In this business it’s important to recognise that house prices, and particularly the valuation people place on their own properties, is an emotive subject. I’ve yet to meet a vendor who didn’t think their home had gone up in value, and (most likely) far in advance of what other homes had been valued (and sold) at in their local area.
Of course, that comes with its own challenges, not least when it comes to our role in putting an appropriate and realistic valuation on a property for our clients – who, for the most part, are not the vendor at all but the lender. It’s why some of the ‘feedback’ we can get from those who own the property is often not as complimentary as we would like – that’s nothing to do with the way we went about our business, the speed of valuation, the comprehensiveness, or indeed the overall service we provided, but purely to do with the figure we concluded at.
In that sense, it’s important that all stakeholders within the home-buying/selling process inject a healthy dose of realism into proceedings, because while we might believe that ‘over-valuation’ by agents, for example, is something that is always going to happen, this actually begins the whole journey from a point of over-expectation. Similarly, for existing borrowers seeking to remortgage, there has to be a voice of reason around the valuation at the start – hopefully their mortgage adviser – otherwise we are likely to end up a point of disappointment when that valuation is not realised or accepted.
Take, for instance, the latest house price statistics released last month by one high-street lender. Headlines were taken by an annual house price inflation figure of 4% year-on-year, primarily down to figures at the end of the 2019. December showed a large 1.7% increase month-on-month, while prices in the last quarter of the year were 1% up on quarter three.
Would those increases for the year as a whole be replicated across the entire UK? Of course not. Would various regions have seen a 1.7% monthly increase in December? Again no. In fact, the sizeable increase seen at the tail-end of 2019 was primarily down to the weak level of prices a year previously.
But, the truth of that matter, isn’t likely to make many headlines. The lender said that the 4% annual increase was at the very top-end of its previous estimations for the year – 2% to 4% – and our view is that, while prices have not exactly bounced along the bottom over the last 12-18 months, they have certainly been stable at rather low levels. Inflation exists but the level of improvement is minimal.
Indeed, unless vendors/remortgagors bought their homes a significant time ago or they have refurbished/added extensively to their properties in order to increase value, then the realistic anticipation should be that their value will not have moved significantly. Certainly, not by the double-digit increases of yester-year, that some people might still think applies to their property, even if the local market has delivered none of this in recent times.
So, in an age of transparency and realism, we still might have some considerable work to do around property valuations. I acknowledge that some within the estate agency sector still believe putting higher valuations on properties means they are more likely to get the work, but surely putting a realistic price on a home gives you a much better chance of sale within the desired timescale?
Our motivation when valuing certainly differs greatly from some agents, after all, we’re working on behalf of the lender (for the most part) and therefore have to be ultra-realistic. That doesn’t mean that we couldn’t, or shouldn’t be working off the same page though – in fact it would add a large degree of credibility if agents and surveyors both educated the client about how they go about their valuation process, and how we go about ours. If we can have that credibility and set the expectation accordingly, then our view is we have a much better chance of getting a successful outcome for all.
Here, at the start of the new year, we do have the opportunity to be upfront with our clients and to begin the journey on a sensible and realistic footing. The other option is frustration and bewilderment for too many until the purchase or remortgage process is complete, or it collapses – do we really want this to be the outcome? We pride ourselves on providing accurate valuations for our clients and we would only offer a valuation we could stand firmly behind based on the property, the market and the evidence. Most agents will feel the same way, and if we can both approach the client from this point, then we’re far less likely to leave the client disappointed.
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