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A mortgage valuation surveyor checks one thing for the lender: whether the property is worth enough to secure the loan. To answer that they look at recent sold prices of similar homes nearby, the property’s type, size, age and construction, its general condition, and anything that would make it hard to sell. It is not a survey of the property’s condition for you. This article is part of my first time buyer mortgage hub.
What is a mortgage valuation survey for?
The lender instructs it, and it is for the lender. The valuer’s job is to say what the property would sell for and whether it is acceptable security, so that if the mortgage were ever not paid the lender could recover its money from a sale. The report belongs to the lender. Some pass a copy on, many do not, and either way it is not written to tell you what is wrong with the house. A valuation and a survey are different things, and if you want to know about the roof, the damp and the wiring you need your own survey.
What does a mortgage surveyor look for at the visit?
When a valuer does visit, the inspection is short, often 15 to 30 minutes, and it is a look rather than an investigation. No carpets lifted, no readings taken. What they are doing is building a picture of value and saleability.
The biggest input is comparable evidence: what similar properties in the same area have actually sold for recently. That is the anchor for the figure, and it is why a valuer can come back below the agreed price on a house that looks fine.
Then the property itself: its type, age, size and number of bedrooms, and how it is built. Standard brick and tile is straightforward. Concrete, timber frame, steel frame or other non standard construction gets a closer look because some lenders will not lend on it and it can be harder to sell.
Condition comes next, at the level of obvious defects only. Cracking that might point to movement, visible damp, a roof in poor order, old wiring, large trees close to the building. If something looks serious enough to affect value, the valuer can recommend a specialist report before the lender goes further, or a retention.
Tenure and saleability round it off. On a leasehold flat the valuer will note the remaining lease, the service charge and ground rent, and on flats in taller blocks may need an EWS1 form or equivalent evidence about the external walls before a figure can be given. Anything that narrows the pool of future buyers, such as a flat above commercial premises, is noted for the same reason.
The valuation is for the lender. It confirms the property is adequate security for the loan and does not report on condition for you.
The main input is recent sold prices of comparable homes nearby, then construction type, obvious defects, tenure and saleability.
Roughly half of my cases are valued from a desk or by an automated model with no visit at all; it depends on the loan to value and the property.
What happens at a mortgage valuation, and is there always a visit?
Not always. Lenders now use three approaches: an automated valuation model that estimates a figure from sold price data, a desktop valuation where a surveyor assesses the property from records and photographs without visiting, and a physical inspection. Across my own cases it splits roughly half and half between a desktop or automated valuation and a valuer turning up in person. What decides it is the loan to value and the property. A lower loan to value on a standard house in a street with plenty of sales lends itself to a desk. A higher loan to value, an unusual property, a flat with cladding questions or a home in poor condition tends to mean a visit. On a remortgage the desk route is even more common, because the lender already holds the property and only needs to confirm the figure still stands.
Why does a down valuation happen?
This is the thing valuers flag most often on my cases: the figure comes back below the price agreed with the seller. It is rarely about the house being in bad shape. It is the comparable evidence. If the last three similar sales in the street were lower than the price you have agreed, the valuer has to justify their number against those, not against what the estate agent listed it at.
When it happens the lender bases the mortgage on its valuation, not the agreed price, so the gap has to come from somewhere. In my experience, appeals rarely work. Sending the lender a set of higher comparables sometimes moves the number, but not often. The route that does work more regularly is going to a different lender that instructs its own valuation, and if that comes back the same, going back to the seller to renegotiate the price. The post on what to do after a down valuation walks through the options in order.
What is a retention?
A retention is where the valuer recommends the lender holds back part of the mortgage until specified work is done, typically damp, a roof, structural movement or unsafe electrics. The lender offers the loan, but a slice of it is released only after the work is completed and, often, re-inspected. It changes how much cash you need on the day, so it is worth knowing about before exchange.
What I would check first
Before a valuation is instructed I look at the things that decide the outcome. The first is the sold prices for the street and the immediate area, because that is what the valuer will look at, and if the agreed price sits well above them I would rather you knew the risk of a down valuation now. The second is the property itself: the construction type, whether it is leasehold and how long is left on the lease, whether it is a flat in a taller block, and anything the listing hints at that a valuer will pick up on. The third is the loan to value, because that is the main driver of whether the lender sends a valuer or values from a desk. None of that replaces your own survey, and whether to commission one is your decision. It does mean the valuation is less likely to surprise you.
Speak to an expert
Had an offer accepted and want to know what the valuer is likely to make of it? Send me the listing and the price agreed and I will tell you what I can see from the sold prices and the property before the lender instructs anything.
What a mortgage valuation does not tell you
It does not tell you whether the boiler works or whether the damp in the bathroom is a leak or condensation. If the valuer saw nothing that affected value, the report will say very little, and a clean valuation is not a clean bill of health. What it does tell you is that a professional acting for the lender thinks the price is supportable and the property is acceptable security. For the condition side you choose whether to add a survey of your own, and the surveys page explains the levels.
Every purchase is different, and how the valuation is likely to go depends on the property, the price and the loan to value. Working that through before the lender instructs anything is exactly what an advice appointment is for. Call me on 01425 203055 or book a 15 minute call and I will look at the property with you.
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