Does ‘Down Valuation’ really exist?

When you purchase a home with a mortgage, you are borrowing money. Therefore a ‘Lender’s Valuation’ is usually required for them to establish that the prices you are paying matches with the value of the home on the UK property market.

If you are paying over the estimated market value for your property, then the lender is placed at a higher risk and you will be paying too much for the property. The Valuation is required to determine the value of the property for the bank, but this figure could be different if a property is sold to a cash buyer.

If the valuation ends up being less than the estimate given by the estate agent then this is called ‘Down Valuation’. You are still able to go ahead with the sale if you had the adequate funds, but the lender would not necessarily take the risk.

Mortgage Valuation

A Lender’s Valuation isn’t a survey undertaken by a building surveyor which looks at the homes condition and any issues that may arise. The Valuation is just a limited property check to make sure that the house is worth the prices being paid so that the lender can ensure they are offering the right figure.

A ‘Home Survey’ carried out by an RICS Surveyor will inspect the house fully to advise you if there are any issues. For a full list of the property services we can provide, please see our Services Page.

Read more about ‘The Importance of a Home Survey‘.

The market value of any given property is based on other properties which are on the market and comparable. They will usually look at a minimum of three similar transactions in the local area, as well as the professional knowledge into market trends, supply and other influences. It may be that the lender’s valuation may not match the asking price set by the agent.

The Valuation Process

If house prices are rising or falling at a faster than normal rate in some parts of the country, then Surveyors have to be certain that there is evidence for the Valuations.

RICS valuation professionals are required to use the International Valuations Standards (IVS) for all written valuations completed. The bank or building society is making sure that the valuer is providing an accurate opinion of the market value to safeguard themselves from any losses that may occur if they lend too much against a specific property.

If you have any questions regarding your house purchase please contact Richard Benwell.