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Everything you need to know about property valuations.
A valuation provides an opinion on the value of a property.
A valuation may be provided for a variety of purposes. Most the valuations undertaken by our RICS Registered Valuers are for lender clients who want to ensure a property is suitable security for lending purposes. We also undertake valuations on behalf of purchasers and include a valuation in some of the surveys we undertake, this is so purchasers can check they are paying an appropriate price for a property.
A valuation is usually based on a limited visual inspection. It only reports on matters that are considered so significant that they affect the value. While the condition of a property and any issues identified will be considered and reflected in the valuation, they will not be detailed in the report.
For example: dampness may be discovered during the inspection, however, if it is not considered to affect the security of the property for lending purposes and is not considered to affect the value, then it will not be reported.
Unlike a valuation, surveys are designed to provide purchasers with information on the condition of a property, this is to assist with the decision of whether to purchase the property or not. It will also inform them of issues within the property that need attention.
The level of both the inspection and reporting for a survey are more detailed than for a valuation. However, the level of inspection and reporting will vary dependant on the scope of the survey product chosen. Details on the scope of the survey will be included in the Terms of Engagement.
Find out more about surveys.
Find out more about valuations.
The Valuer will undertake a limited visual inspection of the property to collect the information required to value the property. The information will include the type of property, number of bedrooms, bathrooms and reception rooms, and other features such as garages or conservatories.
The Valuer will measure the property to calculate the floor area and will also look for evidence of any items that are considered significant enough to affect value, such as structural movement.
Valuation advice is provided in accordance with the RICS Valuation Professional Standards (The Red Book). If the valuation is being provided for a lender then that lenders guidance must also be complied with. When valuing residential properties Valuers use the comparable method of valuation.
The comparable method of valuations seeks to arrive at a value by looking at the sold price of other properties with similar characteristics. By comparing these to the subject property and making adjustments to allow for any difference in attributes a valuation range is established.
How are comparable properties selected?
Valuers obtain comparable evidence from a variety of sources including Rightmove. They have access to a section of Rightmove that is not available to the general public. The Rightmove tool provides a comprehensive database including the sales history of the subject and comparable properties, sold prices from Her Majesty's Land Registry (HMLR), marketing details including floor plans and the location of the properties on a map.
What if there are no comparable properties?
The comparable properties selected are typically of a similar size, type, location and sold within the last six months. Where this is not available the Valuer will consider the next best available. The Valuer will take into consideration:
They will then compare these against each other and to the subject property to see where in the range the subject property sits to establish a valuation figure.
This is not related to the current market value of the property. The reinstatement figure is provided as a guide for buildings insurance purposes. The buildings reinstatement cost is calculated using the BCIS (Building Cost Information Service) tables. The figure represents the estimated cost of demolishing the property, clearing the site and replacing the structure in modern materials. The figure also includes professional fees.