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Down-valuing by a distance – is this a problem for you?

Monday 15th November 2010
Written by Rosalind Renshaw
We all know that down-valuing is a problem, but EAT would be particularly interested to know agents’ experiences of ‘out of area’ valuers.

Invariably, they work for national groups, do not sell property themselves, and can be based miles away from where the property in question is. That means they do not visit the property but rely entirely on recent sold data, which they get from their computer and/or by phoning estate agents in the area.

In other words, they can’t possibly know of a particular property’s setting or condition, or learn how long a comparable took to sell or what the interest was in it, or even whether it is a true comparable at all.

We’re told of one very recent case where one property was down-valued by £15,000.

The agent was understandably not happy so rang the valuer, who was based in a different region, to ask about the comparables he had used.

It turned out he’d rung round various local agents and had used three recent sales – one, confusingly, from the agent’s own stock.

However, the other two comparables turned out to be part-exchange resale properties where the seller, a developer, could afford to sell for what they’d paid – ie, at a heavily discounted price – because the developer had made the profit on selling the new unit. One of these resale properties was such a bargain that it had a sale agreed on it within six hours. The other property was at the entrance to a busy development – just how busy, the absentee valuer could not possibly have known.

In this case two comparables which were not true comparables were used.

The sadly predictable result? The buyers pulled out, unable to get a mortgage, but also feeling that they would have paid over the odds.

We would like to have your views on this one, so please post below.

(14) Comments

Added by wooden top on 2010-11-19 11:11:13

Ever tried to get a surveyor to change his value once the ink has dried?
Outside valuers haven't a clue on values other than to see if the property is falling down and then ask estate agents for recent sales to get a feel of the price. One pitafll is are they comparable properties. He hasn't a clue if the recent sale was shed condition, extended etc etc. I always laugh at some valuations from RIC's surveyors, particulary if the sale doesn't proceed and resold and gets a different value by another RIC's surveyor, err why?

Bottom line if it's mortgage related: enough value to cover the loan .... the loan or property value whichever is the lowest. No-ones mentioned drive by valuations!
Added by Blurb on 2010-11-18 18:05:06

It would be unwise to dismiss the opinion of EA's completely. Whilst we are bound to acheive the highest possible price, we are just running business' so volume is king. We spend as much time persuading our vendors that the offer they have is good as we do trying to get buyers up.

Surveyors, as pointed out by Pablo, are just as open to looking after their own interests because they are the ones the banks look to when things go pair shaped.

A lot of the time we are on your side, kind of!

Also to those EA's that think by telling a potential vendor their house is worth the same or more as in 2007, YOU ARE THE PROBLEM

Nicholas, bet you haven't found yet...
Added by Pablo1 on 2010-11-18 14:39:04

Estate Agents need volume (of sales) to get this they need to understand the basic principles of marketing. If surveyor's (representing the lenders who are enabling the buyers to proceed) are down valuing and you are loosing sales, then you need to adjust the price you take the instruction at accordingly.

When prices were rising you keep pushing the ceiling price up. Now we are in a more 'normal' market and prices are falling the only sensible thing to do is restructure your vendors expectation to the new reality of the market.
The quicker you assist the market to get back to prices sustainable by fundimentals (i.e rental yields/ave price to earnings)the quick er you'll get back to reasonable sales volumes.

Prices as ever will over correct on the down side before finding the new market reality level. And by the way 2002 to 2007 was not normal.
Added by Realising Reality on 2010-11-18 13:39:13

Phew! I was beginning to wonder if the estate agents were, after all, right about being the totally knowledgeable ones on house values.
It's refreshing to read someone daring to speak out in these columns about the tyranny being inflicted on buyers by estate agents trying to get the highest possible price, by whatever means at their disposal; irrespective of the economic circumstances - and whom try an win more instructions by being the one to exaggerate asking prices to the greatest extent possible.
Free market appraisals? Bah! Humbug!
Added by Nicholas on 2010-11-18 12:52:20

As a potential buyer, I think I am more elikely to use an out-of-area Surveyor to value any property I am interested in (thanks to this article).

If EA's were required to get degree's and pass an associating body's exams, then I might have a little trust in what they do, but my experience of EA's over the last 15 years / mutliple areas of UK is very _VERY_ bad.

Personally, there is nothing an EA can say which will have any baring on the amount I will offer for a property - the Surveyor, on the other hand, has my total attention and huge sway. My advice to EA's is to shut-up and help the surveyor with as much information as possible, if you want to have an offer close to what you think is agreeable!
Added by Paul Willis on 2010-11-18 12:44:30

Another way of looking at it is the surveyor is worried about culpability if the bank lose money on the future value of the home. The market is dropping (over 50% of surveyors agree) so they will downvalue - BECAUSE THE COMPARABLES still need to be downvalued to match the lower prices that could be achieved in todays market.
It's tough out there at the moment, but we have 4 sales this week (1 office) after getting vendors to agree hefty price drops for buyers.
HOPEFULLY the valuations for these WILL COME BACK OK!!
Added by Blurb on 2010-11-17 18:12:02

The real issue here is that a lot of agents will approach a surveyor in the wrong way when looking to challenge a down valuation. If you start in an accusatory manner then the surveyor is unlikely to take any interest. Surveyors are qualified professionals, most Estate Agents are anything but, so insulting their intelligence is never going to work.

Providing comparables is definitly part of an Agents job, lets not get on our high horses about that, we are instructed by our clients to achieve the highest price, sell to the best buyer and manage their sale (to an extent). We know surveyors will often take advantage so stop whinging and do the bloody job.
Added by ElTel on 2010-11-15 17:31:13

Down valuing by out-of-area, out-of-touch surveyors is happening all the time. We have had many 'discussions' with these surveyors seeking an explanation and providing good comparibles ourselves. In most cases the surveyor take an arrogant stance and castigate my negotiators for daring to question his 'professional' decision.
Added by Taff on 2010-11-15 16:19:36

I don't mean to be funny, but isn't obtaining the comparables the biggest part of the job - a job which the out of area "valuer" is being paid to do. If these "valuers" don't have the tools for the job, perhaps they shouldn't be instructed in the first place. You wouldn't be impressed if you instructed an out of area carpenter to do a job, only to find that he then expected a local carpenter to supply the tools, now would you? what's the difference?
Added by Vossy on 2010-11-15 15:02:34

You can always fax/email to their office?
Added by PP on 2010-11-15 11:45:34

I also do this but still have some problems when the surveyor does not come into the office. We had a property downvalued by 16% last week!
Added by Vossy on 2010-11-15 11:02:12

Surely when an Agent knows a valutaion is going to take place they prepare comparables to leave for the surveyor/valuer to take with them so thereby saving the valuer/surveyor time for which most are extremely grateful. Cant remember the last time we lost a sale on an undervaluation!
Added by pointless on 2010-11-15 09:02:12

What is the point of this story other than to cause agents to moan. Or maybe p**s surveyors off so that they down value even more. Do you actually intend to do anything about it?
Added by Rebel on 2010-11-15 08:03:13

Not just problems from another region, but from the other side of the city. ALSO, where a competitor agent's surveyor is comparing against their own past under sold / under valued properties, they will down value just to save face.

This is just to stop us later mailing the whole street with sales stats & selling agent alongside.

Surveyors? professional? Don't make me laugh.

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