Property Valuations: Discovering Their Variety and Purposes

There are many situations in the property market where you would need to get a reliable valuation. You might be buying or selling a property. Alternatively, you may need a valuation for other purposes including a mortgage or re-mortgage, to determine the true value of the property. This week we are exploring the many reasons for obtaining a valuation, their different types and why getting one from an independent RICS residential surveyor is a crucial step wherever you are on the property ladder.

What is a Property Valuation?

A property valuation determines how much your property is worth and how much it could be sold for. A property’s value is based on various factors including its location, size, and its quality both inside and out.

Estate Agent vs Chartered Surveyor Valuations

Both estate agents and surveyors may value a property for a prospective seller. However, their reasons for doing so are different. A local estate agent may be good to get an approximate valuation from. They are knowledgeable of a local area, the current state of the property market, and will do it for free. However, it’s also possible that some estate agents may give you an exaggerated property value, hoping that you will choose them to sell your property. This could lead to future disappointment if your property does not sell for the desired fee originally proposed to you.

A residential surveyor does not have this motivation when performing a property valuation. A RICS residential surveyor is specifically trained to observe a property and its qualities, including its size, location, state of repair and its overall quality. If you decided to get a level 3 property survey alongside your valuation, a surveyor could also tell you how much it may cost to fix any issues within the property. You can also find out the cost of repairs as an optional extra part of your survey.

RICS regulated property surveyors also work with properties in their local catchment area, so they will be well-informed about an area in order to provide you with the best service they can.

Standard Red Book Valuation Reports

A Standard Red Book Valuation refers to any valuation report which adheres to the professional valuation standards by RICS. As the international governing body of surveying, these compulsory guidelines have been put in place to ensure that any surveyors undertaking asset valuations are adhering to best practice. A Red Book Valuation includes standard guidelines that surveyors must follow when conducting their appraisals. For example, it instructs that a surveyor must provide three comparable properties that have been bought or sold in the same area, over the last six months.

These strict measures can assure the client that the surveyor is conducting their valuation to an industry-wide and respected standard.

Help to Buy

Help to Buy is a selection if government schemes designed to help first time buyers to get a property. If you have bought a home using the Help to Buy scheme, your loan is interest free for 5 years. The full loan must be repaid after 25 years. Alternatively, you can choose to repay the loan sooner, re-mortgage or pay it off when you sell your property.

When the time comes to sell, the amount you must pay back will be calculated based on the current market value of your home, not at its original purchase price.

Shared Equity

A Shared Equity valuation needs to be carried out by an RICS Registered valuer. This is to provide a market value for the sale or purchase of your percentage share in your property. The principal of the valuation is to determine 100% of the market value from which the percentage split for the homeowner and the Housing Association can be calculated.

Inheritance Tax & Probate Valuations

In the unfortunate circumstance that you experience a bereavement, you may find that you are the executor to a will which includes property assets. If this is the case, you will need a probate valuation. It is at this point that you will have the difficult task of requesting a probate valuation report. You can find out more on how White Horse Surveyors can help you with probate valuations here.

Insurance

It’s a good idea to get a valuation when you are wanting to get property insurance or update your policy. Additionally, a valuation that is current will ensure the accuracy of what the insurance company would owe you in a case where you may need to make a claim. Sadly many people discover they are underinsured only when it is too late. One of our previous articles that could to help you with this issue, linked below.

Capital Gains Tax

Capital gains tax occurs when you sell any asset that has increased in value since you originally bought it. You will be charged on the tax on the increased value you have gained from your property. You are exempt from this if you only have one home and have lived in it during the period of time you owned it. When selling a property, you need a valuation carried out by a RICS surveyor, in order for HMRC to accept the official value of the property and decide if any capital gains have been made.

Remote Valuations

A remote valuation is an inspection that is conducted using information accessible via online platforms. It does not require the examiner to physically attend the property at any stage. A remote valuation is ideal in circumstances such as tenanted property, new build properties and circumstances related to COVID. You can discover more about our remote valuations here.

Private Desktop Re-Valuation

These valuations are used to prolong the validity of your report for an additional 3-month period. Unforeseen delays in the exchange process could mean you’d be required to update your valuation to consider recent developments in the property market. In this case, it may be advisable to request a private desktop extension re-valuation to prolong your survey. These are typically conducted well after the inspection has been completed, but before the report reaches its final expiration date. Within these three months, a discounted extension can be requested. This would be to prolong the initial appraisal’s validity for a further three month period. Provided that the desktop is instructed up to 2 weeks before the report becomes invalid, the surveyor will then use the 3 most up to date and comparable properties to re-evaluate the current market value of your home.

Conclusion

Wherever you are on the property ladder, getting a valuation is bound to be a crucial part of your process. You need to know how much your property is worth when selling it, so you’ll know how much you can get back from the sale. If you are hoping to buy a property, you need to know if your bank will give you a mortgage. If so, you need a valuation. Check out our website or follow the links below for more information on this topic.

Read More

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