Professional briefing - The Journal Online

the surveyor is on their panel and it is
not more than three months old.
“There may be exceptions if a
property or borrower is perceived to
be higher risk and lenders always
reserve the right to commission an
independent valuation… These are
decisions for individual lenders”.
He adds however that throughout
the development of the home report,
the CML indicated that it could be an
issue that when the report was
commissioned, the identity of the
purchaser and lender would not be
known. So even if, as he points out,
most of the major surveyors tend to
be on lender panels, his comment of
“no major change” has to be qualified
in that important respect.
Worth a second look
It follows that many purchasers still
end up funding at least a mortgage
valuation, and not only for that reason.
“Sellers are reluctant to pay for refreshed
reports”, reports Graeme McCormick of
Conveyancing Direct, Glasgow. “The
cost normally falls on the purchaser,
depending who blinks first.” Mark
Hordern at GSPC reports some
exceptions: “Some sellers will cover the
cost of a refreshed report in order to
secure a sale, and some buyers insist
that they do so as part of an offer.”
What about purchasers choosing to
instruct their own survey in any
event? This attracted the whole
spectrum of responses. Despite
Gibson’s experience, Thomson and
Hordern say this is rare; and in
Edinburgh, Chris Hardie of Lindsays
says most purchasers accept the
report. Even so, 78% of ESPC
members say that a second survey is
instructed “occasionally, i.e. 10-39%
of the time”, and half of these are
because the purchaser wants an
independent survey. Paul Carnan in
Glasgow reckons there is a further
survey in a third of cases, while
McCormick puts the figure at 50%,
when lender requirements and
purchaser lack of confidence in the
seller’s report are taken together.
Another development can only
increase the chances that a purchaser
will wish to have their own valuation.
While there appear to be few cases of
sellers going to the length of
instructing more than one home
report and selecting the most
favourable, various solicitors report
the emergence of the “beauty parade”
– requesting a desktop valuation from
say three firms of surveyors and then
instructing the home report from the
one providing the highest figure. Ron
Hastings of Kelso indeed calls for the
www.lawscotjobs.co.uk
practice to be stamped out, by
requiring disclosure of other
valuations obtained within the
previous three months.
The suggestion may not be practical.
Some, like McCormick, do not get
involved in arranging home reports,
and would have to rely on the client’s
honest disclosure. But if the tactic is
widespread, it could explain why
McCormick has yet to see a valuation
obtained by a purchaser exceed the
home report valuation, whereas in
several cases it has come in at less. And
with an Edinburgh solicitor (otherwise
in favour of the reports) reporting a
potential difference of up to 25%
between one valuation and another,
and Janette Wilson having seen a case
where a second surveyor produced a
valuation £40,000 higher than a first,
in a falling market, the seller appears
to have little to lose.
Paul Carnan believes it is not always
borne in mind, as he says it should be,
that the home report valuation is still
only one person’s opinion. Referring to
surveyors being selected for their
favourable tendencies, or being
persuaded to revise valuations upwards,
he comments: “I see nothing wrong in
this provided prospective purchasers are
aware that the valuation in the home
report is merely a valuation, provided
by the seller’s choice of surveyor: it is
not ‘the’ valuation. Other surveyors may
have a different opinion.”
All the same, it must represent a
serious undermining of the original
concept of an independently
prepared report. Lindsays’ Hardie says
his firm discourages clients from
instructing more than one report, as
“To do so on a regular basis would
undermine the credibility of our
selling service and the fact that the
home report is entirely objective and
therefore more reliable from the
point of view of the purchaser and his
lender.” One might think, however,
that evidence that different surveyors
can still come up with significantly
different valuations of the same
property will in itself work against
such acceptance.
Douglas Crombie of Craigens,
Aberdeen does report the sort of
experience the promoters must have
been hoping for: “The immediate
availability of information on the
condition of a property, essential and
non-essential repairs, and most
importantly a valuation (which
incidentally the majority of buyers and
indeed lenders have accepted without
question), coupled with a realistic
asking price, has allowed buyers (1) to
very quickly obtain mortgage lending
approval, and (2) thereafter to offer
with confidence at or around the
asking price/valuation figure.”
Market factors
On the subject of price, GSPC’s
Hordern does not detect any consistent
trend, but observes that it is already
clear that home reports are not
preventing buyers from offering above
valuation. Mike Sinclair in Aberdeen
reports many properties now achieving
more, some up to 10%.
To be fair, it has never been claimed
that the system would itself lead to
fixed prices, and it is clear that local
market conditions and/or demand
for the particular property continue to
have the dominant influence, even if
the home report may provide a
weighting of its own.
Hordern continues: “On the other
hand, we see properties… selling for
less than the home report valuation.
In some cases, sellers are effectively
suggesting that their home represents
great value by showing that their
current asking price is lower than the
home report valuation.”
Upset prices reflect this benchmark
role. Hordern adds: “Home reports
have certainly encouraged most
selling agents to advertise homes for
sale at or close to their home report
valuation. This is particularly true in
areas where prices are under pressure
and sellers are using the home report
valuation to justify and support their
asking price. However, there have
been signs recently that some estate
agents are returning to the policy of
advertising homes for sale for less
than the home report valuation.”
Hardie agrees that home reports have
at least eliminated the artificially low
upset price – and can also put a damper
on inflated expectations as to price.
In Ken Thomson’s experience the
valuation has been acting as a guide
price: a fixed price at the valuation
figure “is often treated almost as an
invitation to offer below that price….
Continued overleaf >
A fixed price at the valuation figure
“is often treated almost as an
invitation to offer below that price”
December 09 theJournal / 13