As Home Reports play such an important role in the property market, it is vital that the general public are aware of all the facts and what they get for their money.
1. Home Reports are biased towards the seller because they pay for it
Chartered Surveyors have a responsibility to everyone who relies on the Home Report. Some purchasers still believe that they should get their own Scheme Two as the Single Survey will be biased because the seller paid for it. This should not the case.
The official phrase in the guidance is “Chartered Surveyors owe a duty of care to potential buyers, buyers, sellers and lenders.” Surveyors, it has to be stressed, are independent because they carry the liability in the Home Report product – not solicitors, not sellers, not buyers and not estate agents. It all falls on the shoulders of the surveyor.
They have to make sure that they have produced the Home Report exactly right in an impartial way and that they are comfortable with the reported market value. If they don’t, they will be found wanting and their standing in the market will be reduced with consequent reputational damage.
2. Home Reports need to be replaced every three months
This myth has come about because lenders will not rely on the valuation section of the report after three months. Therefore, if the purchaser requires a mortgage and the Home Report is over three months old, the report will need to be replaced at the point of sale; but (importantly) not before!
As surveyors are revaluing at the point of replacement, they are required to re-inspect the property to check if there are any material differences in condition from the original inspection, which would affect value or mortgageability. It is at this point that repairs to previously noted defects, or further deterioration will be noted and taken into account.
The replacement value will reflect sales evidence available from the date of the original inspection up to the replacement date and the marketing history of the property will be analysed as part of the deliberation process.
3. All Home Report providers are on lenders’ panels
Not all Home Report providers are on lenders’ panels and this could be a critical aspect when selecting a Home Report provider. When a provider is not on lenders’ panels, this often means that purchasers or their lender have to instruct their own valuation or alternatively insist that the seller commissions a new Home Report. This is counter productive, partly defeats the object of the Home Report, slows the sales process down and introduces a different opinion of the property to manage.
At DM Hall, we are on all lenders panels for Home Reports. As a result, we can provide transcripts without delay and remove all of the complications within an agreeable timescale.
4. A high valuation on a Home Report is always desirable and will automatically lead to a high selling price
One of the most crucial parts of the Home Report is setting a realistic market valuation of the property. An independent and reliable Home Report should always be used to set a compelling asking price, which will in turn attract buyers’ interest. Set a compelling asking price in conjunction with a realistic Home Report value increases the opportunity of achieving a favourable price within a sensible time scale. Set too high a figure and interest in the property will often be compromised and lead to a prolonged marketing period with increased costs and often a reduction in price.
Our message is very much set a realistic asking price supported by a reasonable market value, rather than the highest.
5. There is no variation in the quality of Home Reports provided on the market.
We would argue there can be a world of difference between providers of Home Reports. Here are a few things to consider when choosing a Home Report provider:
– consider if the surveyor is on lenders’ panels. Reports by professional surveyors are trusted and accepted by lenders. As mentioned earlier, if they are not it will slow down the sales process
– local knowledge. Is your surveyor experienced in your area and aware of local market conditions?
– Cheap reports can be risky for something as crucial as selling your house. Does cheapest usually offer quality or value for money?
– The right surveyors will have a wealth of experience and will add value to the selling/buying process.
Overall, it remains quite incredible that, for the biggest financial decision most people are ever likely to make, they are still reluctant to invest as much as they would pay for a television or a mid-range Tablet.
Surveyors have been continually pressed on price. But selling a home is a big decision. Paying market rate for a well-constructed package of professionally-prepared information is simply the right decision.
6. The Home Report is a guarantee that there are no other defects and that future defects will not occur.
The Home Report is a general examination of those parts of the property which are accessible. In other words, visible and readily available for examination, without risk of causing damage to the property or injury to the surveyor.
Parts of the property which cannot be seen or accessed, will not be reported upon. Although if the surveyor suspects that a defect may exists within an unexposed area, it may be recommended that further investigation is sought by specialist contractors.
As a result of restricted access and in the absence of service testing, the Home Report cannot act as a guarantee to say that there are no other defects in the property or that future defects will not occur.
7. My valuation should be the same as other houses on my street
Each property is unique – even your neighbour’s! Valuations will vary depending on location, size, style, condition and enhancements, meaning variations will often occur for good reason.