How To Understand Home Appraisals
If you are buying or selling a home in the UK, you will need a better understanding of the property’s value for several reasons. If you’re selling a home, you must understand its value so you can price it well, pay off any mortgage debt you currently have, and perhaps even make a profit. If you are purchasing a home, the property must be appraised so that you (and your mortgage lender) understand its true value. In most cases, this means you need a home appraisal. What is an appraisal, though? How do you get one? How do you know if it’s right? This guide will help to answer all of your questions.
What is an Appraisal?
If you’re asking the question “What is an appraisal?” in the UK, it’s important to note that this term typically means the same thing across the world in real estate. In the UK, a home appraisal is commonly referred to as a property valuation. It is an assessment conducted by a qualified professional to determine the market value of a residential property. The purpose of a property valuation is to provide an impartial and independent estimation of a property’s worth, based on various factors such as its size, location, condition, and recent sales of comparable properties in the area.
While you may think about appraisals primarily in the case of home sales, as most people do, there are several other reasons why you might need to have your home appraised. For example, if you are having additional buildings and or contents insurance added to your property, you may need an appraisal to help better determine exactly how much insurance coverage you need for the property. Valuations can also be used to determine property tax obligations or for inheritance tax purposes.
What Happens During an Appraisal?
If you need to have your home or the home you’re purchasing, appraised, this process typically starts when someone schedules an appointment with an appraisal firm or a chartered surveyor. The person who schedules the appointment doesn’t always have to be you. If you’re buying a home, your mortgage lender may schedule that appointment for you. If you’re selling the home, you may have your estate agent schedule the appointment for you.
Once the appraiser arrives, he or she will conduct a fairly complete inspection. While it depends on the type of appraisal or home survey you’re having done, typically your surveyor will assess various aspects, including the property’s size, layout, condition, features, and any recent renovations or improvements. They may also take measurements, photographs, and notes during the inspection. In the next section, we’ll talk a bit more about the different kinds of appraisals you can have done and why you might want each one.
Once the actual inspection is complete, your surveyor will research and analyse any comparable properties in the area. That will help give him or her the insight necessary into recent sales prices and better be able to place a solid number on your property based on the market trends in that given area then.
Based on the property inspection, comparative analysis, and valuation methodology, the surveyor determines a final valuation figure, which represents the estimated market value of the property. At that point, the surveyor delivers the valuation report to the property owner or the party who commissioned the appraisal, such as a buyer, seller, lender, or insurance company. The report serves as an independent assessment of the property’s worth.
What are the Different Types of Property Appraisals in the UK?
In the UK, several different kinds of property appraisals can be done on your home or on the home you’re purchasing.
Here are the most common types of home surveys or appraisals in the UK:
- Condition Report: This is the most basic type of survey and provides an overview of the property’s condition. It focuses on significant issues that may impact the value or need attention, such as major defects or safety concerns. This report is less detailed and does not include a valuation or advice on repairs or maintenance. It’s probably not the best option if you’re trying to sell a home, but it may be important if you’re buying a home without a mortgage. If you are buying a home with a mortgage, you’ll need information about the actual value of the property.
- HomeBuyer’s Report: The HomeBuyer’s Report provides a more detailed assessment of the property’s condition. It includes information about major defects, potential problems, and necessary repairs. It also provides a valuation of the property. The report follows a standardised format set by the Royal Institution of Chartered Surveyors (RICS) and is suitable for conventional properties in reasonable condition.
- Building Survey (formerly known as a Structural Survey): The Building Survey is the most comprehensive and detailed survey available. It provides a thorough assessment of the property’s condition, including a comprehensive examination of the structure, fabric, and all visible aspects. This type of survey is suitable for older properties, buildings of non-standard construction, or properties that have undergone significant alterations. The report includes detailed advice on repairs, maintenance, and potential issues. If you have any concerns at all about the property you’re purchasing, this is likely the best option to meet your needs, as it will tell you everything you need for some peace of mind as you make a property purchase.
- Mortgage Valuation: Although not technically a survey, the mortgage valuation is conducted on behalf of the lender to determine the property’s value and assess its suitability as collateral for a mortgage loan. The mortgage valuation is primarily for the lender’s benefit, and it does not provide a detailed assessment of the property’s condition for the buyer. This is typically the kind of report your mortgage lender might order on your property before you can complete the purchase process.
More than just the types of property appraisals, though, is the fact that surveyors typically employ different methods of valuation depending on the kind of home you have and the reason for the initial appraisal. Commonly used methods include the comparison approach (comparing the property to similar recently sold properties), the income approach (for rental properties), and the cost approach (evaluating the property’s replacement cost). You’ll want to ask your appraiser which method they intend to employ before you hire them, particularly if you’re looking for something special.
Who Does Property Appraisals in the UK?
Property valuations in the UK are usually carried out by chartered surveyors who specialise in property appraisal. They inspect the property, consider its condition, location, and other relevant factors, and provide a valuation report detailing their findings and the estimated market value. The valuation report helps inform buyers, sellers, lenders, and other interested parties about the property’s worth.
How Do You Find a Good Chartered Surveyor?
If you’re just having a mortgage valuation done on a property, the lender will typically choose the chartered surveyor to handle the process. The lender wants to ensure that the property being used as collateral for the mortgage loan is valued accurately. They have a panel of approved surveyors or valuation firms that they work with regularly.
Remember that the lender’s chosen surveyor will just conduct a basic valuation to assess the market value of the property. The sole purpose of this valuation is to determine whether the property’s value is sufficient to support the loan amount requested by the borrower. The valuation report is primarily for the lender’s benefit, providing them with assurance about the property’s value and suitability as collateral. It may give you a bit of insight into the property, but it won’t be much.
Essentially, you must remember that the mortgage valuation is different from a comprehensive survey or homebuyer’s report. The mortgage valuation is limited in scope, focusing mainly on the property’s value and identifying any obvious defects or issues that may affect its value. It is not intended to provide detailed information about the property’s condition or potential problems.
If you want to have a more comprehensive survey conducted to assess the property’s condition and identify any potential issues, you can commission and pay for your survey separately from the mortgage valuation. As mentioned in the last section, this additional survey is known as a homebuyer’s report or a building survey and it provides more detailed information for the buyer’s benefit.
If you do decide to have that more detailed report, though, how do you begin to connect with a surveyor who can meet your needs? Start by seeking recommendations. Ask friends, family, colleagues, or your real estate agent for recommendations. Personal referrals can be valuable in finding a reputable surveyor who has provided satisfactory services to someone you trust.
Choosing a surveyor or even a firm that has been personally recommended to you can be more valuable than any other way of finding someone to meet your needs for several reasons. Maybe the most important one is the fact that when someone you know and trust recommends a surveyor, it carries a level of assurance regarding their competence and reliability. Personal referrals come from individuals who have had direct experience with the surveyor and can vouch for their professionalism and quality of service.
More than that, though, those personal referrals provide insights into the experience of working with a particular surveyor. You can learn about their communication style, responsiveness, thoroughness, and overall satisfaction of the person who made the referral. This information can help you gauge whether the surveyor is a good fit for your specific needs and preferences. You can’t always get that information from other methods of referral. These kinds of referrals also tend to be contextually relevant to your situation. Referrals from people who have gone through a similar property transaction or had similar surveying requirements can be particularly important to you at that moment. They can share insights specific to your situation, such as the surveyor’s understanding of particular property types, local knowledge, or expertise in handling specific issues.
Additionally, these kinds of referrals offer an opportunity to have an open conversation with someone who has already engaged the surveyor’s services. You can ask specific questions, seek honest feedback, and gain a better understanding of what to expect during the survey process.
Finally, getting a referral from someone you trust can give you peace of mind. It reduces the uncertainty associated with selecting a surveyor solely based on online research or random choices. Knowing that someone you trust had a positive experience with a surveyor can help alleviate concerns and build confidence in your decision.
While personal referrals can be valuable, it’s still essential to conduct your due diligence and consider your specific requirements. As a result, you may want to look online for surveyors who are members of a reputable professional body, such as the Royal Institution of Chartered Surveyors (RICS). RICS members have undergone rigorous training and adhere to professional standards. Consider utilising online directories provided by professional bodies like RICS or other trusted platforms that list chartered surveyors. These directories often allow you to search by location and surveying specialisations.
Eventually, you will begin to build a shortlist of individuals to consider for the job. For each of those individuals on your shortlist, look for reviews and testimonials from previous clients or surveyors you are considering. This can provide insights into their professionalism, expertise, and quality of service. You will also want to visit each surveyor’s website to gather more information about their background, qualifications, experience, and the services they offer. A professional and informative website can be an indicator of their commitment to their profession. Additionally, you should assess each surveyor’s experience and specialisation. Consider whether they have expertise in the type of property or survey you require. This is particularly important if you have a unique or specialised property or if you need a specific type of survey, such as a building survey.
During the process, don’t hesitate to contact several surveyors to request quotes or estimates for the survey you require. It’s important to compare not only the cost but also the scope of services included in their quotes. We’ll talk more about how to compare quotes in the next section.
You’ll also want to get additional assurance about a surveyor’s reputation and quality of work, by requesting references from previous clients. Contacting these references can give you firsthand insights into their experience working with the surveyor.
The last step in the process should be scheduling an interview with the professional you’re considering hiring. Scheduling a brief conversation or meeting with the surveyor to discuss your needs, ask questions about their approach, and gauge their professionalism and communication style can help you assess if you feel comfortable working with them.
How Do You Compare Surveyor Quotes on a Home Appraisal?
If you don’t already know someone or have someone who has been personally recommended to you, you may wonder how to begin comparing all of the quotes you might get from surveyors. When comparing surveyor quotes in the UK, it’s important to consider several factors to ensure you make an informed decision. These key points have to be part of what you consider as you look at the quotes on a side-by-side basis.
- Scope of Services: Review the scope of services outlined in each quote. Different surveyors may include different levels of detail, inspections, or additional services in their quotes. Ensure that the services offered align with your specific needs and expectations.
- Type of Survey: Consider the type of survey being offered in each quote. Assess whether it matches the level of detail and assessment you require for the property. Remember that common types of surveys include condition reports, homebuyer’s reports, and building surveys, so you’ll want to be sure the potential surveyor offered you a quote for the type of survey you wanted for the property.
- Price: Compare the prices provided in each quote. It’s important to remember, though, that while cost is a significant factor, it should not be the sole determining factor. Ensure that the price is reasonable and competitive about the level of services offered. We’ll talk more about what to expect in terms of price in the next section.
- Additional Fees: Check to see if there are any additional fees or charges not included in the initial quote. Some surveyors may have additional charges for travel expenses, VAT, or specific additional services. You’ll want to consider these factors to avoid any surprises later on.
- Experience and Qualifications: Evaluate the experience and qualifications of the surveyor. Consider factors such as their professional accreditation (e.g., RICS membership), years of experience, and any specific expertise relevant to your property or survey requirements. Remember that the more experienced and qualified a surveyor is, the more they may end up costing you. The trade-off, though, is that you’re likely to get a far better report in the long run thanks to that education and experience.
- Turnaround Time: Assess the estimated turnaround time provided in each quote. Depending on your timeline and urgency, you may prioritise surveyors who can complete the survey within your desired timeframe.
- Sample Reports: Request sample reports from each surveyor. Reviewing sample reports can give you an idea of the level of detail, clarity, and professionalism of their reports. This can help you assess the quality of their work and determine if it meets your expectations.
- Communication and Support: Consider the level of communication and support provided by each surveyor. Determine if they are responsive, helpful, and approachable. Clear communication throughout the process can contribute to a smoother experience.
- Recommendations and Reviews: Take into account any recommendations or reviews you may have received for specific surveyors. Positive feedback from previous clients can provide insights into the surveyor’s professionalism, expertise, and quality of service.
By considering these factors and comparing the quotes on various aspects, you can make a more informed decision about selecting a surveyor that suits your requirements and offers good value for the services provided.
How Much Does a Home Appraisal Cost in the UK?
The cost of a home appraisal, or property valuation, in the UK, can vary depending on various factors such as the type of survey or valuation being conducted, the size and complexity of the property, the location, and the individual surveyor or firm hired. These prices are simply general guidelines to help you better understand the quotes you’re getting from various professionals with whom you speak. To get the most specific quotes, you’ll need to visit a surveyor’s website or talk with them about the costs of their services.
Here is a rough breakdown of the average price range for different types of property valuations in the UK:
- Condition Report: The cost of a basic condition report typically ranges from £250 to £400.
- HomeBuyer’s Report: The price of a homebuyer’s report generally falls between £400 and £800, depending on the property size and location.
- Building Survey: The cost of a comprehensive building survey, which provides the most detailed assessment, is usually between £500 and £1,500, depending on the property’s size, complexity, and location.
It’s worth noting that these estimates vary quite a bit based on individual surveyors, regional variations, and specific property factors. Additionally, there may be other fees rolled into the cost of your home survey, which is the purpose of getting and comparing quotes well before you decide on which surveyor you want to hire to handle your home appraisal.
To get the most accurate pricing, you’ll want to contact several surveyors, provide them with the necessary details about your property, and request specific quotes tailored to your needs. This allows you to compare prices and services to make an informed decision based on your requirements and budget.
How To Prepare Your Home for a Valuation Appointment
If you are selling your home, and a surveyor will be coming by to complete his or her work, you may wonder about how to best prepare your home for its big appointment. You’ll want to start the way you started before you ever put your home on the market. You’ll initially want to clean and declutter your home as much as possible. There are many reasons to take this step. First, it makes the space appear to be a bit more spacious and inviting. While cleaning is important, it’s essential to note that a surveyor’s assessment goes beyond surface cleanliness. Their focus is primarily on the property’s structure, condition, and potential issues. However, presenting a clean and well-maintained property can contribute to a more favourable overall experience and potentially create a positive impression on the surveyor. More than that, though, a clean and decluttered property allows the surveyor to easily access different areas and components of the property. It enables them to conduct a thorough inspection without any obstructions, which can lead to a more accurate assessment. Imagine if your home were so cluttered that the surveyor could access certain rooms or spaces! That would certainly lead to a lower number on the property than you initially expected. A good cleaning may also help you (and possibly the surveyor) Cleaning the property can help uncover any hidden defects or issues that may be obscured by dirt, dust, or clutter. It allows the surveyor to get a clear view of the property’s condition and identify any potential problems that may need to be addressed. It allows you to do the same!
Identifying those potential defects after a cleaning leads you to the next best way to prepare for a surveyor’s visit. You’ll want to attend to any minor repairs or maintenance tasks, such as fixing leaky faucets, replacing light bulbs, or repairing cracked tiles. These small details can contribute to a positive impression during the valuation. While the surveyor is primarily looking for problems with the overall structure of the property and any major defects that may change the value of the property, dealing with those tiny issues can help alleviate any concerns the surveyor may have and, ultimately, list in his or her report. Not sure what to fix? Here’s a quick list to consider:
- Leaky Faucets: Repair any dripping faucets or minor plumbing issues, such as leaking pipes or running toilets.
- Wall Cracks and Holes: Fill in any visible cracks or holes in the walls, as they can be indications of underlying issues. Use appropriate filler or plaster to smooth out the surfaces.
- Damaged or Loose Wall Tiles: Replace any cracked or broken tiles and reattach any loose tiles in kitchens, bathrooms, or other tiled areas.
- Damaged Skirting Boards or Mouldings: Repair or replace any damaged or worn skirting boards, architraves, or other mouldings to enhance the overall appearance of the property.
- Doors and Windows: Check that all doors and windows open, close, and lock properly. Replace any broken or damaged handles, hinges, or locks.
- Light Fixtures: Replace any burnt-out light bulbs and repair or replace any malfunctioning light fixtures. Proper lighting can improve the overall appearance of the property.
- Exterior Maintenance: Trim overgrown vegetation, repair or repaint fences, and attend to any minor exterior maintenance tasks to enhance the curb appeal of the property.
- Caulking and Seals: Inspect and repair any damaged or deteriorated caulking around windows, doors, and bathtubs/showers. Ensure that seals are in good condition to prevent water infiltration and potential damage.
- Damaged or Worn Flooring: Repair or replace damaged flooring, such as cracked tiles, loose floorboards, or worn-out carpets, to ensure a safe and presentable interior.
After you’ve finished your cleaning and repairs, it’s time to make the property look amazing. The best step to take to make that happen is to showcase the property’s key features. For example, if your property has unique or distinctive features, such as exposed beams, period details, architectural elements, or special amenities, ensure they are highlighted during the survey. These features can set your property apart and potentially increase its value. If you have upgraded any essential systems, such as plumbing, electrical, or heating/cooling systems, highlight these improvements. Updated systems indicate that the property is well-maintained, and they may also prove a good way to add some value to your property. Similarly, if you have implemented energy-efficient upgrades, such as double-glazed windows, insulation, or renewable energy systems, highlight these features. Energy-efficient measures can enhance the property’s appeal and potentially improve its value. Finally, showcase any recent renovations or upgrades that have been carried out. This can include modernised kitchens, bathrooms, or other areas that have undergone improvements. Highlight the quality of materials and craftsmanship invested in these upgrades.
As you’re showcasing these key features, be sure that you provide documentation to the surveyor of each one. Gather all of the relevant documents related to your property, such as the title deed, planning permissions, building regulations certificates, guarantees for any renovations or installations, and any other paperwork that showcases the property’s history and compliance. He or she is likely to want to see that documentation during the survey. It may help to create a pack containing essential information about your property. Include details such as the property’s age, dimensions, council tax band, energy efficiency measures, service charge or ground rent details (if applicable), and any recent renovations or upgrades. Within that pack, you’ll want to organise the service records for the property. This is particularly key if you have undertaken any major works or renovations, and compile records, invoices, and guarantees associated with those projects. This information can help demonstrate the property’s value and maintenance history.
Throughout the process, be present and available. Make yourself available during the valuation to answer any questions the valuer may have. Provide them with any additional information they may require to assess the property accurately. Additionally, ensure the surveyor has easy access to all areas of your property, including any outbuildings or loft spaces. Unlock any gates or doors as necessary, and inform them about any specific features or areas they should pay attention to during the valuation.
Finally, if you have any questions, be ready to ask them on the day of the surveyor’s visit. You’ll want to do so before he or she prepares the report on the property.
What If the Appraisal Value of the Property Is Too Low?
If the value of your property as recorded by the surveyor was far lower than you expected, you do still have some options. You’re certain to be disappointed, and it can mean that a lender won’t give you exactly what is necessary to purchase the property, but there are a few different things you can do if the value is too low.
Start by actually reviewing the report. That will help you to better understand the reasons behind the low valuation numbers. Look for specific issues or concerns that the surveyor identified, as these may have influenced the valuation. Understanding the surveyor’s perspective can help you assess the accuracy and validity of the valuation.
There are many really common concerns listed on home surveys across the UK, and some of them are more serious than others. For example, the survey may highlight structural issues such as subsidence, cracks in walls, sagging roofs, or unstable foundations. These concerns can affect the stability and safety of the property, and that’s an incredibly serious issue. The surveyor may also see signs of dampness, mould, or moisture penetration in areas such as walls, ceilings, or basements. Dampness can lead to structural damage and affect indoor air quality, which means it’s also a fairly serious issue. If, however, the survey finds issues with the roof like missing or damaged tiles or poor insulation, while that’s an issue that needs to be addressed, it’s easily done.
Wondering about some of the other issues surveyors find that may cause low numbers on that final report? Electrical and plumbing issues are fairly common throughout the UK such as outdated or unsafe electrical systems, faulty wiring, inadequate plumbing, or issues with the heating system. These concerns can impact the functionality, safety, and energy efficiency of the property. Another fairly common category of issues surveyors find include drainage and sewer problems. Those kinds of problems are often blocked or damaged drains, inadequate sewage systems, or poor water management. Because drainage problems can lead to flooding, water damage, or health hazards, they must be addressed with some immediacy.
The surveyor may also notice common signs of pest infestations, such as woodworm, rodents, or insects. These infestations can cause damage to the property and require professional treatment before the home can be sold.
Insufficient insulation in walls, floors, or roofs is an incredibly common issue, particularly in older homes across the UK. Inadequate insulation can result in energy inefficiency, higher utility bills, and a less comfortable living environment. In most cases, a potential buyer will want to have this remedied as soon as possible.
One potentially serious problem you may find highlighted on the survey is fire safety issues such as inadequate fire escapes, faulty smoke detectors, or non-compliance with fire regulations. They’re so serious because they pose a real risk to anyone who lives on the property.
There are far less serious issues that a survey can uncover, though. For example, planning and legal issues commonly pop up during surveys. The survey may reveal unpermitted alterations, boundary disputes, or restrictions that could affect the property’s value or legal compliance. It’s important to address any legal or planning concerns before proceeding with the purchase, but it isn’t usually a deal breaker when it comes to the sale.
Likewise, the surveyor may identify general maintenance and repair needs, such as deteriorated paintwork, worn-out flooring, or outdated fixtures. While these may not be major concerns, they can impact the overall condition and appearance of the property, and they will have to be addressed before the sale.
No matter what problems the surveyor found with the property, you do have the right to seek a second opinion if you believe the valuation is inaccurate or unjustified. It’s important to choose an independent surveyor who can provide an unbiased assessment. This second opinion can help determine if there were any oversights or inconsistencies in the initial survey.
It may also help to do some research on recently sold properties in the area to determine if the survey valuation aligns with the market trends. This information can provide context and help you evaluate the accuracy of the survey valuation.
If the lower valuation impacts your financing, you may need to reassess your mortgage options. Speak with your mortgage lender to discuss the implications and explore alternative financing arrangements that accommodate the revised valuation. It’s possible that you could negotiate the price somewhat. Based on the survey findings, they may be willing to work with you. If they’re not, and you’re concerned about the property itself, you may want to reconsider the purchase completely.
No matter what you decide to do, it is essential to remember that a home survey is an independent assessment of the property’s condition and value. While it can be disappointing to receive a lower valuation, it’s crucial to approach the situation objectively and consider the options available to you. Consulting with professionals, negotiating with the seller, and conducting thorough research will help you make an informed decision based on the survey results.
Don’t Be Afraid of a Home Appraisal!
Now that you better understand the home appraisal process, it’s time to get started, whether you’re the buyer or the seller. Start with a better understanding of exactly what you want from a home survey, then find the right person to handle the job to meet your needs.