TOPIC 14 - Valuations and Surveys Flashcards
Standard valuation
Interior, exterior, comparison
RICS level 1 – launched in mid 2011 (condition report)
Construction and condition of the property
Serious issues that need urgent attention.
Issues that may be dangerous.
Advice for buyer solicitors, summary of key risks.
RICS level 2, survey and valuation
All of RICS 1 AND: Professional market valuation
Insurance reinstatement figure,
Problems / defects that could affect value
Advice on repairs / maintenance,
information about location, local environment and energy efficiency.
It will identify major defects.
RICS level 2, survey only
Includes all of RICS level 1 & 2 except valuation and reinstatement costs.
RICS level 3, structural survey.
Carried out by professional surveyor, engineer or architect.
Structural movement
Subsidence / heave
untreated woodworm
Severe damp
Previous removal of chimney breast.
Extensions not confirming to building regs.
Concrete roof.
Undertaking
A form agreement that the buyer will undertaken specific remedial work within a period of time after buying.
The contract for a basic valuation is between the:
borrower and the lender.
lender and the valuer.
borrower and the valuer.
lender and the valuer.
Applicant pays the fee.
If a buy-to-let investor takes legal action for negligence against the valuer that carried out a basic valuation, the claim:
may succeed if the disclaimer was insufficiently prominent.
may succeed if the borrower was inexperienced.
is unlikely to succeed.
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Courts have made it clear that buy-to-let investors and business borrowers should be experienced enough to understand the limited nature of a valuation report and arrange their own inspection if they have any concerns.
is unlikely to succeed.
Courts have made it clear that buy-to-let investors and business borrowers should be experienced enough to understand the limited nature of a valuation report and arrange their own inspection if they have any concerns.
A basic valuation may make a recommendation to lend on a conditional basis. Such conditions would not include a recommendation to:
require a retention.
require an undertaking.
reduce the mortgage loan to value.
reduce the mortgage loan to value.
Reducing the loan to value of a mortgage is not something a valuer would recommend. That part of mortgage underwriting is the lender’s responsibility.
Which of the following statements is true of a RICS Survey Level 1 Report?
It contains all the information of a basic valuation together with comments on any aspects of the property that are dangerous, in need of attention or that need further investigation.
It provides an overall picture of the condition of any property, and can be arranged to include a valuation to satisfy the lender’s requirements.
It identifies aspects of the property that are dangerous, in need of attention or that need further investigation, and it provides advice, but it does not include a valuation.
It identifies aspects of the property that are dangerous, in need of attention or that need further investigation, and it provides advice, but it does not include a valuation.
A significant difference between a RICS Survey Level 1 Report and a RICS Level 2 Survey Report is that only the RICS Level 2 Survey Report includes:
an energy efficiency assessment.
advice on repairs and maintenance.
a traffic-light system to rate each part of the property.
advice on repairs and maintenance.
Unlike the RICS Survey Level 1 Report, the RICS Level 2 Survey Report includes advice on repairs to issues identified and ongoing maintenance.
Which of the following statements apply to a RICS Level 3 Home Survey Report? Select all that apply.
a) It can include a valuation on request.
b) It is a contract between the lender and the valuer.
c) It is a more detailed assessment of the key elements of the RICS Survey Level 1 Report and RICS Level 2 Survey Report.
d) It provides the highest level of recourse if defects are not identified.
e) The surveyor will not inspect the electrical system or drainage system.
f) The surveyor will lift carpets and inspect the roof space.
a) It can include a valuation on request.
c) It is a more detailed assessment of the key elements of the RICS Survey Level 1 Report and RICS Level 2 Survey Report.
d) It provides the highest level of recourse if defects are not identified.
f) The surveyor will lift carpets and inspect the roof space.
Which of the following is most likely to cause subsidence in a property?
Removal of nearby trees.
Long-term leakage of pipes.
Chemical reactions in the soil.
Long-term leakage of pipes.
Removal of nearby trees and chemical reactions in the soil are causes of heave.
Jackie has been informed that the property she is hoping to buy has a large patch of wet rot in the living room. The rest of the property appears to be in reasonable condition. Her lender is most likely to:
require an undertaking.
impose a retention.
refuse to lend.
impose a retention.
As the rest of the property is sound, a retention is the likely response. An undertaking would be appropriate for less extensive, less serious issues.
Which of the following is true once an undertaking has been included as a condition by a mortgage lender?
There will always be a time limit for work to be done.
Completion will always be checked by an inspection.
Funds will be held back until the work has been completed.
There will always be a time limit for work to be done.
The lender can check completion in a variety of ways, including phone calls, inspection or confirmation from the owner. A retention is where funds are held back until work has been completed.
