Estate agents are overvaluing properties claim mortgage brokers

Research reveals 71% of mortgage brokers are doubtful of estate agents’ property valuations and expect 'down-valuation' numbers to surge. Brokers believe agents' appraisals fail to accurately represent values that will survive mortgage lender scrutiny.

Research from Countrywide Surveying Services shows only 29% of brokers trust current agent valuations revealing significant gaps in how the market approaches property valuations.

DOWN VALUATIONS

As a result, 41% of brokers are anticipating an increase in appeals. JLM Mortgage Services Director Sebastian Murphy agrees, telling The Negotiator: “What was a trickle has now become a flood, with around 20% of all our cases, both purchase and remortgage, subject to a down valuation from the surveyor.”

Down-valuations are a major source of frustration for estate agents. They can derail transactions weeks into the process, with buyers typically demanding vendors reduce their asking prices to match the mortgage lender’s lower valuation, which can easily result in the sale falling through.

Analysis by EXP shows that fall-throughs cost estate agents £1bn last year, with an estimated 296,204 transactions collapsing at an average cost of £3,419 to buyers and sellers.

APPEALS OFFER LITTLE HOPE

To compound the issue, the valuation appeals process is rarely successful, says AALTO Mortgages’ boss, Stuart Phillips: “After six years in the industry and witnessing countless appeals, I’ve never seen one overturned.” It may be no coincidence that the growing gap between surveyors’ and agents’ valuations has coincided with RICS Red Book updates.

The new standards require surveyors to assess environmental, social and governance factors for the first time, which is said to be making surveyors particularly cautious when assessing older properties.

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