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What is a “desktop valuation”?

James Adams

9 November, 2021

James Adams

9 November, 2021
what is a desktop valuation

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    What is a Desktop Valuation

    As the name suggests, desktop valuation is done at a desk rather than having a person to physically view, inspect and analyse the property. It is done using information that is publicly available online, as well as using existing data the surveyor may have about the area or house itself in their records. Desktop valuation, also known as data appraisal, is mostly used when it is not possible and convenient to physically go for the inspection and valuation of the property.

    A desktop valuation can be used to value the newly built buildings and even unfinished structures built on the property, in these circumstances valuation is done based on the plan and data provided by the developer of the project. However, it should not be forgotten that desktop valuation provides just an estimated figure generated by the overview of the existing data i.e. photographs of the property, stats and suggestions of the clients. Using all these sources our experts generate a valuation of the property from their office desktop.

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    Pros of a Desktop Valuation

    Desktop valuation is widely used as it is cheaper than the other valuation methods. As the surveyor’s cost of visiting and analysing the property adds additional cost to the mortgage application. In addition to this, it is less time-consuming. The valuation is a lot quicker, in some cases valuation of the property can be just a matter of a few minutes using this technique. Furthermore, desktop valuation is also accurate hence it has gradually become acceptable by many lenders. Especially, if you are applying for a home equity line of credit, your lender must require desktop valuation. Not only this, desktop valuation is a reliable method of data valuation; however, it should be kept in mind that the reliability of desktop valuation is lesser than that of the traditional methods of valuation. Desktop valuations are mostly preferred when there is a lower risk of loans and lending.

    Disadvantages of a Desktop Valuation

    There are some disadvantages you need to be aware of. Desktop valuation involves making a lot of assumptions. The valuation is done without physically visiting the property. The information on the papers and documentation may sometimes vary from the property’s actual features which could only be recognised by physically visiting the property. This makes this valuation method comparatively less reliable than the traditional methods of valuation. Furthermore, if you are buying a house you may want a detailed review of the property before you make the final decision. A desktop or automated valuation will not address and recognise any structural issues in the house, or if the electrics and plumbing require a replacement. The property you are buying or remortgaging may also have unique features that could either increase or decrease the value of the property, such features will also not be picked by the automated valuation method. However, whenever someone is buying a house he will be looking for as much detailed survey as possible to be fully aware of the pros and cons of the property he is investing in.

    Reliability of a Desktop Valuation

    Finally, there is a degree to which a lender will accept the reliability of desktop valuation. If the property has been bought and sold or refinanced in recent years, the chances are that the data the surveying company has will be more up to date. If the property has not been looked at in the past 20 to 30 years, it is likely a desktop valuation will not be accepted and the companies will require a more detailed and accurate report on which they can rely. This report will preferably be compiled after using the traditional valuation methods.

    How does a Desktop Valuation work and for and how long is it valid?

    Desktop valuation is completed by an independent expert who gives his opinion about the value of the property by looking at the existing sources of information that he has. He may also take advice from the clients and the developers of the land. After going through the existing information and stats the appraiser prepares a report stating the value of the property. Desktop valuation is generally only valid for 90 days however a full valuation may be valid for 3 to 6 months.

    Desktop Valuation VS Full Valuation

    Desktop valuation is done from the appraiser’s desk, the appraiser does not have to go for the physical inspection of the property he is about to value whereas, the appraiser will have to physically visit the property take pictures, closely examine all the features of the property, measure and evaluate the property to perform a full valuation. A desktop valuation is preferred for the property that is in average condition. However, full valuation appraisals are recommended for homes that are in poor condition or highly upgraded one. Full valuation is also recommended when someone is disputing the value i.e. tax appeal cases and divorce.

    Desktop valuation is the simplest and the cheapest method of valuation whereas full valuation provides more accurate and reliable valuation but costs a lot more than what desktop valuation does. In addition to this, desktop valuation is time saving and quick. It has opted when a quick and fast valuation of property is required whereas the full valuation method is time-consuming. As it physically requires the appraiser to visit and subsequently evaluate the property. Full valuation provides with a more detailed report of the property as all the features of the land are closely looked at by the appraiser however, desktop valuation provides with a comprehensive report based on the expert’s opinion about the land after looking at the available sources.

    What is the difference between Automated Valuation Models (AVM) and Desktop Valuations?

    A desktop valuation still relies on the experience of an RICS qualified chartered surveyor to manually investigate comparable property valuation data, together with the geographical location and other factors without actually physically going to visit the property. The surveyor compares the property he is valuing to other properties of similar type in the surrounding area. Based on the empirical information, a valuation figure will then be generated and provided. As no physical visit to the property is undertaken, it is the lender who takes extra risk in this instance. Therefore, they will generally restrict their loan to value ratio to cover any possibility of any loss, should the property not be worth what the desktop valuation thought it would be. If this shows up, the property eventually needs to be repossessed and any unforeseen defects remedied or the property sold at a discounted rate.

    An automated valuation method (AVM) is automated. It is similar to a desktop valuation but is often completely automated, with either little or no intervention. The automated software will examine and compute a wider range of empirical house sale data, not asking the price, and will provide a valuation based upon such data, with no human intervention.

    When are AVM and Desktop Valuation preferred?

    These systems are preferable when someone is buying a standard house, of standard construction, in an area where there are a lot of other properties of a similar type. Many residential two, three or even four-bedroom homes are like this, particularly on a housing estate. These houses are generally very popular and in-demand all the time, this means that such houses can be easily compared with any similar sale in the past few months. It helps to give a more reliable and accurate valuation.

    In the contrary, these valuation methods might not be preferred when a different structural property is to be valued, if the property is located in a place with not many properties around it or even if a property which has been converted into houses of multiple occupations (HMOS) is to be valued. This is because it is nearly impossible to find a recent sale of similar property in the neighbourhood, to compare the data. Hence the opinion or figure generated after the valuation might not be accurate and reliable.  

    What is a mortgage valuation and why is it carried out?

    A mortgage valuation is not a survey for the buyer’s benefit. It is a particular type of assessment that a lender carries out to validate a mortgage. A mortgage valuation is entirely in the lender’s interest, it is generally carried out to assess the lender’s risk exposure. A mortgage survey is carried out, after which the surveyor provides the mortgage lender with his opinion on the property’s value. If the surveyor agrees with the asking price or the remortgaging price of the property, the lender is likely to offer the mortgage for which you have applied. The mortgage valuation is just a matter of a few days if the banks are provided with all the necessary documents and information. On average the process of mortgage valuation takes around a week.

    You may also find mortgage calculators online. They can be used to easily and efficiently calculate the mortgage of the property.   Following is a link to a mortgage calculator for your ease https://m.mortgagecalculator.org

    Does a valuation report mean that the mortgage is approved?

    A mortgage valuation does not mean that the mortgage is approved. Getting a mortgage valuation does not automatically mean that the mortgage is accepted this is because there are other requirements too with which the borrower has to comply. So, to be on the safer side and to keep your options open you should not take a mortgage valuation as a sign of the approval of a mortgage application.

    A lender may decline a mortgage after valuation if the value you indicated on your mortgage principal was far below or above the property’s true value. A lender may have a loan to value rage which is part of its lending criteria and could decline your mortgage after a valuation if it does not fit its criteria.

    Why do lenders use desktop valuations?

    Desktop valuation is generally undertaken in circumstances where a full physical inspection of the property cannot be undertaken. In these circumstances, lenders use desktop valuation as a quick way to underwrite a loan working on the assumption that there is enough data available about the property and that it is in a reasonable state of repair. However, it should be kept in mind that Desktop valuations are not as reliable as the traditional methods of valuation are.

    What if the value after valuation is too low?

    If your buyer’s mortgage surveyor values your property for less than the offer you have accepted, the difference between the two figures would be called down valuation. Down valuations can often result in a failed sale as if your buyer’s mortgage provider values your provider at a lower price than the accepted offer, this will negatively affect the amount of money they are willing to lend. Down valuations normally lead to higher LTV’s (loan to value). The higher the LTV the more reluctant the lenders are to approve the mortgage as it is deemed to represent a greater risk. If your buyer can no longer secure the mortgage they will have to purchase your property, they will be forced to pull out of the sale.

    When a property is owned valued, the buyer will have to find a new mortgage lender or pay the difference between the down value and the selling price. If he is unable to do either of the two, the buyer will be left with no option but to pull out of the sale.

    James Adams

    James Adams

    Author

    Founder & Co-Director, My Simple Mortgage. Has helped thousands of people purchase their first home. Dreaming up ways to change the norm and challenge the status quo.

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