Property valuation

A property valuation is an inspection carried out to help determine the current market value of a property.

It is usually undertaken by an estate agent or an independent valuer, typically acting on the instructions of the vendor or a lending institution who are considering funding its purchase. Buyers may also request a property valuation if they are considering purchasing a property, in addition to structural surveys that assess its physical condition.

Before providing a mortgage or refinancing, a lending institution (such as a bank) may request a valuation to ensure the loan can be covered by the security value of the property. This is gives them with the confidence to lend the capital, knowing that if the mortgage goes unpaid, they can recover any outstanding amount by re-selling the property.

Preferred licensed property valuers tend to be used by lending institutions. Estate agents tend to conduct property valuations for sellers of the property. The valuation provided by an estate agent and that provided by a licensed valuer may be different. This is because estate agents are working for the vendor (i.e. the seller), and receive commission based on the price that the property is sold at. They may, therefore, be more optimistic in their assessment of the property’s worth than a licensed valuer who is legally responsible for the information provided by them, so must produce their valuation based on facts and accurate up-to-date data.

It is important that sellers ensure the property is in as clean and tidy a condition as possible prior to the valuation, as this can have an impact, as can the state and style of decorations, furnishings and so on.

A property valuation is typically produced as a report and, in addition to photographs and plans, may contain the following information:

• Age of the property.
• A description of the construction.
• Size of the land and building.
• Room layouts and measurements
• Details of fixtures and fittings.
• Physical condition, wear and tear, etc.
• Details of any issues that need addressing (such as cracking, subsidence, etc.).
• Any improvements that have been made (e.g. block-paved driveway, house extension, etc.).
• Comparative sales in the area.
• Use class and extant permissions such as planning permission.
• Development plans that might change the value of the property in the future.

In order for the valuation to be as fair and accurate as possible, a property will typically be compared with other similar properties in the local area. Valuers will examine planning restrictions, by-laws, council zoning, and so on. Factors such as local infrastructure, reputation and attractiveness of the neighbourhood, market demand, and amenities (e.g. schools, hospitals, green spaces, and so on), will also be taken into consideration.

Valuers also refer to data provided by the Land Registry, which updates house prices across different areas on a monthly basis.

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[edit] Related articles on Designing Buildings Wiki

• Caveat emptor.
• Estate agent.
• Funding options.
• Homebuyer Report.
• Land Registry.
• Property development finance.
• Reservation agreement.
• Residual valuation of land.
• Site appraisals.
• Site surveys.
• Vendor survey.
• What is a valuer?