Lenders Should Be Challenging Valuers

I should prefix this article with the fact that like most of my articles there is the subtle tinge of a rant or moan (as some of my learned lender contacts would put it) that said though it is unfortunately not without substance, I should also add in my defense that I do not moan about isolated instances but rather I merely state my observations as a master broker of many instances that cause needless frustrations to the broker and indeed the Lender community on a regular basis.

In the world of short term finance Mortgage Brokers, Lenders, Solicitors & Valuers should be geared to get applications completed as expediently as is practicable and possible, that is not to say that some lending applications are not without issues that may well prevent expediency but too often I am now seeing valuers having far more impact and calling the shots.

A recent case in point is one where our client is extending their current term of their bridging loan, nothing unusual, also not unusual is the length of time it has taken for the valuation to be carried out, the report to be produced and then returned to the lender for scrutiny. The original report is a little over 6 months old and the valuer stated that they would have to carry out a full re-inspection, again not unusual but one would have to question the need for a full inspection given they had only visited 6 months prior, perhaps it is to justify the fee for doing so? 5 days after carrying out the inspection that not surprisingly only took a 5th of the time of the original inspection for the same fee! the valuer decided to email the lender and raise a query? 5 working days!! they then proceeded to tell the lender that due to annual leave the original valuer would not be able to produce the report until their return a week later!! This may sound comical to some readers but I assure you this practice happens regularly enough to become a concern and major frustration.

In short - A full valuation fee paid for a re-inspection valuation report by the very same personnel as the original report, which took them only 20 mins to re-inspect a 10 unit MUB to then fail to produce a report within 3 weeks for which they will most definitely heavily rely on the original report for content. At the time of writing this article we have waited some 3 weeks for a re-inspection valuation report and the lender still does not have the report, my client has exceeded their loan term and we are no nearer to any resolution. Sadly this is not an isolated incident and more common than lenders would like to admit within the specialist market. The question is….why? 

Why do lenders allow this to happen? Why do they think it is acceptable and not challenge the valuer? Why is it invariably up to the Broker to raise it as an issue? and why, as the client, does the lender not use its influence to pull rank and tell the valuer to produce and return the report forthwith? Answers on a postcard please……

To be fair the lender in this instance has emailed this week and agree it has taken too long and are doing all that they can to get it resolved ASAP…….hmmm!! If the lender really is doing all that they can and I have no reason to doubt this, why do they still not have the report after all it has been 3 weeks and still counting? It stands to reason the only possible answer is the valuer and this simply cannot be allowed to continue.

I know that some lenders Service Level Agreements with valuers for Red Book reports is 5 working days from the date of inspection to produce a report, this it must also be stressed assumes a single unit!! Given that the valuer may not have availability to carry out the inspection for a week that would mean the lender is prepared to wait at least a fortnight for a valuation report REALLY!!

Imagine then if the security property being offered consisted of more than one unit does that mean it is acceptable to expect it to take longer? What would happen god forbid, if there were be a query over the Lease or Freehold or the comparable evidence used by the valuer to justify their valuation (generally lower). It all amounts to more delays in an already protracted amount of unnecessary delay, short term lending this is not.

Let us consider that whatever delays are caused at the outset of an application will undoubtedly have a knock on affect going forward, until the valuation report is received and underwritten there is no mortgage offer nor have any legals commenced with the clients solicitor which can often throw up their own delays, the valuation can delay the start of a Development build, the refinance of a bridge loan even the sale of a property in a chain in the case of someone raising capital to purchase another property. The bottom line is that valuer service standards matter and mean far more than the simple application they may relate to and it can have dire consequences to the applicant and associated parties down the line. This is not a myth, I am not using some off the wall example to amplify my point, the example above was a simple loan extension request or at least it should have been.

I can imagine many brokers reading this nodding in agreement due to instances they themselves have experienced sadly though I can also imagine many lenders and their representatives simply passing it off as just another disgruntled broker whining.

We are all only as good as our weakest link therefore lenders like it or not do have a greater responsibility in the process of valuations from instruction to receipt, it’s no good communicating their agreement or frustration to the broker as some form of appeasement hoping to deflect the fact that they should be haranguing the valuer for poor performance standards. Service levels are part of how lenders measure valuers worthy of being on their panel and I am sure if they communicated their displeasure and possible removal from Panel the valuer would make sure they towed the line. Allowing the valuer to dictate the pace of Short Term lending applications to suit their own workload and holiday calendar not only removes the need for the word ‘Short’ it also compromises the lenders purported ability to perform with speed.

We are all aware that property valuation has never been an exact science which in itself is an irony given a qualified surveyor has a BSc in such but that aside even a valuer will tell you that it is their best estimation/guess based upon researched factors relevant to the property, Type, size, comparable sales, demand etcetera etcetera and for all of the this they are then expected to produce reports both Red Book and short form that their client (the lender) will need to rely upon. Notwithstanding these points it does not mean it should take any longer than it needs to and even 5 days is simply too long in the specialist short term lending market and Lenders should be challenging valuers to perform better.