Blog | Valuation | Loan Security

Can a property valuation be Red Book compliant in these uncertain times?

The simple answer is, yes it can.

When I thought about my impending return from maternity leave; I thought of my daily commute and losing my personal space in a crammed commuter train, I thought of sweaty HiiT classes, I thought of catching up with colleagues and clients over breakfast or lunch in busy cafes and restaurants.  What was to come was a bit of a shock; my daily commute was a 10 second walk down the hallway, daily exercise was PE with Joe and connecting with colleagues and clients was only possible using online tools and apps.

So, how does this all fit in with the world of valuation?

At the current time there is a restriction on movement and we are all being asked to stay at home unless it is absolutely necessary to do otherwise.  With this in mind our teams here at Allsop are all working remotely but our business carries on.  Despite these restrictions, in most instances we are able to undertake valuations and we are able to provide a Red Book valuation in accordance with the current RICS guidance where we consider there is sufficient information available to us to complete the instruction.  It is our responsibility as valuer to assess whether the information that we are to be provided with, or is readily available to us, is sufficient to be able to undertake the valuation.  Where there is insufficient detail then the instruction must be declined until such a time that any travel restrictions are lifted and a full inspection can be carried out.

So, how can we gather sufficient information on the property, its location, the competition and so on when we aren’t able to inspect?  Firstly the starting point must be the client; what information is available, be it previous valuation reports or building surveys, property inspection reports and photographs, a tenancy schedule is a must and floor plans would be ideal.  Sales details and specification reports are also very useful.

We are very lucky to have so much data and information at our fingertips.  The internet is a wonderful tool; thanks to Google we can all go for a virtual walk past a property hand in hand with the little orange man (or woman!).  We have also been using virtual tours as well as drone footage to get a detailed understanding of a property.

Finally, communication, who has been inside of the property, owners, letting or sales agents, colleagues or associates.  Communication is key.

 

What is the guidance from the RICS?

Ordinarily, inspections and investigations should always be carried out, however, the RICS recognises that dispensing with an inspection in the current circumstances is not voluntary and therefore valuation work undertaken in these circumstances without an inspection will still be fully compliant with the requirements of the Red Book.  So whilst the guidance recognises that external or desktop valuations are a divergence from normal valuation procedure, they are not a departure from the Red Book.  The RICS does therefore not mandate against a valuation without an inspection, however the valuer must state any restriction in the terms of engagement which must be agreed with the client from the outset.

In order for an external or desktop valuation to be Red Book compliant a valuer must have full and credible facts available.  The valuer should carefully consider whether the information can be relied upon without adversely affecting the credibility of the valuation opinion.

Restrictions – what can’t we do?

There are obvious restrictions; we clearly cannot advise on the structural integrity of a property or the presence of an invasive species such as Japanese knotweed; unless of course prior reports have noted any issues.

Insurance

While insurers are cautious regarding desktops, PII does cover them, however insurers will expect to see some risk management control and a well-considered valuation file note as to how the value was arrived at and the factors influencing the valuation.  Insurers are risk averse and so too should valuers be.  As valuers we have a duty to undertake reasonable due diligence to verify any information or data that has been provided from a third party.

So, what does this mean for us here at Allsop

Whilst we can’t get out and about and carry out our usual inspections; we are very much open for business and by working together openly with all parties we are, in most cases, able to provide reliable, compliant Red Book valuation advice.

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