In this post I want to explain how the House Buyer’s survey can affect your sale.
So, you’ve made an offer to buy or had an offer to buy your house and it’s all agreed. Job done, no? NO!!
Unfortunately, there are a number of hurdles still to be jumped.
Here, I look at the Survey.
Almost all buyers, whether they need a mortgage or not, will have a survey done. If they are getting a mortgage, this will be insisted upon by the mortgage company.
There are three types of survey: 1. Mortgage Valuation; 2. Home Buyers Survey; 3. Full Structural Survey.
The cost of these to the buyer increases, with a Home Buyers Report costing anything from £500 – £1,500 depending on the size of the property and Full Structural Surveys costing far more.
What they do
Full Structural Surveys are rare in the residential market other than for very old properties or those where potential structural issues are clearly visible with the naked eye.
The Home Buyers Report is the most common and this combines the Mortgage Valuation with a more in-depth look at the property but falling well short of a full structural survey. This can take anything from 2 hours upwards depending on the size, type and age of the property.
You will find that Surveyors are so concerned about being sued these days that they can exaggerate the significance of any issue they find since that’s the safest thing for them to do. It can then be difficult for buyers to gauge the true significance of an issue and lead to sometimes unnecessary price renegotiations.
Since adverse surveys account for between 30% & 50% of all agreed purchases failing to go ahead, this can be a source of great annoyance and upset for both the Buyer (who doesn’t get their money back) and the Seller.
The final survey type is the Mortgage Valuation Survey, which, as the name suggests, is the minimum that the Mortgage Company will want to take place. This is a relatively short inspection, taking around 30 -45 minutes. Only very obvious structural problems are noted but there is still a potential sting in the tail.
For Buyers wanting to borrow 90% or more of the agreed price, if the agreed price is more than other similar houses nearby have sold for recently, and there is no obvious reason why this house is worth more, the Mortgage Company may refuse to lend the Buyer the amount of money they want.
What can I do?
For Sellers, there is little you can do except look objectively at your house and see if you can spot any problems that may arise from the survey. Examples are: broken/missing roof tiles; cracks in exterior or interior walls; sign of damp; large trees near property walls; unclear boundaries with neighbouring land etc. Anything you can do to deal with these issues prior to selling your house will help smooth the process.
For Buyers, view properties with eyes open for potential survey issues and if at all unsure, have a Home Buyers Survey undertaken. But do remember that it’s in the survival interests of surveyors to exaggerate the importance of things and put all kinds of caveats and disclaimers in their reports. Of course, sometimes the problems are so great that you will need to pull out, but sometimes you just have to go with your gut instinct as ALL houses (yes, even new ones) have things which a surveyor will highlight as potential negatives.
Next time, I’ll talk about the role of Solicitors in the residential house market.