As four of ‘my’ current buy to let / commercial mortgage applications have reached valuation stage at roughly the same time I have harvested fresh insight for less experienced property investors.
Valuation marks the reality check between the amount of funds you can hypothetically get from a lender and what in fact you will be offered from them.
While some buy-to-let lenders offer quicker Automated Valuations (AVM) depending on the Loan To Value, commercial property lenders tend to insist on physically conducted valuations.
Here are 5 potential stumbling blocks during the valuation process and how to remove them:
1. When the valuation terms are not good enough
If the lender comes back with higher than normal valuation quotes and valuers are not available short to mid term ask for alternative quotes and dates
2. ⏳ Beware of hidden ‘time eaters’ in the valuation process
While a valuer typically takes 5 to 10 working days to write up their report, the bank’s compliance processes and internal checks can sometimes double the time for a valuation report to actually ‘land’
3. A seller can close the door on a valuer
If a developer or property professional dislikes the valuation firm chosen by the lender they can refuse to open the door to a valuer. In this case, ask your broker to work with the lender and developer to find options acceptable to both.
4. What to do when the valuation is lower
When a valuation report results in a lower value than the purchase price the mortgage application can still go ahead though the Loan To Value will be lower. This is a good time to go back to the seller and renegotiate. Remember that an independent valuer is obliged to determine the realistic market value of the property, not the ideal purchase price.
If you have evidence that similar properties in the area have sold for much more you can challenge the valuation though not every lender will be open to an appeal.
Ready to share your plans for a commercial (re)mortgage or complex Buy To Let (re)ortgage with a view to widening your funding options? Call or email me: 0774 776 7312;
[email protected]
