Quite what does a valuation surveyor actually do? Don't get me wrong, some of my best friends are surveyors. I'm not anti-surveyor, but ...
A report from the Bank of England this week said lenders are struggling to value homes in the current market, causing delays which are leading to the break-up and collapse of chains.
How different from the halcyon days two years ago when the job of a valuation surveyor was little more than establishing the "comparables". A tough task indeed: dropping in for a chat at a local estate agency, and finding out what similar properties have gone for. If that was too strenuous, there was always the Land Registry's website, holdings details of actual sale prices. Indeed, why even employ humans? Many lenders found it was simpler and cheaper to use "automated valuation models" during the boom years.
Yet the homebuyer still got stiffed with an steep bill for a valuation, typically around £350 on a £200,000 purchase (although often waived for remortgages).
Today the automated valuation models are close to breaking down. With so few sales, it's impossible to establish comparables. How much is a house worth on a street where there has not been a sale for a year? Valuation surveyors are having to work twice as hard on half the amount of business. Lenders want valuations pushed down, fearful of further falls in house prices. Buyers are in chains which fall apart after a low valuation prevents them from obtaining a big enough mortgage to go ahead.
The Royal Institution of Chartered Surveyors should be taking a long hard look at itself. How truly "professional" is the work of its members? Who was valuing buy-to-let flats at such absurdly inflated prices? How does a valuation surveyor get it so wrong? And what sort of action should a professional body take against members who have so discredited themselves?
The professional skills needed for the structural element of a home survey will always be essential. But the valuation bit? Clearly the profession failed, hypnotised like the rest of the country into believing markets rise in a straight line upwards.
Valuers live by the maxim that the price of a property is the amount that someone is willing to pay. But this has turned out to be nonsense. In truth, the price of a property is the amount someone is willing to lend you to buy it. Value is not in the eye of the beholder, it's in the spreadsheet of a lender.
Be aware,
Mr Jackson.
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