A survey or a valuation: What’s the difference?
When is a survey not a survey? When it’s a valuation, of course. Still none the wiser? Then you are not alone. Kharla Mullen explains why it’s easy to confuse the two and offers a clear explanation of both
It’s been just over a year ago since a webinar poll conducted by Countrywide highlighted that four out of five consumers still confuse a mortgage valuation with a survey.
When asked the question – is the mortgage valuation still thought of as a survey? An overwhelming 80% of webinar respondents believed this to be the case, with only 20% disagreeing with the statement.
Further audience responses highlighted the need for greater consumer awareness around valuations, with 86% pointing out homebuyers’ failure to understand that a valuation could be completed by a computer. Whilst 14% suggested that consumers were aware this could in fact be the case.
One year on, is there greater consumer understanding of the difference between a survey and a mortgage valuation?
While I can’t offer a definite answer, despite surveys and mortgage valuations having been a staple component within residential lending for many, many years, they are still largely misunderstood and much maligned.
They represent two different aspects of the homebuying process. While they both provide information about a property, they serve different purposes. Purposes which consumers are not always aware of.
So, let’s clear up some common misunderstandings.
What’s a survey and a what’s a mortgage valuation – the definitions
A survey… is a detailed inspection of a property that is conducted by a qualified surveyor. It is typically more in-depth and comprehensive than a mortgage valuation.
A survey is often recommended for older properties, properties that have been extended or modified, or properties that may have structural issues.
Although, purchaser be aware, when making the biggest purchase you are likely to ever make, always get a survey for your own peace of mind.
A mortgage valuation, on the other hand, is a basic assessment of a property that is carried out by a valuer or surveyor on behalf of a lender.
Its primary purpose is to provide the lender with an estimate of the value of the property so that they can determine how much to lend to the borrower.
A mortgage valuation is usually less comprehensive than a survey, as it only covers the basics and does not delve into any potential issues with the property.
In summary, a survey is a more detailed and comprehensive inspection of a property that is carried out by a qualified surveyor for the purchaser, while a mortgage valuation is a basic assessment of a property that is carried out by a valuer on behalf of a lender.
This difference is something that we, as an industry, have to continue working hard to convey. An integral component within this process is for surveying and valuation firms to constantly evaluate how we can guide people through a complex and often daunting homebuying journey in a simpler and more effective manner.
The end game being to ensure they are comfortable in understanding exactly what they are getting from their survey and how to make best use of this vital information to make the most informed decision possible.
This remains work in progress but we are certainly moving in the right direction.
Kharla Mullen is chief operating officer at Countrywide Home Surveys