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What to do when a home survey goes wrong

Laura Shannon
by Lovemoney Staff Laura Shannon on 30 July 2012  |  Comments 8 comments

Paying for a survey is a ritual of property buying and often runs smooth, but what do you do when the survey reveals a problem?

What to do when a home survey goes wrong

You might think finding a house and agreeing a price is the difficult part – but in truth it’s just the beginning.

Next comes the survey. Buyers and sellers alike will be keeping their fingers crossed for the A-OK, but what if you’re told the price isn’t right?

What can go wrong?

Banks and building societies are stumping up a fair whack of money for you to buy a home, so it stands to reason they would want to check it’s worth what you’ve agreed to pay, hence the need for a valuation. Unfortunately, sometimes the result is out-of-tune music to your ears.

The lender might tell you that the property isn’t worth the sum you were willing to pay. If that’s the case, it’s not going to give you the size of mortgage you want.

If you opt for a more thorough survey as opposed to the lender’s basic drive-by valuation, other problems may come to light that could affect your original offer. For example, the survey may point to serious repairs needed or any subsidence issues. If repairs are pressing and are likely to be costly, you might want to revise your offer and renegotiate a lower price.

Two sets of couples I know have had similar experiences with property valuations; one was told the property simply wasn’t worth so much. The other couple discovered the same but it was because of structural issues; a conservatory needed underpinning. Both found themselves in a tricky situation and their house buying dreams were put on hold.

Why does it happen?

Property prices are still falling in many areas of the country. Some sellers put their house on the market with an unrealistically high price.

Or the home may have lost value since they put it up for sale at the right price. This is more likely for homes that have been on the market for a long time.

Therefore a report might show a mismatch between the property’s offer price and its true value.

In other cases, any repairs needed are highlighted on a survey. This could happen where an older home has been neglected and is only worth the money other neighbouring homes are selling for if it’s brought up to scratch.

On the flip side, thorough surveys will detail every minor defect, which can look worrying when it needn’t be. Problems shouldn’t always be taken to mean that the property isn’t worth the price you’re paying, but if repairs are likely to be expensive you can try making a lower offer. If your lender is happy at least you know you’re in the right ballpark with your offer.

No refunds

Most valuation and survey costs are non-refundable. However, Halifax announced last month that it would become the first lender to refund valuation fees if a sale collapsed.

Buyers must go on to take out a mortgage with the lender on another property to qualify for the money back though. Read more of the details in Halifax to refund valuation fees for failed house purchases.

What about ‘free’ valuations

Mortgages for both new buyers and existing owners switching deals often come with a free valuation as an added incentive.

A valuation advertised as free should stay so even if the deal collapses. But it’s likely that you will have paid an initial booking fee for a mortgage and that’s money lost unless you found a fee-free and free valuation deal, as offered by Clydesdale and Yorkshire Banks.

Any extra money paid for a HomeBuyer’s Report or a full structural survey will be lost. These surveys are far more detailed and are for your benefit over that of the bank or building society.

What can you do?

You have two real options. Renegotiate with the seller or walk away. Neither is easy.

If the property has been overvalued, approach the sellers to see if they will lower the price. Remember this isn’t you being cheeky – if they don’t lower the price, the bank won’t give you a home loan, simple as that.

They might decide to stay put instead of move, which is their prerogative, but there’s little hope of them finding another buyer happy to fill the funding gap with their own money. One of the couples I mentioned above successfully renegotiated and the seller agreed to take the hit. My friends got their keys and moved in last week.

The other couple were forced to walk away. They lost what they paid for the HomeBuyer’s Report, which is typically between £400 and £600 depending on the property. The scale of the repairs is more than they wanted to take on with their first home, so their search continues.

Use our mortgage comparison tool to find a home loan that’s right for you and get the ball rolling. You can also find more help in our property buying guide.

More on mortgages:

The true cost of a month's mortgage payment holiday

Super sub-3% mortgages

More mortgage cuts for British borrowers

At lovemoney.com, you can research all the best deals yourself using our online mortgage service, or speak directly to a whole-of-market, fee-free lovemoney.com broker. Call 0800 804 8045 or email mortgages@lovemoney.com for more help.

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Comments (8)

  • mrs weatherley
    Love rating 30
    mrs weatherley said

    Please note if the surveyor misses anything serious you will have to sue him or her. In law you are not entitled to the cost of repairs just something bizarre which is the 'notional difference in valuation' which means a house with 100.000 worth of dry rot and other hidden defects does not get you repairs costs just a small token stuff because the law says you would have bought it anyway just at a reduced price. This happened to me in the 80's and when I was on radio talking about it I received hundreds of letters and phone call from others who had been let down and financially ruined by this ruling....buyer beware what protection you think you are paying for is very little. On the bright side doesn't seem to make much difference what survey you paid for you are still entitled to laughable compensation.................

    Report on 31 July 2012  |  Love thisLove  0 loves
  • deanrobinson78
    Love rating 18
    deanrobinson78 said

    I have had 2 experiences....

    1) Buying first home paid for a Home Buyers Survey which all came through fine. When i moved in I found damp, a gap in a single storey extension caused by the roof dropping away from concrete fillets. Main roof needs propping after slates replaced with tiles with no re-inforcement of roof trusses. I complained to the surveyor who were dismissive, but then to the RISC. At that point the surveyors refunded my full survey fee.

    2) Remorgage valuation done by a large national company. Guy turned up and asked me to watch over his BMW while he valued my house (I'm not joking). He was in there 2 minutes and valued it at £190,000 even though the house over the road (same) and the house next door (same) were sold for £235,000 and £230,000 respecively within 6 weeks before. Valuer kept quoting the house down the road which was up for sale needing extensive renovation.....for £190,000.

    I had to compain right to director level before they saw sense and that the valuation was wrong. It was possibly the most stressful experience of my life!!

    I have total sympathy with first time buyers - the excitement of the deal clouds judgement, plus the pressure of the agents and other buyers.

    Report on 31 July 2012  |  Love thisLove  0 loves
  • AdAstra100
    Love rating 26
    AdAstra100 said

    75% of current survey reports appear to be reproduced caveats designed to reduce any liability that may arise due to the fact that the surveyor will never be able to cover all aspects of a house even on a full structural survey. This invariably gives the impression that the house is falling apart even if it is not and this leads to optimism/pessimism and aggravation between buyer and seller based on not a great deal of evidence only regulatory get outs.

    I have yet to have a survey which I felt was really useful to me as a buyer or a seller and it just becomes an overhead expense on house buying designed to obviate risk by the lender and the surveyor and leave the ball still in the court of the buyer.

    Report on 31 July 2012  |  Love thisLove  0 loves
  • spider589
    Love rating 4
    spider589 said

    When the market was bouyant, surveyors would know full well when a property was overpriced, but they would also know that if they killed the sale by downvaluing, there would probably be someone else daft enough to pay the same inflated price, so they would risk losing the business of the lender, who would have lost a big fat moneymaking mortgage! As a result they used clever caveats, like AdAstra says. Here's one I memorised! "Although we consider the property to be at the high end of the spectrum for properties of this type in this locality, we consider that in today's market it may well reflect adequate mortgage security" - clever, eh? - only one word is important in all that waffle, and it isn't "tomorrow"!

    Now, of course, the market is bumping along with not much chance of improving, so it's the nationwide HPI for you, seller, and if there are comparables on rightmove it doesn't matter that yours might be in totally different condition, that's your value!

    Report on 31 July 2012  |  Love thisLove  0 loves
  • Aitken B
    Love rating 125
    Aitken B said

    It is my experience of so-called surveyors/valuers that the cover every aspect of what they write in thier "reports" with caveats because they have very little idea of what they are talking about.

    Examples

    "This house has been built with solid walls (no cavity)" - entirely wrong. The house was originally constructed in the mid 19th century when the need for cavity walls was well understood. The bricking style is "Flemish Bond" (which the surveyor could not identify) which does support a cavity where required. Because the style shows headers (bricks laid to show the end on the outer surface) in the wall he assumed that there was no cavity. He was and is entirely wrong. We do not pay for "professionals" to make eroneous assumptions and certainly not one as basic as that.

    "This house suffers from rising damp" He detected this by using one of these electronic probes which only, and can only measure the moisture ON THE SURFACE. There was a small problem but it was nothing to do with rising damp which, incidentally, is very rare. The plaster had become hygroscopic which means that it draws in moisture from the atmosphere (like salt left open). This is basic stuff yet these people are charging huge amounts for their so called services.

    Unfortunately lenders set much store by these surveyors/valuers who, in my humble opinion, are, for the most part, highly overpaid charlatains.

    Report on 31 July 2012  |  Love thisLove  0 loves
  • Caramelo
    Love rating 0
    Caramelo said

    Surveyors pretend to know things and don't. I paid for a full survey which didn't flag up any major issues. Things started to go wrong from when I moved in. When I tried to claim they said they couldn't be expected to see things like that. Eventually when the kitchen ceiling started to fall down (which the survey said was plasterboarded but wasn't) I did have a valid claim. By which time they'd gone bust. The house insurance won't pay as they say it's due to shoddy workmanship. I've had water ingress; roof leaking in 3 rooms; kitchen ceiling falling down; doors which don't shut; electrical problems; etc. etc. etc. Admittedly the survey doesn't cover electrical. But they are not worth the paper they are written on.

    Report on 02 August 2012  |  Love thisLove  0 loves
  • oldhenry
    Love rating 274
    oldhenry said

    Totally depends on the experience and integrity of the surveyor. Firstly ensure he/she is a qualified RICS. But before that you need to go over the property yourself with a toothcomb and spot the probelms. Thses will increase with age , just like cars. Most of teh surveys that ihave had are only fair, one a typical drive-by where teh surveypr, appointed by mortage company, did not notice teh rotting fascias the old rubber wiring abd leaking boiler. All of which I has already seen and factored a reduction into teh price offerred. He was right in that he said the house would be safe for the building society to lend against, they did not need to see it to know that though as it was a 60% mortage.

    What plonkers.

    But the last survey I had , 17 years ago, was by a lady RICS and I think she was very good, but the house was only 18 years old and built to a design that was quite numerous around the county by a well known builder. But she found that the builder had not tied in the roof trusses to the walls. Still it was an easy job to attend to for myself.

    Report on 06 August 2012  |  Love thisLove  0 loves
  • Stargazer
    Love rating 11
    Stargazer said

    My experience with surveyors is that in general you get what you pay for. If you're buying with a mortgage and only getting a basic valuation done it will be arranged by the lender and will be extremely basic. If, however, you're getting a homebuyer's report or structural survey it's worth asking the lender if they would accept a valuation given by an independent surveyor - if you are proposing to use a surveyor that is already approved by the lender there's a fair chance of getting this agreed.

    If you can engage your own surveyor you have a significant advantage - you are likely to get a more personal service. You will probably get more time to go over the report with the surveyor - in fact the last time I bought a property (as a renovation project 2 years ago) I managed to visit the property with the surveyor for half an hour and go over the details of his report with him. He was very pleased to help and it helped me understand clearly all the repairs needed.

    Report on 07 January 2013  |  Love thisLove  0 loves

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