A nasty surprise for ‘penny wise’ homebuyers

A nasty surprise for ‘penny wise’ homebuyers
Homebuyers who rely on a mortgage valuation report commissioned by their lender, rather than paying more for some form of professional survey, often find they have been ‘penny wise but pound foolish’. That is the main conclusion of analysis of more than 1,000 property purchasers where a quarter of those who relied solely on mortgage valuations needed unexpected building work after completion.

Cynics may say the conclusion is no surprise when you consider that this report was commissioned by the Royal Institution of Chartered Surveyors(RICS). After all, you wouldn’t ask a barber if you needed a haircut, would you? Against that, the sums of money involved in buying a home make the argument for expert advice compelling. When you are about to sign a contract committing you to spending several years earnings, why blind yourself to some of the risks involved and strip yourself of valuable insurance for the price of a week or two’s wages?

Many homebuyers have no idea how little they will get when they settle for a valuation report – or how much they might be able to knock off the asking price, when they are armed with a homebuyer survey setting out the property’s faults and any work that needs to be done.

For example, RICS found that nearly six in 10 homebuyers wrongly imagined that a valuation report included an assessment of the building’s condition, including searching for damp and structural movement. One in three mistakenly believed it included advice on legal issues that a solicitor should investigate.
For important information like this, you have to pay for a building survey or – at bare minimum – a homebuyers’ report.
A homebuyer’s report is usually sufficient for homes less than 50 years old and in a good state of repair. The RICS homebuyer report uses a traffic light system, red for immediate replacement or repair, amber for within a time period and green letting you know this area of the house is fine.,and it will include a valuation. A building survey, on the other hand, will be a more in-depth examination of a building’s structure and is recommended for older, dilapidated or extensively-altered properties. This does not necessarily include a valuation and if you require one you should ask at the time of enquiry.

The main reason to get a survey is that if anything does go wrong, you have a comeback on the surveyor via their professional indemnity. Don’t go with a lender’s recommendation, always stay independent.Having a property surveyed will help prospective owners avoid nightmare situations that can rack up enormous costs in future.
There are rarely instances where a homebuyers report might suffice, as – even if you are buying an apartment above ground floor level and below the top floor – you will be responsible for contributing to repairs to the outer fabric of the building. It’s essential to check that a sinking fund is in place for any apartment building, especially if the survey highlights repairs are needed
Always expect the worst from a survey, as it will always provide a critical report and find fault wherever possible; that is what you are paying the Surveyor for.

Many of the findings will be suggestions and will list repairs that are not necessarily urgent. However, homebuyers should always seek a second opinion where aspects of the report are worrying, one that corresponds with the problem it addresses, for example a damp specialist or electrician.
Even bad news can be good news for purchasers who are well-informed before completion. RICS reckons three quarters of homebuyers who paid for a building survey were able to negotiate a lower price. Information is power when it comes to property.