That’s the tagline to an article in The Times Online – it continues
Surveyor volatility is one explanation being offered for the housing market’s current mixed-up state; soar away in spots, still stagnating in others. The phrase has nothing to do with men in suits getting emotional — although earlier this year, surveyors were accused of being ruled by fear.
The surveyors who assess properties for mortgage purposes were claimed to be almost universally down valuing homes. They were said to be living in dread of litigation from lenders who might, in the future, be looking to recover the losses that could arise from over-optimistic valuations. This panic has subsided. But in its place we have surveyor volatility, which may also act to depress the prices of some properties…
One insider explained it like this: “The valuation of a property may now be based less on the latest transactions in the locality — which is what you expect — than on the size of mortgage the buyer needs. If he is borrowing a relatively modest sum, as he has a large deposit or equity in his existing home, the surveyor will set the value at the price the buyer has offered. But if the buyer needs to borrow a large portion of the price, the home may be be down valued, as the surveyor is more likely to be sued. And that’s the last thing he wants.” The insider argues this practice could result in much greater volatility in the prices fetched by similar houses on the same street.
Doubtless, the surveyors employed by lenders will see this new claim as a further demonization of their profession…. MORE
So, what do we think? Are we being demonised? No i don’t think so and I think there is truth in the article – of course all surveyors and professionals whatever they do have an eye to their professional indemnity policies and yes, some work is more risky than others, and yes, if the loan to value is say 40% then their is far less risk of being sued should the borrower default than if the LTV is 90% and the base value is wrong.
The stakes we play for are quite high as well! Last years premium for survey and valuation work was about £90 per £1000 of business with a £10,000 excess for our firm, I know bigger firms who do lots of valuation [we do virtually none] whose excess is £50,000 (yes fifty grand). And then, of course there’s next years premium which may well see an uplift of 100% or more if there’s been a claim – and that will be at least a four and probably a five figure sum as well as a probable tripling of the excess!
So, if it were you what would you do? Cover your ar5e or be rash? Value a property slightly up, get sued by a lender successfully and the cost for a small firm [say 3 or 4 staff] will very likely be £40,000!! yep, thought so - you would cover your ar5e too.
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