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  • Buy-to-Let

    How long after refurb to get true valuation?

    Hi All,
    I would love to hear your views and experiences regarding valuations in today’s market. I am a reasonably experienced landlord and own a few BTLs. I am trying to grow my portfolio at a steady rate by renovating and refinancing.
    My main obstacle stopping me growing at a rate I would like, is obtaining the required house mortgage valuation post renovation. It appears that if I try to get a mortgage immediately after 6 months the surveyors are not looking at comparable house sales, but instead siding on caution and adding on a guestimate of the renovation cost to the last sold price.

    This means I cannot pull out as much of my money as I would like and have to add more of my savings to purchase the next property, which slows me down.
    From speaking to others in a similar situation it appears the norm has now become, Buy, renovate, rent out and wait for 2 years to remortgage to pull out the desired equity. After 2 years surveyors will simply look at comparable sold houses in the area. I am interested to see if this is what all of you are experiencing and have accepted is the norm now???
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    If there are directly comparable properties in the same area, they should have some influence on the valuation figure for your property. 

    Valuers are being cautious at the momentd due to the political and economic uncertainties. 

    If you have a situation like this and you have directly comparable properties as evidence, you could go to the lender and challenge the valuer's figure if it comes in low.

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    I don't think there has ever been consistency with Surveyors and Valuers tbh. I've just had a house done for re-mortgage purposes that was refurb'd to a high standard and the surveyor came back 5k less than an exactly comparable property (in terms of beds/size etc) recently sold a few doors down. Go figure that one... You could argue the point but I don't think you'd win. Particularly today where I believe they are being cautious due to outside influences. Brexit seems to get blamed for most things.

    A couple of years back the same thing happened to me on a house I made a great profit on. The surveyor/valuer came back with a ridiculous value (in my opinion) for the re-mortgage. The house was sold for 25k more than his estimate, not very long after the valuation had taken place. I've had five houses surveyed for re-mortgaging and can only say they are all over the place valuation wise. Supply/demand/timing/corporate pressure/opinions who knows what goes on in their heads.

    I'm sure more experienced people on here will have their views but for me it's all about lack of consistency.

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    The inconsistency is definitely an issue. Showing comparable houses does not help within a short timescale of 6 months. The surveyors don't want to know. The are covering their back. I've also read that the value they supply to the lender is valid for 12 months. So that means they are trying to go into the future and guess what the market would be like then, which is very difficult in today's climate.

    So my question will be how do we get around this issue. Do you think the following will work:

    Find out which company the lender uses for valuations. Contact that company directly and obtain a survey from them directly. That way you are the client and the surveyor is more likely to look at the comparable sold price data you show them and give you a fair market value. Then once you obtain a valuation. Give your lender's surveyor a copy when they come around to do their valuation. I can't see how they will be able to argue with their own company's valuation????

    What do you think???

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    Dear Albrahim

    Perhaps I can offer some comment as a valuer.  This question comes up for me and I have seen similar queries on PT before.  Basically there is no definitive answer. each case will turn on it's merits.

    The valuer should always reference transactional evidence (comparables) in determining value, but I'm afraid that a very recent transaction of the property at a lower price in recent months will inevitably raise questions.  I have been asked to value houses purchased just a few weeks before the valuation that have had little more than a coat of paint and the owner is expecting £10k increase in value.  Whether value has been added will entirely depend on the works that have been done. 

    You can't generalise that valuers are nervous, but lenders will ask questions. The valuer has to report recent transactions, so the lender will know about the recent sale and will need to know how valuer has been added.

    The value stands on the day a property is valued.  Where completion of the loan takes an unusual amount of time (several months) then most lenders revert to us and ask if the value still stands.  We take an objective view at that point as to whether the market has changed and report accordingly.

    If you make contact with a bank valuer prior to their instruction, most banks would not then allow that valuer to do a mortgage valuation; they regard it as a conflict of interests, however innocent the instruction.  Valuers are generally only allowed to do the job in isolation and any prior contact has to be declared.

    Also bear in mind what the lenders ask the valuers to do.  Some banks ask for a valuation subject to a short marketing period (e.g. 90 days) and this inevitably depresses the value.  This is not the valuer's fault!  That's just the lender's policy.

    Most of my time is now spent as an investor so I understand the issues you have.  However, my valuation experience is that many investors have unrealistic expectations.  I have just refurbished a house myself and I am fairly confident that the £10k+ spend has not been added to the value.  The area is such that £10k is a massive jump in prices (the house was habitable at the start of the works) and unlikely to be achieved.  I did it so as to continue renting it out at the higher end of the local market.

    A final few points - don't go for the cheapest valuation.  Frankly there is not enough money at the lower end to dwell for too long on a job.  Not to say it shouldn't be right., but just a fact.  Make the valuer's life a bit easier - I know it's hard to sometimes get access with tenants, but try not to mess the valuer around with access.  Hand them some comps if you have any (I certainly don't mind) and make sure that you have all your paperwork in order (planning, building regs, tenancies, EPC, etc.).  If you can get the property tidy, then this helps - it is only psychological, I know, but if a valuer has a better "feeling" about a property, they may be more optimistic.

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    3 months ago I had a property valued by the professionals. The valuations came in between £150,000 and £160,000. I sold it myself for £177,500. It’s not rocket science.
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    Hi Graham,

     

    Thanks for the insight from a surveyor’s point of view. I understand your view on this and agree with all you have said. But based on what I’m seeing today I think it’s fair to generalise and say surveyors are nervous. And maybe rightfully so but its clear to me they are applying a level of conservatism in their valuations.

     

    I would expect a surveyor to question why the estimated value of the house I have given is so much higher than the sold price 6 months ago. My answer would be the full refurbishment I did. I don’t mean just paint. I mean a full refurbishment spending 20K plus including rewire and re-plumb and plaster and other things that are not so obvious to see. The surveyor should then determine their own value for the house and the most important data they need for that is comparable sold prices. I mean houses with the same layout within ¼ mile. The surveyor can make minor adjustments for small differences like an additional WC or garage for example.

     

    But this is not whats happing today. The surveyor is worried about the banks interest and reducing the market valuations to cover their backs. I would be interested to know how do you know which lenders apply the ‘short marketing period’ valuations? Maybe that’s what is causing these down valuations.

     

    My plan is not to use the same surveyor but to use the same company to obtain an independent valuation. I cannot see how there is a conflict of interest there. Ultimately I’m paying twice for the same service but the first time I’m the customer. It will be interesting to see if there is a difference?

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    There are some great products out there for bridge to let purposes though?

    You can refinance it within the usual 6 months, and its just one application for both the bridge and the mortgage after.

    • One application form produces 2 offers, one for thr bridge and one for the BTL.
    • The same valuer for both the initial valuation and the re-inspection
    • one expert underwriter from start to finish
    • one conveyance and discounted legal fees
    • the bridge payments can be rolled up too so no payments during the refurb phase
    • borrow up to 75% LTV on the bridge and then refinance for up to 80% of the post works valuation for the BTL mortgage which essentially means you can get all your money back out again for the next project.

    Obviously if you are flipping properties this is not for you but as for refurbishing a BMV place to then let out, its perfect, especially as the same valuer can see just how much of an improvement you have made and possibly agree beforehand if your planned works are going to add the right amount of value realistically.

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    Hi, AJohnson,

    This seems like a good product and good idea. I have looked into it briefly, in particular from Precise. The BTL rates at the end are not great but acceptable and the bridge interest is not too bad. I have heard from two investors that their surveyors do provide conservative valuations, but that's just from two cases.

    Have you had any feedback from any of your clients that have used these products. Can you share any experiences?

    Thanks
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    We like the product and so do our clients that have been recommended it, I haven't heard anything negative about it.  Shawbrook also offer something like this but as they are a bit more specialist, they usually have a higher rate than Precise, but will lend where Precise may not.


    As for the Precise rates, a LTD company can get a 2 year fixed rate for 2.99%, that's not bad when it comes to LTD companies who usually circle the 3% mark anyway.  Personal name Clients may well find a better mortgage exit rate option but a lot of standard lenders will not allow a remortgage in the first 6-12 months so it may end up counter productive that way.

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    Financial Consultant working with Property Tribes Financial Services.

    BTL Specialists.

    Always cover your debts, don't leave them for your loved ones to pick up. Ask me how - austyn@ptfs.co.uk     07500 871209


    I am in the NE so my area may be worse than other areas for down valuation

    Personalty I came to a conclusion that trying to get money out of a property was just a let down  I never got what I wanted from a revaluation

    So I learned the best way for me to raise deposits was to save a Deposit from Income

    since I took the Bull by the horns my Business has got stronger and stronger

    I understand that for some Landlords trying to save a deposit is really an none starter If you you haven't got the ability to save deposits

    I use good cash deposits from saved income and I use Capital and repayment

    My own feeling is if you can go down the road I use now Its really money making money and you grow slower but you get

    stronger

    You end it getting better deals along the road because your LTV is falling with every payment

    Its not the get rich quick road but it is the road I follow now

    Nothing worse than doing all the work and paying a Valuation fee and you find the Property will not value up

    I used to get frustrated Now I dont

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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.