Down valuations on the rise as valuers turn cautious

Mortgage brokers have warned about a surge in “atrocious” down valuations among lender’s valuers.

Brokers are warning that valuers are becoming “overly cautious with the values that they are putting their names to” in a stagnant property market.

Adam Stiles, managing director at London-based mortgage broker, Helix Financial Partners, says he has had three properties downvalued by more than £1m in recent weeks and says valuers are “marking their own homework”.

He said:

“Ground control to property valuers. We’ve had some atrocious valuations of late through a mix of different types of property finance. One valuer went round to value two finished new builds and gave a value of £1.7m. We then took the deal to another lender that instructed a different valuer who, two weeks later, valued the properties at £2.8m.

“That’s a £1.1m difference in value and it’s simply crazy. In another example, a freehold house in prime London estimated at £3m was worth £1.4m. This is after previous valuers had agreed with the estimates of the borrower for their existing funding. There needs to be more accountability and means for impartial appeal as currently valuers are ‘marking their own homework’.”

Jack Tutton, Director at Fareham-based broker, SJ Mortgages, also said down valuations are becoming more common:

“We have seen a higher number of down valuations than we have experienced for a long while. Recently, we had a surveyor reduce the value of a client’s property by 10% versus the value that they placed on the property only a matter of months before. The surveyor placed a value on the property of £250,000 in March only to reduce this to £225,000 in June.

“I am not aware of anywhere in the UK where the housing market has reduced by 10% in such a short period of time. If it had, a lot of people would be in serious trouble. Whilst the cause of the down valuations can sometimes be people overstating the value of their properties, surveyors are being overly cautious with the values that they are putting their names to as a result of the stagnant market that we currently have. Stagnation can create conservatism when it comes to valuing homes.”

Ken James, director at London-based Contractor Mortgage Services, says properties being down valued as they are at present is creating a headache for all, especially estate agents.

He said:

“We’re seeing more and more down valuations now, which is creating a real headache for everyone involved. Estate agents fight tooth and nail against any renegotiations and, if a property is downvalued, often want you to try an alternative lender to see if they will value it higher.

“This, of course, is not always going to get you the outcome they want, and when a lender states the value is lower, the prospective buyers will often then suspect the property’s real value is not what they were prepared to pay. In some cases, they will then question whether they should progress with the purchase at all.”

Babek Ismayil, founder at homebuying platform, OneDome, added:

“Down valuations tend to happen when there is uncertainty around the direction of house prices or a lack of properties being sold, which can make valuing them harder as there are fewer benchmarks. That appears to be where the market is at currently.”

Kindly shared by EstateAgentTODAYImage courtesy of Adobe