What is a homebuyers survey?

So, what is a homebuyer’s survey and do we really need one before we buy a property? There are many conflicting views surrounding homebuyer’s surveys from such reports being written by surveyor’s keen to cover their backs, only to be used by buyers to force down prices. There are three types of surveys one can commission prior to purchasing a house and each one has value but should always be perceived as a gauge and not the final answer.

One in five buyers rely on simply a Valuation survey to verify with the mortgage lender that the house is worth the money being lent (primarily this reassurance is to the lender that they will see a return on their money).

The next type of survey is a Homebuyers report which is navigated via an easy to understand ‘traffic light’ ratings, so you can clearly see the property’s condition, and any areas of concern. This survey is what most potential buyers will commission. However, it is important to note that surveyors undertake these visually only, they will not pull up carpets or manoeuvre large pieces of furniture, so often the report ensures they have benchmarked expectation and should be used as a guide only.

A Building Survey is the most detailed of surveys, and is therefore suitable for older properties, or if you’re planning any extensive building work. This report includes all the detail of a Homebuyers Report, apart from the valuation, as well as a more in-depth analysis of the property’s condition. A difference between a homebuyer’s report, is that the homebuyers report may flag up some tiles in need of replacing on the roof, while a building survey will detail the exact locations of these tiles, how many and where they are positioned on the roof. The report also got into further detail to advise on the necessary repairs and investigative next steps required and can provide an estimate of repair as an optional extra.

The ideal scenario is to always select the survey, based on the condition of the property being purchased. For example, a large 1930’s house (built within the last 100 years), that has never been modernised is likely to have some requirements that can easily be picked up with the Homebuyers Report ‘traffic light’ ratings, so you can clearly see the property’s condition, and any areas of concern.

An example of items that can be colour coded against the necessary ‘traffic light’ rating systems follows:

traffic

A Building Survey is the most detailed of surveys, and is therefore suitable for older properties, or if you’re planning any extensive building work. This report includes all the detail of a Homebuyers Report, apart from the valuation, as well as a more in-depth analysis of the property’s condition. A difference between a homebuyer’s report, is that the homebuyers report may flag up some tiles in need of replacing on the roof, while a building survey will detail the exact locations of these tiles, how many and where they are positioned on the roof. The report also got into further detail to advise on the necessary repairs and investigative next steps required and can provide an estimate of repair as an optional extra.

The ideal scenario is to always select the survey, based on the condition of the property being purchased. For example, a large 1930’s house (built within the last 100 years), that has never been modernised is likely to have some requirements that can easily be picked up with the Homebuyers Report ‘traffic light’ ratings, so you can clearly see the property’s condition, and any areas of concern.

An example of items that can be colour coded against the necessary ‘traffic light’ rating systems follows:

traffic1traffic3

On acceptance of a property offer, estate agents will demand that surveys are conducted immediately and they can be organised through your mortgage lender or independently by yourself. Committing to this cost gives them the reassurance you have made a serious offer and are willing to pay the money for a survey and not walk away. As the cost difference is negligible, we would undertake independent survey, as they can be done far quicker (the waiting lists can be extensive depending on your lender). This then gives a potential buyer more time to investigate further any issue flagged the require answers before exchange. An example of this can be identifying public sewers at etc. back of the house, that may prevent you from undertaking a kitchen extension easily or simply damp that needs to be accounted for. In our experience, many estate agents have put considerable pressure to ensure these surveys are completed quickly and ensure any flagged issues are not used against to re-negotaite the initial offer on the property.

Arguably though, if structural problems are flagged, then it’s important to understand you still have the option to walk away if you aren’t prepared to pay for these repairs or you feel the cost of this isn’t reflected in your offer price. This is where the grey areas of negotiation arise, with estate agents willing to elevate house prices, however it’s important to keep sight of the facts. If a home costs £750,000 to purchase and the renovation work costs an additional £200,000 factoring in the £30,000 for Stamp Duty. Would you be willing to proceed if houses on that street had never sold for over £900,000? One can argue if it’s your dream house, on the one street you wanted and you plan to be there for decades to come the return is more likely to iron itself out. However always remember, London house never come with any guarantee of a return on investment and there is always a risk.

Selecting a surveyor is generally advisable through word of mouth, however the protocol and templates followed are almost identical from one to another. Is a highly-experienced surveyor likely to spot things another may not is hard to gauge? In the past, we have used surveyors who are more local to the area, as we believe they are more familiar with the streets and properties within that area and may have greater sense of familiarity with the problems that may arise.

Discussion have been made over whether sellers in the future become responsible for the survey and ensure every potential buyer is free to view it. It would alleviate any last-minute negotiation, however its unlikely to be forced as policy for the foreseeable future.

In recent conversations with a neighbour, who was struggling to understand why her property hadn’t sold for ten weeks, I did suggest she spend a small amount (turned out to be around £450) for a home buyers survey so, if she got any offers she was able to view what the potential buyers might see. She said later it was useful to see what the buyers might and decided to delay the sale another year and make the necessary repairs herself on the property.

 

 

 

 

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