Many buyers are confused by the difference between a Mortgage Valuation, a Homebuyers Report and a Structural Survey. If you don’t work in the industry, it’s understandable, but there’s an easy way to clarify.
A Mortgage Valuation.
The mortgage valuation is a relatively cursory appraisal of the property that is aimed, primarily, at establishing the open market value of the property. Although the surveyor must be on the lender’s approved board of valuers, sometimes they don’t even visit the property, instead the research is done online.
Whilst a mortgage valuation is usually based on a home inspection, the process is relatively quick and the valuer isn’t expected to make any detailed investigations. For example, he’s unlikely to lift carpets or even inspect loft space. The primary reason for the mortgage valuation report is to establish that the property that will form the collateral for the mortgage is worth enough to meet the lender’s criteria.
Most importantly, whilst you as the buyer will usually be required to pay for the valuation, it’s solely for the benefit of the lender (i.e. the mortgage company). The good news is that the fees charged are based on agreed scales and they’re relatively low.
A Homebuyer’s Report.
The Homebuyer’s Report is designed to meet the requirements of a homebuyer that wants the reassurance of a more detailed inspection of the fabric of the property as well as making an informed judgment on the value of the property. Homebuyer’s Reports are more expensive than a mortgage valuation but they will make a more detailed appraisal of the property’s fabric and as such a report is useful for buyers of secondhand housing stock where roofs are older and damp proof courses might have been installed post construction.
A Homebuyers Report is generally commissioned by the buyer but it is possible with some lenders to ask the same surveyor to carry out the Homebuyers Report when he does the mortgage valuation. However, many borrowers prefer to instruct an Independent Surveyor to carry out the Homebuyers Report on their behalf.
A Structural Survey.
In most cases, a Homebuyers Report would be considered sufficient for your purchase. However, when buying an older property or one in need of renovation, commissioning a more detailed survey that is more intrusive and goes into considerable detail, might be worth considering.
Whilst all three valuations can be undertaken by members of the RICS (a Chartered Surveyor - either ‘structural’ or ‘valuation/general practice’) a structural survey in particular might also undertaken by a specialist structural engineer. Structural surveys are usually commissioned after a particular concern has been identified, either by a previous inspection or at the time you agreed the purchase.
The big advantage to commissioning a structural survey is that you are able to remove uncertainty both from the buying process and, therefore, also from the lender’s risk appraisal when considering loan criteria.
All surveyors are required to hold Professional Indemnity Insurance and so, if they are negligent in their advice you may have a case to sue them for damages to cover and consequential loss you have incurred as a result. Of course, the level of expertise expected from a short inspection for a mortgage valuation or a more detailed structural survey will vary and to a large extent, you get what you pay for.
It’s likely that a structural survey will require access to all areas of the home and a surveyor might even want to remove carpets, even some plaster work, etc. If this might be the case it’s worth checking first that the owner is happy for this to be done. It’s likely that you will be asked to make good any damage caused.
In all cases, a surveyor might recommend specialists be commissioned to undertake further investigation as a result of their findings. Most commonly, this will be the recommendation to commission a report on the cost or need for the installation of a damp proof course or to check the condition of the wiring in a home. These can be done by specialists and in some cases they do not charge, on the basis that they are likely to secure work from the quotation.
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