There is lots of speculation as to why we have seen a recent increase in down valuations, with down valuations now affecting one in five sales, as opposed to one in twenty just a couple of years ago according to the online estate agent Emoov. But how can we be sure that it’s the surveyors that are down valuing properties, and not that sellers and estate agents aren’t simply over-valuing the properties in the first instance?
Chartered surveyors professional body RICS, has recently raised whether the term down valuation is just a myth? Surveyors have explained that a valuation is generally based on the following:
- Sales of similar properties in the local area
- Current market conditions in the area, such as supply and demand dynamics; and
- The condition of the property
Amongst other things.
RICS have also explained that, when house prices fall or rise at a faster rate than usual, surveyors must be certain that they can evidence a particular property’s value on paper to avoid being sued by lenders for overvaluing properties if the bank repossess and cannot then recover all of their money when they sell.
So how do we begin to determine whether properties are initially priced too highly, or whether surveyors are down valuing properties to cover themselves in anticipation for a financial housing crash in the near future? Russel Quirk, Founder and CEO of Emoov, says “Surveyors are prophesying a [financial] crash. The system is built to protect them.” But can we be certain of this? Unfortunately, speculations from both ends of the spectrum doesn’t make it any clearer for the individuals who are looking to get themselves onto the property ladder and buy their new home.
A down valuation on a property can become a nightmare for the individuals looking to buy that particular property and for the sellers. This is due to the fact that once a property is given a down valuation, buyers are left to find any shortfall themselves if the seller is unwilling to reduce the price. This can often result in buyers having to pull out of the transaction. Buyers are able to contest a down valuation, however, there are no guarantees that the valuation will change.
Whether you’re a seller or a buyer, and you’re concerned about a property being down valued, it’s important to get the advice of a professional to help you assess the situation and make the best decision moving forward. One of the most important factors in the conveyancing process is having the right solicitor – and no one understands the North Lincolnshire property market better than QualitySolicitors Bradbury Roberts & Raby. Find out more about our dedicated team here or alternatively, you can give us a call on 01724 854000 for a no obligation chat with one of our experts to find out how we can help you.