Lenders insist on a valuation before approving a loan, although this usually only consists of a brief check to reassure the bank or building society that the property is worth the money that you want to borrow. The valuation takes into account the property's age, condition, area and the price of similar properties locally. Although it's carried out by a qualified surveyor, it's merely a cautious assessment of the value of a property and not a survey. It would be a gamble to rely solely on a valuation report, as it's no guarantee that a property is structurally sound.
The cost of carrying out the valuation (which may be refunded when the mortgage is finalised) varies, depending on the lender and the value of the property, but will be approximately £200 for a house worth £100,000 to over £400 for house worth more than £500,000.
The valuation report will take into account:
- condition of the property
- location
- resale potential
- market value of properties in the area
- accommodation and land
- traffic density
- neighbourhood amenities
If, in the surveyor's opinion, the property is overpriced, you have three options:
- You can find the extra money, taking a risk that you might not get your money back when you come to sell.
- You can back out and look for another property.
- You can enter into negotiations with a revised offer.
Equally, bear in mind that if you're putting in a sizeable proportion of the asking price yourself, you might want to have the valuation confirmed by second opinion, as it will be your money that is at risk if the valuation is overgenerous.
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