“Down-valuations are becoming the norm” – property experts reveal

Mortgage and property experts have seen an increasing number of properties being down-valued, in many cases significantly.

According to reactions submitted to Newspage, industry experts also revealed that successfully appealing these valuation decisions was often extremely difficult, particularly given the current climate.

Riz Malik, director of R3 Mortgages, said: “I just reviewed a report for a 2-year-old new build that valued the property at over 40% below the client’s expectation.

“From the report, it was clear that a shortage of comparable sales played a major role in this down-valuation.”

Malik said his client was currently waiting, having appealed the decision.

Graham Cox, founder of the Self Employed Mortgage Hub, also experienced down-valuation first-hand recently, albeit not at such extremes.

He said: “Down-valuations are increasing, as lender caution takes hold.

“We recently had a client buying at £285,000, only for the lender’s surveyor to value the property at £250,000.”

Darryl Dhoffer, founder of The Mortgage Expert, said that “down-valuations are becoming the norm” and warned that the chances of successfully appealing a down-valuation are slim at best.

He added: “As far as Surveyor Appeals go, you’re more likely to catch a brick in a cobweb than win. They should call them ‘No Chance Appeals.’”

While agreeing that “down-valuations from surveyors are definitely on the rise,” Imran Hussain, director at Harmony Financial Services, said that down-valuations do serve a purpose of protecting buyers.

Hussain said: “We have to be realistic as the market is now in a radically different place compared to 12 to 18 months ago.

“When a property has no clear comparable evidence, expect surveyors to be bearish to prevent unforeseen harm should property prices slide even further.

“Surveyors being more cautious as the market slows is never a bad thing as I am sure no one wishes to borrow more than what the property is worth.”

In contrast, Justin Moy of EHF Mortgages said: “We haven’t seen too many down-valuations this year although a high percentage of our business has been product transfers.

“Via the product transfer route, valuation figures have been more generous, given they index against local data that is about nine months old, and not specific to any property but to a postcode area.

“We have helped many secure better rates through product transfers rather than remortgages for this very reason, especially those with higher loan-to-value mortgages or landlords.” 

Lewis Shaw, founder of Shaw Financial Services, said the issue is often sellers being unrealistic.

He said: “There are very few genuine down-valuations: it’s mainly overpriced properties.

“The problem at the moment is many sellers still failing to understand that houses are worth less as each month passes.”

Meanwhile, Michelle Lawson, director at Lawson Financial, said external forces were at play: “Down-valuations are cyclical but always seem to be coincidentally in tune with when there is something economic happening or a hidden driver.

“I have always been suspicious that RICS and the Government control values by directives.

“I had a down-valuation last week of £25,000 on a flat in a university city in the South East from £175,000 to £150,000, making that property the cheapest in the city.

“I could list endless stories of inconsistency and inaccuracy but we are always told that the lenders’ hands are tied.

“The whole process needs overhauling and, in my opinion, this has to come from the lenders to a point.”

She concluded: “Valuers drive lender policy and challenging these is nigh on impossible while being detrimental to the client.”