Valuation

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Every lender needs an independent view of the property’s value before it lends. The type of valuation required depends on the lender, the loan size, the loan-to-value and the property itself.

Types of valuation

An automated valuation model, or AVM, is a computer-generated valuation based on sales data, with no inspection. It is the quickest and cheapest option, but is generally only available for standard residential property at lower loan-to-values.

A desktop valuation is carried out by a RICS registered valuer without a full internal inspection, using market data and, in some cases, an external view of the property. It is quicker than a full valuation and is used for more straightforward cases.

A full RICS Red Book valuation involves an inspection by a RICS registered valuer and a detailed report prepared under RICS valuation standards. It is the standard requirement for most bridging and commercial loans, and for larger or more complex cases. The lender decides which type it needs.

It is important not to choose a lender on the basis of low set-up costs. A lender offering an AVM, perhaps free of charge, will not necessarily give you the best valuation. What a free or low-cost valuation usually gives you is a 'safe' figure: the benefit of an experienced surveyor assessing the quality of the property, how it differs from its neighbours and why it may be worth more can be lost. Churchbridge will flag this with you at the outset, drawing on our experience. What matters is that you get the valuation the loan needs, otherwise it will not proceed.

Who instructs and who pays

The lender instructs the valuer, usually from its own panel, and the report is addressed to the lender. A valuation you have commissioned yourself cannot usually be used. Most lenders expect the borrower to pay the valuation fee before the valuation is instructed, and the fee is usually non-refundable once work has started. Please have the funds ready so that the valuation is not delayed.

The inspection

For a full valuation, the valuer will almost always visit the property. The sooner the visit takes place, the sooner the report will be ready, so please:

• respond quickly when the valuer makes contact and offer several dates;
• make sure access is available, whether that means keys, an agent or notice to tenants; and
• have to hand any floor plans, tenancy schedules, planning documents and, for refurbishment or development, a schedule of works and costs.

After the valuation

Lenders lend against the valuation figure, so if it comes in lower than expected, the loan amount may reduce. Some lenders also ask the valuer for a value assuming a restricted sale period, such as 90 or 180 days. If the valuation affects your loan, we will talk you through the options.