Good business or sharp practice?

[Lucan Unlordly]

A relative is in the process of buying a new home which will require a very small mortgage of around £60k.

Despite the new house being worth in excess of £350k the building society providing the mortgage require a valuation to confirm that whether it's worth the £60k borrowing!

So they'll do what? Visit the property to inspect the roof, make sure the buildings not in a poor state of repair, that the services are all connected etc.,

No, none of that, they will simply drive by nod to the postman, wave to his cat, return to the office and send a bill for £250!

Yes, £250......

 

[Nico Albrecht]

Keep in mind you want something from Barclays, so play by their rules. £250 seems very reasonable for a surveyor to come out.

 

[Lucan Unlordly]

Keep in mind you want something from Barclays, so play by their rules. £250 seems very reasonable for a surveyor to come out.

Yes, if you want a survey. Not to drive past!

Yes, if you want to borrow closer to the value of the house but.............in this case there is more than 5 times the sum required in equity.

 

[UKSBD]

Shop around for mortgage providers who don't charge for valuations

 

[Newchodge]

Neither good business nor sharp practice. Just normal practice to ensure there is actually something in existence woth at least 60k

 

[tony84]

How else will the lender know roughly how much the property is worth?

It might not have a roof or windows or a door - plenty of houses in manchester have wooden windows (I am not talking about the frames).

Your relative could have gone with a mortgage that offers a free valuation, there are plenty of them out there.

 

[The Byre]

Either that, or find a cheaper house!

There are plenty of fixer-uppers out there.

 

[billybob99]

A relative is in the process of buying a new home which will require a very small mortgage of around £60k.

Despite the new house being worth in excess of £350k the building society providing the mortgage require a valuation to confirm that whether it's worth the £60k borrowing!

So they'll do what? Visit the property to inspect the roof, make sure the buildings not in a poor state of repair, that the services are all connected etc.,

No, none of that, they will simply drive by nod to the postman, wave to his cat, return to the office and send a bill for £250!

Yes, £250......

Surveyors aren't the smartest of people.

At long as you get the result you wanted.

 

[Lucan Unlordly]

Neither good business nor sharp practice. Just normal practice to ensure there is actually something in existence woth at least 60k

I think you miss my point. I'm suggesting the cost is excessive. The surveyor is based less than a mile from the property. A 10 minute round trip or 1 minute detour on the way into work, a cursory glance at a property in an area where prices average £400k.

How else will the lender know roughly how much the property is worth?

It might not have a roof or windows or a door - plenty of houses in manchester have wooden windows (I am not talking about the frames).

Your relative could have gone with a mortgage that offers a free valuation, there are plenty of them out there.

See above.
We are talking about a company, an institution who's business is knowing the property market inside out Tony. I sit here in the home counties and can tell you that properties are worth a lot less in Tyneside than they are in Surrey.

You could probably tell me that a property sold for £360k on the open market, and many others like it, is worth more than £60k.

Re a free valuation. I'm guessing the better rate was more important at the time of securing the mortgage?

 

[JEREMY HAWKE]

They maybe the ones that discover it is on a sink hole before it is too late

 

[UKSBD]

Re a free valuation. I'm guessing the better rate was more important at the time of securing the mortgage?

There's usually a reason why it is a better rate.

 

[tony84]

See above.
We are talking about a company, an institution who's business is knowing the property market inside out Tony. I sit here in the home counties and can tell you that properties are worth a lot less in Tyneside than they are in Surrey.

You could probably tell me that a property sold for £360k on the open market, and many others like it, is worth more than £60k.

Re a free valuation. I'm guessing the better rate was more important at the time of securing the mortgage?

If the property has no windows or roof, it is probably not worth £360k if the rest of the street is, but more importantly Barclays would also not lend on the property at all, no matter what the value and loan size.

They are also checking other things - is the property next door or even in close proximity to an off license, petrol station or pub for example? Is there anything on the face of it that may mean the property is not within criteria.

We had an application declined with Barclays 3 years ago. The house was next door but one to a mechanics. I spoke to Barclays upfront and they said it does not fall outside criteria but will be down to surveyors comments. I told the customer this and he was happy to proceed. The property was valued at £0 (which means they will not lend on it) because the mechanics was quite busy and noisy. Our buyer, said he did not mind the noise as he was at work during the day. The same application was then accepted with another lender who took a different view on the garage.

You say £250 for someone to drive past the property, but he/she still has to check a few things, write a mini report, drive there and back and pay for the insurance policy to protect against them getting it wrong, rates, tax - I am sure you know the normal costs of doing business.

 

[Mr D]

The surveyor charging was known before they were booked?

Driving past the property - £5. Knowing what to look out for, insurance, report writing, time spent on the report etc - £245.
If you simply wanted someone to drive by then anyone could have been hired. If you wanted a report written then you pay for a professional.
You don't know what else is known about the property or when a report was last done.

 

[Lucan Unlordly]

The surveyor charging was known before they were booked?

Driving past the property - £5. Knowing what to look out for, insurance, report writing, time spent on the report etc - £245.
If you simply wanted someone to drive by then anyone could have been hired. If you wanted a report written then you pay for a professional.
You don't know what else is known about the property or when a report was last done.

The buyer has not requested the services of a surveyor, the bank offering the mortgage has. They 'may require access to the property but in all likelihood will determine that the property is worth in excess of £60k by driving past'. We'll charge you £250 for that.
No expert eye seeking out damp, subsidence, fire damage, electrical faults, drainage problems and therefore no report.

To put this into perspective the buyer is engaging a professional surveyor to produce a Home Buyers report at a cost of several hundred pounds which WILL give peace of mind and provide some guarantees that the house is in good order.

 

[Newchodge]

Then tell the mortgage company that the cost is unacceptable and your relative will not pay it. Offer them a free copy of the Home Buyers report. Then look for another mortgage provider who does not charge for this part of their service.

 

[Saravanan28]

Good business is better than the sharp practice.

 

[Mr D]

The buyer has not requested the services of a surveyor, the bank offering the mortgage has. They 'may require access to the property but in all likelihood will determine that the property is worth in excess of £60k by driving past'. We'll charge you £250 for that.
No expert eye seeking out damp, subsidence, fire damage, electrical faults, drainage problems and therefore no report.

To put this into perspective the buyer is engaging a professional surveyor to produce a Home Buyers report at a cost of several hundred pounds which WILL give peace of mind and provide some guarantees that the house is in good order.

No, the buyer chose a lender who insist on charging for a surveyor, rather than use a lender who use a surveyor and hide the charge within other costs.
Either way a surveyor is going to be used and paid for.

We don't know that the surveyor doesn't have a report on file from last year. We don't know what the lender asked them for.
We do know that if you book a business to do some work they should be paid...

 

[Mr D]

Then tell the mortgage company that the cost is unacceptable and your relative will not pay it. Offer them a free copy of the Home Buyers report. Then look for another mortgage provider who does not charge for this part of their service.

Does that work these days? The offering of the buyer's report that is.

 

[Newchodge]

Does that work these days? The offering of the buyer's report that is.

Almost certainly not, that is why my final sentence is there.

 

[tony84]

The buyer has not requested the services of a surveyor, the bank offering the mortgage has. They 'may require access to the property but in all likelihood will determine that the property is worth in excess of £60k by driving past'. We'll charge you £250 for that.
No expert eye seeking out damp, subsidence, fire damage, electrical faults, drainage problems and therefore no report.

To put this into perspective the buyer is engaging a professional surveyor to produce a Home Buyers report at a cost of several hundred pounds which WILL give peace of mind and provide some guarantees that the house is in good order.

The bank wants the valuation carried out. They are passing the cost of that on to the buyer. The buyer has a choice of accepting it or not. We have access to around 80 lenders, so there are no shortage of options.

The buyer needs to satisfy themselves that there is no damp, subsidence, fire damage etc etc. All the bank are interested in is can they get their money back if they repossess and does it appear to be within their criteria? It will not be the most thorough but that is because the risk is so low. If there is no kitchen in the property and the buyer defaults, they will still get their money back.

If the surveyor/man in a car driving past decided that further reports are needed, those will be requested and they will also be paid for by the buyer.

There is still a report, just because the buyer does not see it there will still be a report. It is usually a 1-2 page report which is provided to the lender.

 

[DontAsk]

In some cases they do not even send a surveyor anywhere near the property. E,g, Halifax on a 60+% LTV mortgage of £400K. They have ways of knowing

 

[Lucan Unlordly]

The bank wants the valuation carried out. They are passing the cost of that on to the buyer. The buyer has a choice of accepting it or not. We have access to around 80 lenders, so there are no shortage of options.

The buyer needs to satisfy themselves that there is no damp, subsidence, fire damage etc etc. All the bank are interested in is can they get their money back if they repossess and does it appear to be within their criteria? It will not be the most thorough but that is because the risk is so low. If there is no kitchen in the property and the buyer defaults, they will still get their money back.

If the surveyor/man in a car driving past decided that further reports are needed, those will be requested and they will also be paid for by the buyer.

There is still a report, just because the buyer does not see it there will still be a report. It is usually a 1-2 page report which is provided to the lender.

I'm a little bemused as to why you keep stating the obvious as if it has any influence on the question raised in my opening post?
Yes, the bank wants the survey carried out, yes they are passing on the cost to the buyer and yes I am sure there are multiple options with varying costs, some obvious, others hidden.
Yes the buyer needs to satisfy themselves etc., etc.,
Yes the bank need to know that they can get their money back if they repossess.
Yes, if further reports are needed then the buyer foots the bill.
I think we are agreed on that?

My question is whether charging £250 for simply driving past a property is sharp practice?

 

[Lucan Unlordly]

In some cases they do not even send a surveyor anywhere near the property. E,g, Halifax on a 60+% LTV mortgage of £400K. They have ways of knowing

Do they charge?

 

[Newchodge]

I'm a little bemused as to why you keep stating the obvious as if it has any influence on the question raised in my opening post?
Yes, the bank wants the survey carried out, yes they are passing on the cost to the buyer and yes I am sure there are multiple options with varying costs, some obvious, others hidden.
Yes the buyer needs to satisfy themselves etc., etc.,
Yes the bank need to know that they can get their money back if they repossess.
Yes, if further reports are needed then the buyer foots the bill.
I think we are agreed on that?

My question is whether charging £250 for simply driving past a property is sharp practice?

If they charged £250 for simply driving past a property, I want their job.

You are being ridiculously naive.

 

[tony84]

My question is whether charging £250 for simply driving past a property is sharp practice?

In a word No.

But I will expand on that answer by copying and pasting what I wrote previously...

You say £250 for someone to drive past the property, but he/she still has to check a few things, write a mini report, drive there and back and pay for the insurance policy to protect against them getting it wrong, rates, tax - I am sure you know the normal costs of doing business.

 

[AllUpHere]

This demonstrates perfectly the difference between business owners and non business owners.
The employee thinks, bloody hell £250 what a rip off.
The business owner thinks, yep, by the time they've paid the rent, the rates, the vehicle costs, other bills, paid the non fee earners, paid the professional indemnity insurance and paid for professional body membership fees a couple of hundred quid seems about right. Stick a bit of Vat on and Bob's your uncle, near as makes no difference, 250 quid please.

 

[Mitch3473]

A relative is in the process of buying a new home which will require a very small mortgage of around £60k.

Despite the new house being worth in excess of £350k the building society providing the mortgage require a valuation to confirm that whether it's worth the £60k borrowing!

So they'll do what? Visit the property to inspect the roof, make sure the buildings not in a poor state of repair, that the services are all connected etc.,

No, none of that, they will simply drive by nod to the postman, wave to his cat, return to the office and send a bill for £250!

Yes, £250......

That's about the long and short of it, try getting them to come out on a saturday if you want a real laugh.

 

[Lucan Unlordly]

If they charged £250 for simply driving past a property, I want their job.

You are being ridiculously naive.

So her majesty the Queen wants to borrow £50k to refurb the Orangery at Buck Palace. The surveyor has to drive past to confirm that the property is worth in excess of the amount borrowed.
What sort of report would the surveyor need to complete to satisfy the lender. A simple yes, it's worth a few quid or 15 pages of waffle?

 

[Lucan Unlordly]

In a word No.

But I will expand on that answer by copying and pasting what I wrote previously...

The property at 654 Acacia Street is a mid terraced 2 storey house of brick construction with tiled roof over. The property appears to be in good order with no obvious - from the comfort of my car - issues that would greatly reduce the agreed purchase price of £350k when set against the required £50k borrowing.

SMALL PRINT: This valuation was carried out without a full structural survey and any claims made for situations above and beyond the scope of our liability will be binned.

Invoice attached.

What's to get wrong?

 

[Lucan Unlordly]

This demonstrates perfectly the difference between business owners and non business owners.
The employee thinks, bloody hell £250 what a rip off.
The business owner thinks, yep, by the time they've paid the rent, the rates, the vehicle costs, other bills, paid the non fee earners, paid the professional indemnity insurance and paid for professional body membership fees a couple of hundred quid seems about right. Stick a bit of Vat on and Bob's your uncle, near as makes no difference, 250 quid please.

Does it? How comes a qualified surveyor can produce a Home Buyers report requiring a couple of hours work in the office, 2-3 hours physically assessing the property, more time writing up and preparing the report etc., for just £100 more?

 

[tony84]

The property at 654 Acacia Street is a mid terraced 2 storey house of brick construction with tiled roof over. The property appears to be in good order with no obvious - from the comfort of my car - issues that would greatly reduce the agreed purchase price of £350k when set against the required £50k borrowing.

SMALL PRINT: This valuation was carried out without a full structural survey and any claims made for situations above and beyond the scope of our liability will be binned.

Invoice attached.

What's to get wrong?

Just looking at a similar type of report (drive by) that I have on file for a customer, the report has:
Property Address,
Is the property newly built or converted?
- If yes, is there a warranty in place?
- If yes, provide details (NHBC/LABC etc),
Builders details
Development details (name of development, units in development, incentives provided)
Is the property suitable security in line with the banks guidelines?
- If no please provide details
Market Value
Property type (detached/semi etc)
Propery details (bedrooms, garages, bathrooms, etc)
Is the property unconventional or non standard?
- If so, please provide details
Approx build year
Does the plot exceed 10 acres
Tenure (freehold leasehold)
If leasehold - term remaining
Ground rent/service charge - if known
Rebuild value
Insurance required

- That is on page 1, there is also another page with a couple of relevant questions and then some BTL questions.

Can you see now that although there is a drive by - it is the same report as a basic valuation - but is not just a case of yes the house is there. They also have to go off and check if the property is freehold/leasehold, they have to check the lenders guidelines (you can have a look at the CML handbook online - hundreds of pages for each lender).

Obviously not all of those questions can be answered from a drive by but the ones that can not, the lender is happy to take the risk on because drive bys are usually limited to 75% LTV and some of those questions will get checked by solicitors.

In short, the report is not just "Is the property suitable? Yes/No".

Most of that report is tick box questions, but they will also need to go and check things back at the office. Typically surveyors know the area quite well so they will probably know if a house on a street is freehold or not as they will probably have been to 10 other houses on the same street. Likewise for the number of acres, if it is a mid terrace in stoke, it is not going to have 10 acres, but a semi detached in cheshire might - I remember doing a Mortgage in Wilmslow and the lender we went to allowed up to an acre.

Whilst I have stated the obvious, it is for the lenders benefit and not the buyers. Only a couple of lenders earn a kick back from surveys, many do it at cost. So there is not always a financial benefit for lenders.

Can we put this to bed now?

 

[ethical PR]

I'm a little bemused as to why you keep stating the obvious as if it has any influence on the question raised in my opening post?
Yes, the bank wants the survey carried out, yes they are passing on the cost to the buyer and yes I am sure there are multiple options with varying costs, some obvious, others hidden.
Yes the buyer needs to satisfy themselves etc., etc.,
Yes the bank need to know that they can get their money back if they repossess.
Yes, if further reports are needed then the buyer foots the bill.
I think we are agreed on that?

My question is whether charging £250 for simply driving past a property is sharp practice?

i am a little bemused as to why you are coming on a business forum to whinge about the fact that a relative is having to pay out £250 for a valuation survey.

If they weren't happy with it they could have found a mortgage company that offers it for free.

It is clear that you know little about how surveys are carried out. They don't just look at the property but carry out other research to come to their conclusion.

Your assumption that all they do is 'drive by' is down to your ignorance of the process.

When I had a mortgage valuation recently the report not only included her inspection of the premises but other research that affected the valuation of the property.

 

[Mr D]

The property at 654 Acacia Street is a mid terraced 2 storey house of brick construction with tiled roof over. The property appears to be in good order with no obvious - from the comfort of my car - issues that would greatly reduce the agreed purchase price of £350k when set against the required £50k borrowing.

SMALL PRINT: This valuation was carried out without a full structural survey and any claims made for situations above and beyond the scope of our liability will be binned.

Invoice attached.

What's to get wrong?

And its the who gets to look that is being paid for.

Not some random car driver. Its someone who has studied, has experience, has insurance etc.
£5 for the drive by, £245 for the knowledge & skill.

 

[AllUpHere]

Does it? How comes a qualified surveyor can produce a Home Buyers report requiring a couple of hours work in the office, 2-3 hours physically assessing the property, more time writing up and preparing the report etc., for just £100 more?

That's a good point. I'd say there is either more to this drive past survey than you realise, or the home buyer report is a bargain.

 

[ethical PR]

That's a good point. I'd say there is either more to this drive past survey than you realise, or the home buyer report is a bargain.

i am not sure it is. There are three levels of valuation. It is not £100 more for the next level of valuation up from £250, it is about £400 more.

Unfortunately another post where the OP seems to not know what he is talking about.

 

[Mark T Jones]

Everybody's job is easy from the outside...

 

[estwig]

The OP makes me grateful to be in a position, to run a mile from clients like this and not look back.

If the question 'why does it cost that much', can't be satisfactorily answered with 'because that's what I want to do it', you need to be out of there.

 

[tony84]

Everybody's job is easy from the outside...

That is true. I used to own a pub and even the bar staff had to know more than just pulling a pint (which is not always straight forward - all the pumps can differ in how lively they are). They had to eventually learn how to change barrels, the till (which with hundreds of drinks/food combinations is not always that easy), what the different bitters are like for those who ask, making the tills stack up (possibly after they have dipped them)...

Although I once started a job at the same time as another lady. She forgot to mention she was pregnant. 3 weeks in to the training she handed in a request to go on mat leave later that month, so just as she finished the training she went off. She then came back 9 months later, did 2 months training and went off on mat leave again. Then 2 weeks after she came back, we were given notice of redundancy. 4 weeks after that they diverted our phones to another office and we sat playing indoor cricket for 2 months.

So in 2 years, she did the grand total of 18 months mat leave, 4 months training, 1 months work, 2 months indoor cricket and then received a redundancy payout.

 

[Gordon - Commercial Finance]

So in 2 years, she did the grand total of 18 months mat leave, 4 months training, 1 months work, 2 months indoor cricket and then received a redundancy payout.

Nice job if you can get it!

For asset finance brokers, there is sometimes a requirement to do asset inspections. This is not necessarily to determine the value of something, but really just to make sure it exists, and in the condition reported, before they take security on it and lend. Often known as "touching metal", lenders will pay brokers a few hundred quid for this to save them sending someone. A colleague of mine recently went to Edinburgh to make sure a Ferrari existed.

The lender perhaps can't take your relative's word for it that the house is there - clearly there is a term in their criteria that determines they need to have this done. £250 is a decent price - pay it or don't get the mortgage with that lender.

 

[Lucan Unlordly]

i am not sure it is. There are three levels of valuation. It is not £100 more for the next level of valuation up from £250, it is about £400 more.

Unfortunately another post where the OP seems to not know what he is talking about.

As it happens Ethical, I am wrong. The cheapest quote for a Homebuyers Report is just £325,(£75 more) the next is £400, a third is £450. Unfortunately