Karen Healy, head of equity release at e.surv Chartered Surveyors explores some of the themes of her recent presentation at the Adviser Summit.
It was a privilege to be asked to take part in the first Equity Release Council Adviser Summit back in November. It not only gave me the opportunity to share the valuation part of the Equity Release application process, but allowed me to learn from my fellow speakers about the challenges faced by advisers and conveyancers through their part in the process. It was an incredibly positive day and a great opportunity to meet so many of our industry experts. By sharing the challenges we face and discussing what we can do to work more collaboratively, we can strive to continually improve the customer journey.
The Journey of a Valuation – an up-to-date valuation in support of an application for each new product is a requirement under the Equity Release Council’s standards. Providers will instruct the valuer of their choice to prepare a valuation and provide a report detailing information specified by the provider in line with their criteria for lending.
The Instruction is issued by the lender electronically and takes only a matter of seconds to reach e.surv. Once received into the work allocations team the instruction will undergo a series of initial conflict of interest and postcode checks.
Booking the appointment involves our colleagues making contact directly with the customer to arrange a mutually convenient time for the valuer to visit the property to carry out their inspection. It is widely known that surveyor’s inspections are undertaken between 8am and 2pm and this is due to factors such as failing light outside these times in winter months, and allowing the valuers time to complete their comparable research and reporting when their site visits are complete. However, we do always try to accommodate requests where we are aware that customers have specific needs and appointments outside these times are at the discretion of the surveyor.
Before the valuer attends the property to undertake the inspection, they carry out a pre-flight check which involves numerous checks including flood risk assessments, whether the property forms part of our non-traditional database, radon maps, and further conflict of interest checks to ensure that no circumstances exist which would preclude the surveyor from being able to undertake the inspection and valuation.
When the surveyor arrives at the property to undertake the inspection, they will explain that they are from e.surv and they will present identification. Our valuers will engage with the homeowner whilst they are gathering property data to ascertain relevant information such as how long they have owned the property, the history of any extensions and/or alterations, the extent of the boundaries, and many other factors which help to build a full picture of the subject property.
Other important steps that form part of the inspection process include: measuring the property to enable the valuer to calculate an accurate floor area; inspecting the roof space to help identify construction and types of insulation present; and taking photographs which are required by the provider in many cases.
The data gathered by the valuer during the inspection is used to form the basis of comparable research. Factors such as age, detachment type, size, location, condition, and plot are all considerations when determining the valuation. Opinion of Market Value must be supported by evidence of at least 3 comparable transactions of identifiable properties. Further stipulations typically set by providers include comparables being within 6 months, 10% of valuation, and 3km of the subject property.
Definition of market value: The estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller, in an arm’s length transaction, after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion.
Once the valuation has been determined, the valuer will analyse the data gathered within the site notes, in accordance with the provider’s individual ‘guidance notes or valuers’, to compile the report. Each provider has their own set criteria on how the valuer should report in difference scenarios. For example, some lenders will require annexe accommodation to be included in the overall floor area and included in the valuation, regardless of its use.
Other providers would expect any form of annexe accommodation to be excluded from the overall floor area calculation, and only considered within the valuation in certain circumstances, e.g., where it is occupied by a family member. Another example is the extent of land to be included within the valuation.
Whilst most providers will take a charge over the entire title, many will stipulate that only specific amounts of land may be considered in the valuation, i.e., 3 acres or 5 acres. It is imperative the valuers report in line with the direction set out in the guidance to avoid recommending a property as security which falls outside of a lender or funder’s risk appetite.
Once the report is complete and has undergone final checks it is electronically signed from the valuer’s iPad and submitted to the lender. This process can trigger one of a number of different types of audit which is a process in place to manage risk and ensure quality. Audits which may trigger depend on the value of the property inspected and the valuer who undertook the inspection, but include: real time audits, report checks, high valuation audits, surveyor quality audits, and robotic process automation audits.
The final part in the instruction journey is the post valuation query process. Valuers remain available to the lender to provide clarification on points raised within the report; answer queries which may arise from legal searches and provide support generally with any query regarding matters which may impact marketability, saleability, and valuation.
For more information about visit www.esurv.co.uk
- The views of contributors are not necessarily shared by the Council.
