A leading buying agency is warning about asking prices that are higher than those acceptable to mortgage companies who therefore down-value properties.
The warning, from the Black Brick agency, comes after controversy flared last week when the BBC”s Victoria Derbyshire programme covered the issue.
Camilla Dell, managing partner at Black Brick, says that for her high-end London-focussed clients the problem is most relevant to buying off-plan new developments where 10 to 20 per cent deposits are paid up-front with the remainder due in two to three years once the scheme or block has been completed.
She says that in theory this raises the risk of price falls meaning that, when the buyer comes to arrange their mortgage, the lender declines to extend a loan that covers the full value of the property.
But she insists that her approach ensures that clients have not had that problem.
“Coming to an accurate valuation for a property is incredibly difficult for a buyer, especially in the present market” she says, claiming that “too often, estate agents are desperate to get sellers on their books, and are prepared to inflate valuations to do so.”
She adds that for buyers in a market where limited supply can generate intense competition for good properties, “it’s easy to agree on an asking price that doesn’t stand up to professional scrutiny.”
However, she says the company’s process “involves a much more holistic assessment of a property’s value than is possible using public information, such as that on Zoopla and similar websites”.
Dell says her company’s view of the appropriate price is “based on the nuances of location, aspect and condition of nearby properties that have recently been sold.”
On the Victoria Derbyshire programme last week, Emoov chief executive Russell Quirk said that "surveyors are prophesying a [financial] crash. The system is built to protect them” adding that they are “covering their backs” in case the market turns down.
He claimed as many as one in five sales have been hit by down-valuations - just two years ago it was one in 20.
"Surveyors unfortunately have a bit of a vested interest. If the media are reporting about the market softening somewhat surveyors become concerned about their indemnity policies which are called in and of course are called upon by lenders if there’s an issue with the property market. My contention is that the market is very very sound indeed...the statistics say that - whether it’s Halifax, Nationwide, RICS, Hometrack. Prices are firm so there’s absolutely no need for surveyors to be downvaluing properties" insisted Quirk.
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I loved the objective assessment of market conditions by Russell Quirk the estate agent. Many indicators (transaction volumes, seller/buyer registration ratios, mortgage approvals etc. etc.) are flashing orange at least. In London prices are already in freefall, and we all know from experience that London leads the country. But Mr Quirk is that banker from Citibank before the crash. He is "still dancing"!
She already said 'in a market where limited supply can generate intense competition for good properties, “it’s easy to agree on an asking price that doesn’t stand up to professional scrutiny.”
If there is a limited supply and a high demand then the prices will be rising. If this changes then tough, people need to accept that increase in house prices in the short term should not be and is not guaranteed. To many people seem to buy on the basis that the property price will increase in 3 to 5 years instead of looking at the property as a home.
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