Do I really need a survey??
You have had to find a hefty deposit, as well as a legal bill of at least £1000. Not to mention Stamp duty land tax.
So when you have to pay for a valuation, it is easy to see why many choose the cheapest option possible.
But would you buy a car if it didn't have a valid MOT or warranty??
Buying a house is expensive.
You have had to find a hefty deposit, as well as a legal bill of at least £1000. Not to mention Stamp duty land tax.
So when your mortgage advisor asks you to pay for a valuation, it is easy to see why many choose the cheapest option possible to try and keep the costs down.
The lender will need a valuation to ensure that the property loan-to-value ratio meets their requirements when taking out a mortgage.
The valuation is to make sure that if you stopped paying your mortgage, the bank would be able to repossess your property and sell it to recover the outstanding loan amount. The easiest way to check this is to get an independent valuation and set the loan-to-value ratio requirements.
The loan-to-value ratio is the amount of the loan you are asking to borrow compared to the property's market value. Your deposit funds make up the difference.
Occasionally, mortgage lenders can offer a valuation for free as an incentive to buyers to use their mortgage product over a different lender. But if there are no incentives, a valuation report can cost a few hundred pounds - that cost is to be paid by you, the borrower.
Why would you then pay out another few hundred pounds for another surveyor's visit? You will be offered the mortgage with the basic valuation so that you can buy the house.
What would be the point of getting another one?
Many buyers don't bother with the extra expense - but they should!
The critical point is the difference between a survey and a valuation.
The lender's valuation is just that - they are sending a surveyor to check that a) the property is worth what you have agreed to pay. And b) that the property exists and could be resold, in its current condition, if you defaulted on the loan repayments for any reason.
Because the surveyor is checking that the property could be resold quickly, if it needed to be, there will be a cursory check to make sure that the roof is still on and there are no significant defects.
However, the surveyor is not there to check the property for you; they are there for the lender.
It is clear to see if you have ever received a copy of a lenders' valuation report before - it is just one piece of paper confirming the purchase price, the valuation price, and the insurance rebuild price. Not much of a report!
If you only have the basic valuation, you are not checking the property before you buy it.
You will likely not buy anything else as expensive as a home in your whole life.
But you would probably not buy a car if it didn't have a valid MOT or warranty, would you?
By arranging a survey for yourself, you will receive a report detailing all aspects of the property, including the roof and if any damp was found. A Homebuyers' report is a mid-range survey and is usually sufficient. It will highlight any areas of concern with the property that you can arrange for specialists to look into further if needed.
The survey result does not necessarily mean that you will have any problems or need to pull out of the purchase.
It is simply gathering information about the property that you are buying.
It would be helpful to know that you will probably have to re-roof the property in 10 years or that there is a small area of damp in the porch that might need some attention in the next year or so.
By arranging for a proper survey, you know exactly what you are getting into. As surveys are only really done when a property is selling, you could know more about the property than the sellers do!
Sometimes the lenders' valuation appointment can be upgraded so that the surveyor only visits the property once. They simultaneously produce the valuation report for the lender and the Homebuyers' report or full survey report (whichever you order) for you, which can be cheaper.
If not, another surveyor visit will cost another few hundred pounds at least, but it could save you thousands in the long run if there are underlying issues with the property that you were not aware of!
You shouldn't really be buying a property without any survey at all.
How would you feel if you bought a lovely new home and then found out that the floor joist is rotten and you have to redo the entire ground floor - new decor, new carpets and of course new joists!
Perhaps the property looked good, so you assumed that there were no problems.
But now you have the upheaval and expense of significant work.
The seller has likely not even known about the problem, so they couldn't have told you about it.
If you had paid for a survey, you would have known that this work was needed. You would then be able to decide what you would like to do about it.
What should you do if you find out that the property you are buying needs work?
All is not lost.
a) You can decide that you will take the tasks on, continue to buy the property.
b) You can renegotiate with the seller to accommodate for the unforeseen costs and disruptions that you will have after you have completed the sale.
Perhaps you could arrange for the seller to deal with the tasks and have them done before you complete the purchase?
Or finally,
c) You can withdraw completely from the purchase and move on to buy a different property altogether.
There are many directions that a sale can go, and a few points raised on a survey does not mean that the deal has to fall through.
But, if you don't even know what you are buying, you are committing to years of your life in a property that you have not checked out thoroughly.