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Is Your Lender Inspecting on Valuing a Property?

Property valuation

Most of us will buy our home with the aid of a mortgage and some will rely only on the valuation of the Lender to give assurance that there are no problems with the property being purchased.

I have been a conveyancer all of my working life, over 50 years, but I have only very recently come across a disturbing trend going under the name of Automated Valuation Model (AVM).

The term came in respect of a residential property in which I had been instructed by the Buyers and they were obtaining a mortgage from one of the largest lenders in England and Wales and against our advice were relying on the lender’s valuation instead of commissioning their own survey.

As part of the conveyancing process we obtain, amongst other searches, an environmental report and for the property my clients were buying the result of the search revealed potential contaminated land issues. Any issues that could have an effect on the valuation and mortgage offer have to be reported to the lender to ask whether the contents of the report have any adverse effect on the valuation and therefore the mortgages offer.

The lender first of all suggested that it was up to us to advise whether the contents would have any effect on their security in lending on the property.

Conveyancers deal with all legal issues in respect of property. They are not qualified to give an opinion or advice on the structure or condition of the property or any environmental issues that relate to the property.

I pointed this out to the lender who then advised that….

the property has not been inspected and the valuation had been determined using an Automated Valuation Model (AVM). Valuers also do not review generic environmental reports

I pointed out to the lender that conveyancers do not inspect properties but valuers should. Their response was to advise that an inspection of the property would now take place. This has now delayed the purchase proceeding until the valuer has inspected the property.

The existence of an AVM is a totally new concept to me and my conveyancing colleagues and obviously as the property has not been physically inspected will give no specific information or comfort to the buyer.

My advice is always obtain at least a Home Buyer’s survey report when buying a property.

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