At Arnold & Baldwin we think the best way to truly understand the condition and value of a property is with a physical inspection.
However, we also understand that many homebuyers and remortgagors are keen to proceed with transactions in the current environment, where lockdown measures mean that it is often impossible for surveyors to visit a property in person.
So, what are the alternatives?
Automated Valuation Model (AVM)
Many lenders are able to lend to customers who are borrowing a relatively low loan amount compared to the value of the property, with the use an automated valuation model (AVM)
An AVM is a statistical valuation of the property based on past performance of similar properties in the area. It’s the ultimate light-touch valuation, based entirely on data and an algorithm, and worth noting that there is little track record of AVMs accurately predicting prices in an environment of falling house prices
This is why lenders will often limit the loan-to-value (LTV) they are prepared to lend when using an AVM to no more than 85% for remortgage customers, and often much less for homebuyers.
Desktop Valuation
A desktop valuation is relatively new and offers richer information than a standard AVM. It’s an independent valuation that is provided by a surveyor, who uses tools such as an AVM, online data and services like Google Street View to build a more detailed picture of a property’s value. This data is then used in combination with the surveyor’s own expert local knowledge to deliver a more considered valuation for the property. A desktop valuation cannot be as thorough as a full physical inspection, but it uses a wider variety of information sources than an AVM, and where possible can even include reference to internal photos of the property. As such, it could be considered to be a more accurate reflection of the property’s value than a valuation based entirely on an algorithm.
Help to Buy Valuations
It is also worth thinking about valuations that are required by customers who want to repay some or all of their Help to Buy equity loan.
Guidelines from Homes England state the amount to be repaid on a Help to Buy equity loan depends on the market value of the property at the time it is repaid and that an independent valuer must provide the valuation.
However, this can be a desktop valuation from a RICS accredited surveyor, so for those borrowers who took out a Help to Buy mortgage and want to repay all of some of the balance in the coming months, there are options to do so, even if lockdown restrictions continue.
If you would like more information about the valuation services that we offer at Arnold & Baldwin, please take a look at Property Valuations.
