The RICS says surveyors are becoming increasingly cautious as house prices rise, basing valuations on comparables that have not caught up' with today's market.
If property prices rise quickly, comparable evidence never catches up says Peter Bolton King, RICS' residential director. The result is that lenders are willing to offer mortgages on less than the asking or agreed sale price of a property, leaving would-be buyers with a shortfall which they have to either make up themselves, or otherwise forcing them to walk away from the purchase.
Back in 2011 the NAEA - which then had Peter Bolton King as its chief executive - said sales and remortgage deals were collapsing because some lenders and surveyors were deliberately undervaluing homes', in some cases by as much as 10 per cent. At that time the RICS denied that surveyors were being over-cautious.
Research by the Daily Telegraph in 2011 showed that surveyors were facing large numbers of legal actions by lenders over valuations made before the downturn in 2008; earlier this month EAT reported that in 2012 LSL Property Services had to set aside £17.9m to deal with over-valuation claims relating to what it called a period of high-risk lending between 2004 and 2008.
Now with values rising sharply in some areas - but with the fear of a bubble and consequent price falls - it appears that surveyors are being cautious to avoid a repeat of the legal action of past years.
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Comments
Thank you for giving the Longden person such a perfect example of why they look such a numpty, The JB!
Sorry - are you saying YOUR original comment above is rubbish
If so - HEAR, HEAR!
So pleased that, at last, after all the to-ing and fro-ing of the last few years, we finally concur on something... ;o)
Is a loaf of bread only worth the cost of the wheat, flour and other ingredients that get bunged into it plus the time it takes a baker to whip it up If so I'm writing a very strong letter to Mr Warburton about how much he's overcharging me.
Rubbish :(
"If Peter (Bolton) King knew anything much about the art of valuation, he would know that it depends exclusively upon comparisons as far as residential property is concerned."
Then it isn't an 'art' - it's a simple mathematical exercise.
And if he knows "nothing much" about valuation, as you suggest - then why is he in the position that he is in at the RICS
PBK has far, far better things to do than debate with you - public or otherwise.
Which, by the way, is a jolly lucky thing for you.
He would destroy you. Your atoms would be scattered across the universe.
It's not about valuers being afraid of being sued if a valuation is shown to be wrong. This argument is nothing more than a smoke screen made by obsessed negotiators, who think they always know best.
If Peter (Bolton) King knew anything much about the art of valuation, he would know that it depends exclusively upon comparisons as far as residential property is concerned.
His idea that market value somehow transcends any need to base itself upon comparisons is peculiar, the say the very least.
If he still avers that market prices can somehow run free, transcending all and any comparisons he misses the whole point of the use of the term market 'value'. I therefore challenge him to debate this with me in public.
He will probably have heard of the saying 'cash is king'. If so, I would venture to suggest that an interpretation of this phase could mean that if someone wants to pay more than the value based upon current comparables, that person should back his decision with his own cash and not expect to borrow the surplus from others. If he doesn't currently have the cash, he ought not to be considering bidding up the price.
It's a simple enough strategy but it does sort out the issues, and market 'values' would become meaningful once again.
Utter tosh - but then we've become accustomed to that from you.
Consistent as ever. Pity, really.
(please note that this comment is aimed at Longden, NOT The JB)
It seems like only yesterday that I was doing more than half a dozen building society valuations each day & we had the dilemma of whether we should be following or leading the market in accepting that when there were queues for new builds & frequent gazumping it was rather hard to justify down-valuing.
That was 1972. We didn't call it gazumping back then.
Plus a change
Not undervaluing. Seeing sense in not contributing to another bubble. Houses have been massively overpriced for years and years. Demand for a product does not justify the price going up. A house is only worth the price of the land, and what it would cost to rebuild it, with perhaps a 5% premium for a splendiferous site. Otherwise all that happens is that decent working people are frozen out of the 'market' which is my estimation simply means 'whatever we can squeeze out of someone desperate for a roof overhead' and that is immoral to the maximum.