Mortgage brokers are losing confidence in estate agency valuations of properties, with 71% believing market appraisals fail to accurately represent values that will survive mortgage lender scrutiny.
Research from Countrywide Surveying Services shows only 29% of brokers trust current agent valuations. Rebecca Freeman, director of field operations at the firm, says the findings reveal significant gaps in how the market approaches property valuations.
As a result, 41% of brokers are anticipating an increase in appeal volumes and JLM Mortgage Services Director Sebastian Murphy agrees, telling Mortgage Solutions: “What – certainly in 2024 – was a trickle has now become a flood, with around 20% of all our cases, both purchase and remortgage, subject to a down valuation from the surveyor.”
Down-valuations are a major source of frustration for estate agents. They can derail transactions weeks into the process, with buyers typically demanding vendors reduce their asking prices to match the mortgage lender’s lower valuation, which can easily result in the sale falling through.
Analysis by EXP shows that fall-throughs cost estate agents £1bn last year, with an estimated 296,204 transactions collapsing at an average cost of £3,419 to buyers and sellers.
Appeals process offers little hope.”
To compound the issue, the valuation appeals process is rarely successful, with AALTO Mortgages’ boss, Stuart Phillips, observing: “After six years in the industry and witnessing countless appeals, I’ve never seen one overturned.”
It may be no coincidence that the growing gap between surveyors’ and agents’ valuations has coincided with RICS Red Book updates. The new standards require surveyors to assess environmental, social and governance factors for the first time, which is said to be making surveyors particularly cautious when assessing older properties.
Read more about down valuations.