There are a number of types of valuations and surveys commonly used when purchasing a property, each serving different purposes and offering varying levels of detail. So we thought we would go through some of them here
Valuation Report: This is the most basic type of assessment required by mortgage lenders to determine the value of the property. It involves a basic inspection of the property by a qualified surveyor to provide an estimated value. Basically is the property worth what you are paying for it? This report is primarily for the benefit of the lender to ensure that the property provides adequate security.
A mortgage valuation is typically more limited in scope compared to other types of property surveys. It may involve a basic inspection of the property’s exterior and interior to assess its overall condition and value. The surveyor will consider factors such as the property’s location, size, condition, and comparable sales in the area to determine its market value.
The valuation report produced by the surveyor outlines the estimated value of the property and highlights any significant factors that may affect its value, such as structural defects or issues with the property’s condition. These would only normally be highlighted if they affect a potential lenders willingness to lend. As such it is important to note that a mortgage valuation is primarily for the benefit of the lender and may not provide the level of detail or comprehensive analysis that a buyer would receive from a more thorough survey.
In some cases, particularly if you are not borrowing a large amount compared to the overall value of the property (called loan to value), a mortgage lender may instruct an automated valuation. If this is the case a surveyor will not even inspect the property, they will use comparable sales to determine an approximate value of the property.
While a mortgage valuation is often a requirement for obtaining a mortgage buyers may choose to commission additional surveys, such as a Homebuyer’s Report or Building Survey, for a more detailed assessment of the property’s condition and any potential issues that may need to be addressed.
Homebuyer’s Report: A Homebuyer’s Report is a type of property survey designed to provide potential homebuyers with a more detailed assessment of the condition of the property they are considering buying. It sits between a basic mortgage valuation and a more comprehensive building survey in terms of both cost and level of detail.
Here are some key features of a Homebuyer’s Report:
- Visual Inspection: The surveyor conducts a visual inspection of the property, both inside and out, to identify any visible defects or issues that may affect its value or require attention. This typically includes examining the structure, roof, walls, floors, windows, doors, and any outbuildings.
- Standard Format: Homebuyer’s Reports typically follow a standardized format set by the Royal Institution of Chartered Surveyors (RICS). This format ensures consistency and allows for easy comparison between different properties.
- Traffic Light System: The report often uses a “traffic light” system to categorize issues according to their severity and urgency. For example, significant defects that require immediate attention may be marked with a red flag, while less urgent issues may be marked with amber or green flags.
- Advice on Repairs and Maintenance: The surveyor provides advice on any necessary repairs or maintenance work that may be required, including estimated costs and timelines. This information can help buyers make informed decisions about whether to proceed with the purchase and/or negotiate with the seller accordingly.
- Limitations: It’s important to note that a Homebuyer’s Report is a non-intrusive survey, meaning that the surveyor only assesses visible parts of the property and does not carry out detailed investigations or testing. As such, it may not identify hidden defects or issues that require further investigation.
Building Survey (Full Structural Survey): A Full Structural Survey, also known as a Building Survey, is the most comprehensive type of property survey available and is typically recommended for older properties, larger properties, properties in poor condition, or those that have undergone significant alterations. Here’s an overview of what it involves:
- Comprehensive Inspection: A Building Survey involves a thorough inspection of the property, both inside and out, by a qualified surveyor. The surveyor examines all accessible parts of the property, including roofs, walls, floors, foundations, plumbing, electrical systems, and other structural elements.
- Detailed Analysis: Unlike more basic surveys, a Building Survey provides a detailed analysis of the property’s condition, identifying any defects, structural issues, or areas of concern. The surveyor may use specialized equipment, such as damp meters or thermal imaging cameras, to detect hidden problems.
- Tailored Advice: The surveyor provides tailored advice on any necessary repairs, maintenance, or further investigations that may be required. They may also offer guidance on potential future risks or issues that could arise if certain issues are left unaddressed.
- Comprehensive Report: The findings of the survey are compiled into a comprehensive report, which typically includes detailed descriptions of any defects or issues identified, along with photographs and recommendations for remedial action. The report may also include estimated costs for repairs or further investigations.
- Legal Implications: A Building Survey can be particularly valuable for buyers as it can help them identify any potential legal issues or liabilities associated with the property, such as boundary disputes, planning violations, or building regulation non-compliance.
- Negotiation Tool: Armed with the information from the Building Survey report, buyers can use it as a negotiation tool with the seller to potentially renegotiate the purchase price or request that certain repairs be carried out before completing the purchase.
Overall, a Full Structural Survey or Building Survey provides buyers with the most comprehensive assessment of a property’s condition, helping them make informed decisions and potentially avoiding costly surprises or issues after purchasing the property.
If you would like to know more about the house buying process please get in contact or book a consultation.
GP Norgate Financial Solutions is a trading name of Easy Street Financial Services Limited which is authorised and regulated by the Financial Conduct Authority. Easy Street Financial Services Limited is a company registered in England and Wales with company number 6430453.
The registered office address is Basepoint, 377-399 London Road, Camberley, Surrey, GU15 3HL. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances.
Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.