have all the information you need to proceed with the purchase, renegotiate the price, or back out.
In Scotland, sellers can request a Single Survey with a Home Report, which provides a more detailed look at a home. Some RICS surveyors even provide a mortgage valuation report along with a Single Survey, since Home Reports don’t always include one. In most cases, you will need to commission a home valuation.
How does a mortgage valuation survey work?
A mortgage property survey includes information about a property’s overall condition, size, location, and key features, such as its number of rooms. A house’s value is based on those factors.
A valuation report includes an estimated value and any major defects that may affect the price. It doesn’t explain what structural or other problems a house may have, nor does it inform you of such potential problems.
What are the steps involved in a house valuation?
Your surveyor will check your desired home’s construction (traditional or non-traditional) to see how old it is and if it’s in sound shape during a property valuation.
Check to see if the rooms are accurate, if the property was refurbished, and if there are any apparent defects, such as faulty wiring, structural damage, dampness, or pests.
During the inspection, they will note only visible issues, without identifying other potential problems, highlighting urgent issues, or providing an overall assessment of the property.
Following that, they’ll compare the property to similar homes in the area, including their average and recently sold prices.
What is the average time it takes to conduct a house valuation survey?
Because surveyors inspect properties briefly, home valuations take only 10-20 minutes.
Your lender doesn’t need to know about future repairs. The only thing they need is the estimated value of your potential home based on its general condition in order to assess the risk of lending you the money.
What is the purpose of a mortgage valuation survey?
It may be enough for mortgage lenders, but not for homebuyers. There is not nearly enough detail in valuations to help you make an informed decision about your future home.
Even if there are no visible signs of damage, a qualified surveyor can uncover hidden issues and surprises.
It’s for this reason that you should also get a property survey.
You’ll know if what you’re buying would be worth your investment and how much it would cost in the long run. Before you move into your dream home, it will reveal any damage, defects, or hidden problems, so you will know upfront how much any repairs or improvements will cost.
A property valuation alone is not enough and skipping this survey is not the right option. Before signing the purchase agreement, you need all the information you can get. This will enable you to make an informed decision on whether to purchase the home, negotiate a better deal, or back out.
What types of property surveys are available?
Depending on your budget and the level of assessment you require, you can choose from three main types of property surveys.
An RICS-registered surveyor can conduct the following types of home surveys:
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Condition Report (Level One)
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Homebuyer Report (Level Two)
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Building Survey (Level Three)
RICS Condition Report
Since RICS Condition Reports cover very little detail, they are the cheapest option. In addition to a traffic light rating (green indicates everything is in proper condition, amber indicates some areas need attention, and red indicates serious repairs are needed), it includes information on potential defects and future risks. Repair advice or an estimated value are not included.
RICS Homebuyer Report
A RICS Homebuyer Report or Homebuyer Survey is a more detailed report, which may or may not include your new home’s estimated value. Nevertheless, it’s very limited.
Among the major problems identified are rot, dampness, and subsidence. The rating also includes a traffic light system.
Standard properties less than 50 years old and in good condition are recommended for this type of survey. Depending on the type and size of the property, it can take 1-4 hours.
RICS Building Survey
RICS Building Surveys by RICS-registered surveyors are the most comprehensive and expensive option, but they are worth every penny. A structural survey can take between three and eight hours.
To check for damage or structural problems, a building surveyor examines every wall, floor, ceiling, and window.
Among other things, they check the roof, gutters, drainage, woodwork, joinery, electrical wiring, plumbing, gas, and heating systems. The inspectors look for signs of dampness, rot, pests, subsidence, asbestos, and anything else that may need to be addressed.
Their report does not include an estimate of the home’s value. However, the report highlights defects, their severity, repair advice, repair costs, the risks of ignoring their advice, and suggestions for further inspections, if necessary.
A survey of this type is recommended for unusually constructed properties or older homes. If you plan to do major home improvements or renovations after moving in, this is a great option.
Is subsidence checked during a mortgage valuation?
A mortgage valuation does not include a structural assessment, so no surveyor will check for subsidence.
You should request an in-depth assessment of the structure of the property before purchasing a new home to ensure there are no signs or risks of subsidence.
Any visible signs of subsidence, such as sticking doors or windows or cracks in walls, plasterwork, or outside brickwork, should be reported immediately. The cost of doing this kind of assessment may be a bit high, but fixing potential issues caused by subsidence could be considerably higher.
Advice
Taking out a mortgage to purchase your new home may require you to have a mortgage valuation, but they can’t give you an accurate estimate of the property’s value.
There is no information provided about various issues that may require serious repairs, as they only help the lender determine whether to approve your application.
That’s why you should also get a property survey. You will be able to make an informed decision if you have a clear picture of your preferred home’s every aspect. This includes any hidden issues and expert advice on how to fix them. Once you have that information, you’ll be able to determine if the investment is worthwhile.
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