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Feature Home reports
Continued from page 13 >
In competitive situations, people may
still pay a premium to secure a property”.
Janette Wilson has recent
experience of sales “where in a
competitive situation with a closing
date a price well in excess of the home
report valuation has been achieved”;
and to Graeme McCormick “It hasn’t
made a blind bit of difference. Where
there are closing dates or competition,
prices achieved are often 5% to 10%
over valuation. If there is no
competition it just depends on
negotiation as it always has.”
Relevant also to impact on the
market is the complaint by several
solicitors that home reports have a
depressing effect because, as was
predicted, clients don’t want to go to
the expense of obtaining a report
just to test the market. The delay in
being able to market a property also
causes frustrations – two to four
weeks for some.
A cost to absorb
Nearly everyone agrees that home
reports mean more work (the ESPC
finding is 89%, though Hardie is one
exception). The sheer length of some
reports is astonishing. An Edinburgh
solicitor records one of 41 pages –
counterproductive, as the clients
didn’t want to wade through it all.
Carnan has seen one of over 70.
“Clients are increasingly turning to
their solicitor for interpretation and
advice”, he adds. “Standing the time
involved to read and digest the
content of such reports and then to
give advice thereon, I do charge.”
In that he is in the minority, as most
respondents say the current highly
competitive market means they are
unable to pass on the cost of the work.
For Graeme McCormick the extra
is in renegotiating the price when
purchasers’ valuations come in at
under the home report figure. “We just
absorb the cost and the vituperation.”
Janette Wilson claims that a web-based
system such as the Society’s service
provided by Openhouse should
reduce the extra work: “you don’t have
to assemble all the bits yourself”.
Gibson, however, says that by
referring the client direct to the
surveyor, “the client gets a quicker
service and we do not get involved in
doing (unbillable) work”.
Scope for improvement?
What about the main point, then, of
providing better information? This, it
appears, is bound up with the level of
trust in what is offered. In Carnan’s
The system in practice
John Scott of the Society’s Professional
Practice Department reports:
“Your feedback so far indicates that
some favour the new system, finding
home reports an effective marketing
tool for sellers and a source of useful
information for prospective purchasers.
However many remain highly sceptical
of the benefits. Several aspects are
causing particular concern:
Discouragement of potential sellers
from entering the market, due to the
cost of obtaining the report.
Delays in initial marketing of
properties, caused by the requirement
to obtain the report first.
words, “the home report is not
meeting this need effectively because
of the disconnect between the time of
valuation and the time of offer, and
because it is perceived as being the
seller’s report and, consequently, not
to be trusted”.
The thrust of other responses is that
if clients are being given more
information, whether they appreciate
it depends on their willingness to
accept the home report at face value;
and while this applies in many cases,
in a considerable though difficult to
determine percentage it does not.
The question then is whether the
level of acceptance will rise or fall due
to the external influences at work.
What happens next? The Scottish
Government’s promised review will
take place in three stages. First, a
scoping exercise is underway to identify
relevant data streams, including
quantitative data from Solicitors
Property Centres and Registers of
Scotland. The Society has pressed for a
focus group of solicitor estate agents as
a useful source of qualitative data.
An interim review will then assess
any refinements required to improve
the way the reports work – a fine
tuning exercise to be based on the
first year’s data, and due to complete
by next summer (some delay is
predicted). The Society failed in a bid
to include consideration of removing
the compulsion element, or
abandonment of the whole scheme;
this would only destabilise the
market, said the Government.
The full evaluation of whether
home reports have achieved the
Government’s policy objectives will
not take place until five years have
elapsed. “It remains to be seen how
the impact of home reports on the
condition of housing will be
measured”, says John Scott, secretary
Circumvention of the Act, e.g. where
selling agents postpone the
commissioning of a report until a
purchaser is lined up.
“Beauty parades”, where a selection
of desktop valuations is obtained and
the single survey is then ordered from
the surveyor providing the highest.
Delays in concluding missives,
while purchasers’ lenders approve the
single survey.
Rejection of the single survey by
lenders, particularly when provided by
a firm of surveyors not on their panel,
and insistence on a separate mortgage
valuation at the purchaser’s expense –
multiple surveys?!.
“I raised all these points at both the
stakeholders’ meeting and the meeting
with DTZ [who are carrying out the
initial stage of the Government review].
It is clear that the Government is
sensitive to at least some of them. It has
been encouraging Trading Standards to
take a more proactive approach to
enforcement of the legislation, and has
contacted CML on the lender issues.
“We shall continue to represent
your views on home reports to the
Government at every available
opportunity. In addition we may carry out
our own research to gauge their effect.”
to the Society’s Conveyancing
Committee, who has been heavily
involved in the monitoring work.
To Graeme McCormick it is “one of
the biggest flaws in the scheme” that no
national register of home reports has
been created: this could have provided a
historic condition report on a property,
and valuable information on the
quality of the housing stock. Indeed, as
things stand, one wonders how any
change in the level of information
available to purchasers, particularly as
to whether defects have been revealed
that otherwise would only have come
to light after purchase, is to be assessed.
Scott adds: “The political reality is
that home reports will be with us for
the foreseeable future, well beyond
the Holyrood elections in 2011,
unless there is a groundswell of
public opinion against them. If you
have any clients who are seriously
unhappy about the new system I
suggest that you ask them to direct
their complaint to their local MSP!”
What can be said with some
confidence, on the feedback reported
here, is that theory and practice in
relation to home reports are currently
some distance apart, and it remains to
be seen whether effective measures
can be devised to narrow the gap.
14 / theJournal December 09 www.journalonline.co.uk