Thursday, 29 December 2011

Surveys and valuations: A beginner’s guide

Surveys and valuations are crucial if you’re buying so it’s important you’ve got a grasp of what they mean and why you should bother

 
Getting the home you want to buy surveyed is an important step in the journey toward buying a property, but for those who’re unfamiliar with the property market it can be a confusing time. If you're getting a mortgage then your lender will do a survey for valuation purposes, but you may also be asked whether you'd like an additional survey. While it doesn't always make sense (for example if you're buying a new build from a reputable developer), a survey could turn out saving you a fortune in the long term.

What is a survey?
  Richard Sexton of e.surv chartered surveyors says mortgage valuations are not the same as surveys.
"It’s a common misconception that many buyers have a ‘survey’ as part of their mortgage application," he says. "This isn’t the case, as mortgage lenders will only instruction a 'mortgage valuation' for their own lending purposes."

Unfortunately many people are under the impression that the valuation their mortgage lender organises will highlight any underlying problems there may be with a property, but that’s just not the case. Sexton says this leaves customers who do not instruct their own survey report with incomplete information about the true condition of the house they are purchasing.

Why is it important to get a survey? 
 It’s simple really. When making any purchase, the more you know about the product the more easily you can decide if it’s worth buying. The same goes for buying property except the consequences of making a wrong decision, perhaps due to lack of information, can be far more damaging.

Sexton says those who have not obtained a survey frequently uncover issues when they move into a new home. Getting a survey completed on a property, as early as possible, allows for any problems to be identified and action taken sooner rather than later.  "Ultimately it can avoid delays, late price negotiations and even the heartache of a sale falling through or missing out on another property that may have been more suitable," he says.

What are the different kinds of survey report? Sexton says there are three main survey report types available:
 
RICS Condition Report 

The report is a survey which includes an inspection of the property and there is also a section which provides advice for solicitors and a clear summary of the key risks associated with the purchase. It does not include a valuation.

RICS HomeBuyer Report 

This is a more detailed report where a chartered surveyor will undertake a thorough inspection of the property so that any defects that might not be identified in a mortgage valuation report will be noted. This survey format does include a valuation within the report.

Building Surveys 

This is a very detailed report. The surveyor will examine closely the structure and condition of the building and in some cases may recommend specialist reports for drainage, electrical systems, central heating and timber infestations. The inspection may take several hours and involve some limited disturbance of the building itself. A building survey is considerably more expensive than any other type of report in recognition of the work involved. A building survey will not normally include a valuation but this should be requested at the time of instruction if required.

How much can I expect to pay for a survey? 
 Private surveys are an additional expense but they often cost less than 0.5% of the property’s value, says Sexton. Typically, a basic survey can cost from £200, however most survey costs are tiered depending on the cost of the home you are buying and the level of detailed information you opt for.
"The average repair costs identified by private surveys is £1800, making them a great way to offer real value for money and help you understand the true costs associated with your purchase," Sexton says. "It is possible that many prospective purchasers will be able to successfully renegotiate the purchase price based on the information contained in their survey report."

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