As seen on Development Finance Today
To my knowledge, no surveyor has actually been shot by a disgruntled broker following a disappointing valuation, but it is certainly a point of contention when it emerges that a property is perhaps worth a little less than expected.
Unlike estate agents, who are competing to win a listing, a surveyor has no financial bias to value a property at anything other than the true market value and so, while it can be frustrating, a down valuation is actually beneficial for your client if it saves them from paying over the odds for a property.
Knowledge is power – you can’t change the value of the property, but by understanding its true value earlier in the process, you can be equipped to make the right choices.
One area where the early involvement of a surveyor can be particularly beneficial is at the start of a development project, before even an application for credit has been submitted.
Unrealistic expectations of the price that can be achieved for properties on a development is a common reason for a credit application to be declined by a lender. By involving a surveyor at an early stage, a developer can receive an honest appraisal that they are building the right type of property at the right price for the area. This can provide the peace of mind, not only that the credit application has a better chance of being approved, but also that the completed properties will be well pitched for a quick sale.
I have seen many developers build properties that are pitched to an overseas market, with pricing that is not reflective of that particular area. This can especially be the case on a permitted development scheme that does not need planning permission and often does not meet the minimum size requirements of traditional properties, which can be easily missed at the beginning of a development. The result is a final development that is difficult to sell because the properties are not comparable on size or price to others in the area.
Don’t shoot the messenger – embrace local knowledge. Good planning at the outset can help to ensure a smoother life cycle for a development, and this helps all parties involved.