Buying a home is probably one of the biggest decisions one would ever have to make-emotionally and financially. Having the mortgage lender mention a valuation and the estate agent talk about getting a survey can be quite confusing. So where do survey and valuation differ? Are they one and the same? More importantly, do you need both?
At London Stays, we assist thousands of buyers each year, and this is one of the most common questions we receive. Now let’s get this clarified once and for all.
What Is Valuation?
Valuation is carried out solely for the lender’s benefit, not yours as the buyer. Its main function is to verify that the value of the property is equal to the price you have agreed to pay. This way, the lender can safely presume that it is not lending more than the property’s worth.
A valuation can be conducted on-site; however, as with today’s standards, most valuations are carried out from a distance, employing information obtained from online property databases. The term for this method of valuation is “desktop valuation”, and the approach literally requires just a few minutes.
Example: If you are buying a flat for £350,000, the lender will want to ensure it is actually worth £350,000-or they would reduce the loan or withdraw the offer altogether.
Check MoneyHelper’s mortgage valuation guide for authoritative, government-backed insight.
What’s A House Survey?
A house survey, in contrast to scattered values, is an instrument that is specially designed for your advantage. It’s a sort of health check for the property, performed by a qualified surveyor. It would look into the possible defects such as dampness, structural issues, old wiring, or other problems that might affect your safety, or for that matter, your bank account in the near future.
Though they are not mandatory, their absence could cost you thousands in unplanned repairs later on. A survey, unlike a valuation, truly tells you the condition of the house you are about to buy.
💬 One buyer we worked with presumed a new house should not require a survey, but a Level 2 survey detected serious drainage problems. The £500 survey gave them power to negotiate a £4,000 price reduction.
How Long Do Each Of Them Take?
Valuations are mostly quick and can be done in a matter of days without anyone entering the property. The concept “drive-by valuations” has become well-used in a tongue-in-cheek sort of way.
Surveys normally take somewhat longer, generally around a few hours depending on the size and condition of the house. The more in-depth the survey is, the longer it would take.
How Much Do They Cost?
Valuation: Generally £150-£500, depending upon property value. Some lenders will do this for free as part of your mortgage deal.
Survey: From approximately £300 for a basic Condition Report, up to £1,500+.
Tip: Surveys are always paid for by the buyer. Valuation may be free, but don’t count on it for peace of mind.
Types of Surveys That Can Be Conducted
You might be interested in the differentiating aspect of a survey from a valuation. Well, here are the different types of surveys:
- Level 1 Survey- Condition Report
This is a fairly health check-in of the property through a traffic light system to indicate the issues observed. It is best suited for new builds or homes in good condition.
- Level 2 Survey- HomeBuyer Report
A much more specific inspection, such as checks for dampness, subsidence and safety issues. A valuation and rebuild cost would often be included.
- Level 3 Survey-Building Survey
Most detailed report, including loft and underfloor inspections. Most suitable for very old properties or those undergoing major renovations.
Learn more regarding RICS official website in surveyor qualifications and survey types.
Is Survey Worth Paying For?
You may be thinking there’s no point in having an assessment at all if you’re buying a newly constructed house that will carry a warranty in most cases. However, newly built homes can have very minor snags, such as poor plastering or faulty fittings that could otherwise be corrected before one regards it as a final completion.
It is advisable to survey such houses, especially those over 50, or wear, as it offers the opportunity to negotiate and saves one from unforeseen costs incurred due to repair.
Can I Depend on a Valuation Instead?
No, this is the main reason why. It does not consider the condition of the property; it merely checks whether the price you pay is normal in the market or not. It doesn’t catch a leaking roof or structural movement.
Without surveying, you are likely to end up finding expensive problems in the first weeks of moving in, with little possibility of recovering costs.
Am I to Be Concerned about My Survey Reports?
It’s normal to worry about what the survey will find but don’t panic. Most houses not usually poorly maintained often have something wrong with them. What you need to do is see them as indicating a problem rather than an end-of-the-world cast.
Ask the surveyor to explain anything you don’t understand. If major issues arise, you might even:
- Renegotiate the price of buying it
- Ask the vendor to fix it
- Walk out of the deal if it has just too much risk attached.
Conclusion:
So, what is the difference between the survey and the valuation? Valuation serves to protect the lender’s interests; a survey protects yours.
In order to really understand the state of the future home, any survey is well worth the investment to make. This might end up saving you thousands and give you peace of mind when undertaking one of the most important purchases of life.
