Large spacer

I am starting to like the BBC!

They seem to be discovering the news that us property investors are facing.

 

One of the problems faced by a property investor is valuations.  I wrote a previous article about it and it will always be prevalent when it comes to investing in property.  This hazard is:

 

Down Valuations.

 

This means the property comes in at under value of what you are trying to buy it at.  I have valuations come back and they either:

 

  1. round the amount down.  So if I was trying to buy at £38,500 they will round down to £35,000 or even £30,000.
  2. state that the property is unsuitable for security.  This is bad.  Even though the property is not subsiding they say it is poor security, even though you have fought to beat off other bidders to buy it they deem it unsaleable!
  3. Put a retention on it.  So they say the property is worth what you want to pay for it but they want you to spend £5,000 (always round numbers like £5k, £10k as they are out of their depth) to bring it up to scratch so they withhold this amount.  Sometimes they stupidly ask you to get the work done before you have bought it.  Doh!  I do not own it so I am not going to renovate it when it isn't mine!

 

So when we find properties for our clients and state they are approximately worth £75,000 as we do the due diligence low and behold the surveyor comes in with their opinion £50,000!!!

 

Then we look like idiots when really it is simply the state of the market.  And now BBC have exposed this problem. Well done the BBC!

 

They claim that properties are being undervalued by AT LEAST 10%.  So if you get a 10% undervaluation or lower you have done well! 

 

I will let you know we do get valuations come in even in this climate.  We hit about a 60% success rate as we try to be pessimistic, even more so that a surveyor as we do not like looking like idiots.

 

To read about this problem and BBC's expose visit the link below:

 

http://news.bbc.co.uk/1/hi/uk/8191007.stm

 

Ajay

 

 


Posted on: 8th Aug 2009




Bookmark:
del.icio.usdel.icio.usdiggdiggFurlFurlFacebookFacebookRedditRedditYahooYahooSpurlSpurlSmarkingSmarkingSimpySimpyStumbleuponStumbleupon


Subscribe to my RSS Feed
Sell your Property