Getting a valuation
This content applies to England only.
Housing laws vary between England and Scotland. Get advice relating to Scotland
Once you have made an offer to buy a new home and it has been accepted by the seller, your lender will send a qualified valuer to assess the value of the property. Your lender will not give you a formal mortgage offer until after the valuation.
The purpose of a valuation
Valuations are designed to protect your lender's investment, not yours. They assess the approximate value of a property - not the condition it is in. Your lender needs to know that the property is worth at least as much as you are borrowing. This is because if you don't pay your mortgage they may have to repossess your home and sell it to get back the money you have borrowed. You will have to pay for the valuation.
A valuation is not the same as a homebuyer's report or survey. It may give a small amount of information about the condition the property is in, but doesn't involve a detailed inspection. It's unlikely to spot all the repairs and improvements that may be needed. If you want to find out whether the property has any structural problems you will have to consider paying for a homebuyer's report or a full structural survey to be carried out.
Who does the valuation
The valuation has to be carried out by someone approved by your lender. Some lenders will give you a list to choose from, but others will choose one for you. If you are thinking of having a survey or homebuyer's report carried out, it may be possible to have the valuation done at the same time, by the same surveyor. This usually works out cheaper because you only pay one set of fees.
Valuation fees
You will have to pay a fee to your lender for the valuation. The fees are not refundable, even if the sale falls through. How much you have to pay usually depends on the size, age and price of the property, and whether a survey or homebuyer's report is carried out at the same time.
The valuation report
The valuation report will tell you how much the surveyor considers the property to be worth. Your lender doesn't have to give you a copy of the report, but most do. If it says the property is worth what you are paying, your lender will probably offer the amount that was agreed in principal.
However, they may say that the property isn't worth the price you have offered. If this happens, you may decide to:
- get the seller to fix any problems before you buy
- negotiate a lower price
- withdraw your offer and not buy the property at all.
Serious problems identified by the valuer may make getting a formal mortgage offer more difficult. Your lender may only agree to lend you part of the agreed price. Alternatively, they may hold back (retain) part of the mortgage you have requested until repairs have been carried out properly.
Information from the seller
Sellers and estate agents don't have to point out any problems in the property to potential buyers. But if you ask direct questions (such as asking whether the roof leaks, or whether there have been problems with dampness or condensation) they have to answer your questions truthfully. If you go on to buy the property and discover that you were given false or misleading information, you might be able to take action. Get advice from a solicitor if you are in this situation.
Home information packs were recently introduced by the Government to ensure that buyers had access to information about the property from the start of the process. These reports may contain some information about the condition of the property, but they are not the equivalent of a homebuyer's report or survey.
