In this blog we will explain what a residential market valuation is, who does them, how they are calculated, when they might be useful and why an estate agent valuation might not be enough.
What is a residential valuation?
It is simply an opinion of what a residential property will sell for on a given date.
Who can do them?
You will often here the term “red book valuation”. The Red Book is a set of rules and guidance set out by the RICS for undertaking residential valuations. Only RICS registered valuers can undertake them.
This is important as most mortgage companies, banks, government departments and statutory bodies require residential valuations to be to RICS standards.
How is it calculated?
Here’s the boring bit. It is a RICS registered valuers opinion of the estimated price a residential property will sell for on a given date, between a willing buyer and a willing seller, in an arms length transactions after a reasonable marketing period with all parties acting with knowledge, prudence and without compulsion.
Many residential valuers will use a minimum of three similar, nearby properties that have sold recently. These are called comparables.
The valuer will compare the property they are valuing against the comparables making allowance for the condition of the property, size, quality of bathroom and kitchen fittings and whether there are any additional amenities, such as garages or outhouses.
When you might need a valuation?
There are many reasons you might need a residential market valuation:
- Purchasing a property – this could be a stand alone market valuation or as part of a RICS Level 2 Home Survey to give peace of mind on the purchase price of your new property.
- Help to buy and shared ownership – if you want to remortgage or buy the other party out of the ownership of the property you will require a RICS market valuation.
- Probate or other tax reasons – often a market valuation will be required as part of the probate process and to calculate inheritance or other taxes.
- Matrimonial – when the unfortunate happens a market valuation can help settle disputes within a divorce process.
- Secured lending – a further bank loan or secured lending might require a market valuation.
Why an estate agents value might not be enough?
We often hear customers say they have had a valuation from an estate agent.
An estate agent will be providing expert advice but it will be an opinion of value rather than a market valuation. A RICS registered valuer has to follow very strict rules and there is recourse against them if they get it wrong. For these reasons if you need a market valuation only a RICS registered valuer will do.
Conclusion
There are lots of reasons why you might need a market valuation. At Survey Hut we are regulated by the RICS and have RICS registered valuers.
If you need a valuation or have any further questions please get in contact here and we will be happy to discuss them with you.
