Eric Curran: Home reports prove their worth in housing market
THE moribund housing market in Scotland is showing signs of life, with the number of house sales in the first quarter of this year up almost a tenth on last year – though prices are still flat-lining.
Property professionals are ascribing the increase in sales to the fact that people are no longer hanging on waiting for the market to pick up and are accepting realistic valuations rather than continuing to put their lives on hold.
Wishful thinking on valuation has diminished and sellers are more willing to negotiate since the introduction in Scotland in December 2008 of home reports, the reform of the process of buying and selling houses.
After initial misgivings, the new system has been embraced by the mainstream of the surveying profession and many selling agents, who now accept that home reports are working immeasurably better than anyone anticipated and that they have brought much-needed stability to the market.
There is definitely evidence to indicate that when a property is marketed at the correct asking price, with the realistic market valuation in the home report prepared by a trusted, local surveyor, the prospect of a quick sale is enhanced. Sellers should view the home report as a positive part of the sales process rather than an expensive route to market. The seller then benefits from access to trusted home reports on their next purchase.
However, it is a rather sad indictment that, no matter what genuine and altruistic attempts are made to improve the way we do things, there will always be people whose sole concern is to find a way of making money for themselves out of the change.
The new system has also seen the spawning of a plethora of previously unheard of companies offering “cheap home reports” and allegedly discounted deals.
The fact is that, like everything else in life, you get what you pay for. And one thing you don’t get with these firms is a mortgage valuation, a vital bridge for realising successful sales by giving buyers and their lenders realistic information from a recognised and reputable source.
“Cheap deal” companies argue that they are under no legal obligation to supply a mortgage valuation, since it is not mandatory within the home report. Often they are not on the approved panels for the majority of lenders, and whilst they are technically correct, reputable firms recognise the importance of the mortgage valuation for a buyer to get a mortgage on the property. This is therefore provided with the purchaser’s and seller’s best interest in mind.
Where there is no mortgage valuation, the seller may have to fork out for another survey which does contain a mortgage valuation, by a surveyor approved by the purchaser’s lender. In some cases this can result in the loss of the sale of the property.
The inclusion of mortgage valuations in reports dates back to the consultation period before their introduction. Then, the lending industry approached the RICS and stating the need for a realistic and professionally assessed valuation so that it could make informed lending decisions.
Without that information, the lending institutions argued that a further report for lending purposes would be required. That argument holds good today and it is disingenuous at best for any firm to market home reports without it.
Sellers thinking of commissioning a home report should first of all consider if their surveyor is on lenders’ panels. Lenders can refuse to accept reports. Reports by professional surveyors are trusted and accepted by lenders, which can streamline and assist in the sale.
It is also vitally important that your surveyor is experienced in his own area. .
It is of primary importance that the surveyor remains independent of the seller and the buyer. If trust is to be nurtured, the surveyor has to be free from outside influences when providing the home report.
• Eric Curran is a partner in the Glasgow North office of DM Hall Chartered Surveyors
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