You can't trust a RICS valuation anymore!!!
Brett Alegre-WoodChairman, YPC Group
Hey guys,
Well I never thought that I would see the day when I couldn't trust a RICS valuation... I guess you learn something in property everyday.
Today's lesson is that 'When the s&^% is hitting the fan you can guarantee everyone is trying to cover their butts.'
I remember a time when valuers were, give or take, about right on and realistic with their valuations. Sure you had the guys who were ridiculously high and those that were pathetically low and the whole game played out within a + or - 10% (possibly 15%) of what you might call the 'True Market' valuation.
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Recently, valuers started to change their tune, rather than value at 'true market' value they instead have been making allowances for drops in price over the coming year. This has thrown many deals into the bin and caused massive drops in price of some properties regardless of the fact that some owner occupiers and cash buyers are paying more.
Pick the price that suits you...
Just the other day one of the properties we were checking valuations on had Land Registry data at £129,995, a cash buyer at £115,000 and another owner-occupier at Â?129,995 who had a 5% gifted deposit. Yet the valuer decided that 4 months later that the place was worth only £90,000. He stated 'Prices have dropped in the area!'
So in four months prices had dropped 22%. Oh now I forgot to mention that these properties at their height sold for £165,000. So that's a 45% drop in prices.
Now the reason for this is simply - It's called 'PI' or Professional Indemnity Insurance. This is the insurance that all valuers must have in order to practice their trade. The problem is that if they have too many claims (in fact any claims) against their PI, their premiums will increase the following year. It was this very reason that forced one of the top three surveyor companies in the UK to go into liquidation at the start of the credit crunch.
So they are covering their butts ('PI') by down valuing everything in anticipation of decreases this year. It's not strictly by the book and it would be good news for us if we had lots of supply but with prices already having dropped so far and supply levels at critical it's destroying what little supply their is.
The problem we face now is that most deals have to be done at board level and only after getting permission from their lenders. This is taking so long that in the time it takes to come back to us they have received another 2 or 3 offers for the same property. Such is the challenges we face at the moment.
So this all leads to one simple conclusion - Now's the time to jump into property...
Now's the time to jump into property, the supply has dried up, the discounts have dropped and the selling prices of many of the properties have actually increased. The recovery cogs have started to move and it won't be long before we are all loving property again. So if you want to take advantage then give the team a call on 0207 812 1255 and they'll be happy to answer all your questions.
Live with passion,
Brett Alegre-Wood
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