Home report - high valuation?

[ChilliPB]

Looked at a property this week which has a home report valuation of £550k. It’s been on the market for months. It has no obvious issues - nicely decorated, all 1s and a few 2s on the home report. It’s a Victorian tenement flat - the stair and communal garden are nicely maintained and the stair is all owner occupiers other than one (no HMOs or anything in the stair). So ticks a lot of boxes for us.

Good part of town, great school catchment area etc.

The main thing we think might have prevented it selling is the price. Another flat on the same floor a few doors down and in a similar condition had a HRV of £475k. Sold prices in the last few years are between £450k and £650k on that street - so a massive range, given they are all the same size (all three beds - not one of those streets that has 1, 2 and 3 bed flats). So actually £550k is within the norm for the road, although some of the higher sold prices are main doors, and some sold in the peak in 2021 when there were likely closing dates and people going well over HRV (this is in Edinburgh so 10/20% over HRV is common).

Anyway - does anyone have experience of HRV coming out high? Or are they generally quite reliable?

The HR is from May so we understand we would need a new one for our mortgage - any risk that might change the valuation? Could we ask for a separate valuation from a different company for some perspective?

IMO home reports can be inaccurate - if this flat has been on the market for months get your solicitor to make an offer under the home report value, no harm in trying. Normally once a property has been on for a few months I’d have expected the o/o price to drop or it to move to fixed price.

Thanks @WhyIhatebaylissandharding. It’s been on since end of April with no change to price (currently ‘offers over £545’ with a HRV £550). The similar flat was HRV of £475 and went to a closing date a couple of weeks after going onto the market. I think we’ll have a chat to our solicitor and see what a sensible offer might be!

I wasn't happy with my HR valuation but they wouldn't budge whereas my friend said hers was worth 10K more than the HR so they added that on.

Where I live, every house is different so hard to compare.

Thanks @RaraRachael so do you mean your friend asked the surveyor to add 10k to the value in the home report?

Ive been doing some more research and I think maybe part of why the flat I’m interested in has a slightly higher HRV than expected is because extensive work has been done to the roof and stone work of the building in the last five years. So stuff that could be expensive work. So it’s probably in better condition externally than a lot of the surrounding tenements - some really do need a lot of work.

Yes that's correct @ChilliPB
Ironically she sold hers and mine was on the market for a year, with 2 different agents and not a single offer so I gave up.

Thanks @RaraRachael!

We sold in Edinburgh recently and more than one of the estate agents we interviewed prior to marketing said that the surveyor would give a HRV of whatever they suggested. As it turned out the one we went with was pretty good (possibly slightly high) and we got the HRV at a time when the market was suddenly inundated with very similar flats.

I know of sellers who have paid twice to get their home reports done with different surveyors and then gone forward with the more expensive home report.
Would it be worth it to you to instruct your own survey?

Sorry, just to add, ours went on the market just after the dates you mention here, so possibly a similar issue and if it didn't shift initially, people will be ignoring it thinking there's something wrong.

It’s pretty common for a home report value to be done on what the seller wants, providing its sort of within the price range of that house.

I know an estate agent who has a good relationship with the surveyor and they are very happy to add £10,000/£20,000 over what a property is worth.

You only have to look at similar properties on a street to see this.

Wow really! I must be really naive as a first time buyer. I thought surveyors had professional standards to meet and should be somewhat objective….!

Thank you - I think we could look at getting our own survey, we might also offer lower than the home report. Just thinking about the options now.

I do think there’s an element of that, people thinking there must be something wrong as it’s been on for a while. I guess it went on just before summer when things were quiet, and then since then lots of new properties have come onto the market.

I have looked at similar properties, every flat on the whole street is the same layout and size. But it’s really difficult to know what the flat is worth when the range of sold prices is £450-£650k. It’s in good condition but not as nicely done up as others (some of the higher sold prices were very nicely done up/very stylish). But it has had a lot of expensive work done to communal areas (roof and stonework which has totalled approx £30k) whereas other stairs are in pretty poor conditions. So difficult to know where it should fit within that wide range.

I'd definitely put that ahead - we moved in and had to do £6500 of roof work, and ooh over £3k stone work within the first 5 years.

We had a HRV increased as we bid over HR and you can only get a mortgage for HR or something like that, and they would only come up a little bit, not to what we bid.

It does sound as though higher HR reflects better condition.

Thanks @52crumblesofautumn and that sounds like a bit of a nightmare for you with all that work needed when you moved in! I do think it’s worth something that communal work has recently been done, plus it’s more appealing for us to move into a stair where owners are working well together (rather than one where there are owners who refuse to pay for things, which seems quite common!)

Yes you're absolutely right there too, well maintained stair is a good sign as it's often the last thing anyone will pay for.

I had this too in the West, in many ways it’s all quite arbitrary depending on various factors. Round me there are various properties not selling for several months, without having done lots of research it seems things are a bit stagnant so advantageous to you as a buyer.

I also always thought that roof repairs etc didn’t tend to add a lot of value, in the way say a brand new kitchen would? I definitely think you’d be in a position to go lower. Remember estate agents are not generally to be trusted whether yours or theirs, they all want to make money out of you! Definitely seek their advice but I’ve always found it helpful to remember that whilst you weigh everything up.

Am fortunate to live in a hot spot thanks to school catchment. Round here, July, August and September have seen some properties stick far longer than is usual.
I'd say this is a good time to go in with a lower offer. Also, traditionally in November and December the market slows, and if I was to buy another property, these would be my preferred months to negotiate.
My experience of communal repairs - yes, look for a well cared and maintained exterior and shared spaces. See if you can talk to the factor directly - if there is one- and ask what works have been carried out in last five years. If the factor is approachable and helpful, that it also a good sign. (Not sure if the factor will hide behind GDPR, though). It all sounds promising.

Interesting, I guess a new kitchen or bathroom would be more immediately obvious and add to the appeal of a property for sure. The nicely done up properties are still selling around here (and going to closing dates). I guess the roof/stonework repairs are less important to a lot of buyers but do feel like a big plus for us. I think we will go in with an offer under HRV and see what the seller says. Getting it for under HRV would be amazing for us as first time buyers.

Thank you! Great advice. The seller showed us around and actually said he knew if it didn’t sell soon we would be going into a quiet period. So I think hopefully that suggest he’s realistic about the market and maybe open to offers. There is no factor - think it’s pretty uncommon in older Edinburgh tenements (think it’s more common in Glasgow?) However there are details of shared repairs on the HR - roof, stonework, redecoration to stair. I guess stuff we can ask for evidence of too.

OP, you've had top advice here.

I sold an elderly relative's property in May and it went for less than HRV, but not a city.
I heard that a house last month in a top street that would normally do well, literally just got HR. You could be lucky. I would certainly prioritise a very solid well cared for external over another close further down the street that was a bit tired and uncared. Roofs, gutter and pointing will all take a hit with a traditional winter. Winters are now exceptional, so you need the basics to be good.
Also remember that ground floor and top floor flats are perceived as less valuable so might be £20-30k cheaper, (just guessed the number, but it is a thing) and also people pay more to have a better orientation for the sun. (Also easier parking, gardens, etc)

As a rule of thumb, I'd err on the cautious side when you are doing your service charge sums for an unfactored building. Be prepared that maybe 20% of the owners don't actually pay a sausage or prove uncontactable. Even those in good jobs. Others will tell you their experiences, but assume people do not always do the right thing.

I agree with that - getting any group of people to agree is tricky, I'm so lucky with my current neighbours but from friends locally, problems in getting people to agree and pay are commonplace.

Thanks so much @Mum5net and @52crumblesofautumn. Totally agree with everything you’ve said and really great advice. We have seen some real shockers of stairs - actually quite sad our beautiful historical buildings have been allowed to get into such poor states. Definitely a big consideration for us around how the stair is managed/how the owners work together etc. Will let you know how we get on when we put in an offer!

Yes, very interested to hear how you do and wish you all the best, OP

(Indulge me but go look at the home report and see which date it was carried out. Then double check the validity period. If the validity period is about to expire, then use that as a negotiating point... it's going to cost the buyer another circa £800 to refresh. The other thing to consider is looking at the FTB mortgage product that you have decided upon, and see if there is a 'free' survey included in its terms. Finally, weigh up how important it is to you to have a high valuation versus a low valuation. It could be worth throwing your own £800 into the mix to get the price down another £10k. (Will also very much depend on the strength of your cash deposit and whether the seller will accept there has been a market change.)