Do structural problems affect value?
Our highly qualified independent surveyors carry out Specific Defects Reports on many property problems such as severe dampness, woodworm, dry rot, wet rot, condensation, cracking and/or movement.
We also carry out structural surveys, known as residential building surveys and also commercial survey reports, together with property valuations (Note our valuations are not for bank lending but are to advise you how much we feel the property is really worth).
We are more than happy to send you example surveys.
Free phone us on 0800 298 5424 to speak to a surveyor.
Free phone 0800 298 5424
Subsidence, heave, movement and cracking
These are the last things that a homeowner wants to hear. If you have bought a property with this type of problem it is very usually the insurance companies who will resolve it depending upon your specific situation.
How are properties valued?
Residential properties are valued on what is known as comparable basis. This is effectively comparing properties of a similar nature with each other to work out the value which is known as the open market value.
It can always be argued that all properties are unique and the skill of a regulated valuer is to identify the positive and negative attributes and a professional opinion of the value.
However we would say in more recent times that Chartered Surveyors working either directly for banks, building societies or mortgage lenders or those that are owned by banks, building societies or mortgage lenders panels will value based upon what mortgage should be lent rather than what the open market value is and as such the price that you offer is the price that the buildings are valued at in 99.9 times out of 100.
Structural problems or building problems
The problem with this type of valuation occurs where structural problems are present you have to allow for how they affect value. There are several difficulties:
1. A valuer may not notice the problem and as such doesn’t assess for the factor at all.
2. The valuer may see the problem but not understand how to solve it or indeed have ideas of how to solve it which aren’t appropriate for that age, type and style of building.
3. The cost of a repair is different to the value of a repair and as such the cost of putting a structural problem right can be far different to the value.
In our experience approximately ten to twenty percent, possibly up to thirty percent is reduced from the value of a property that has had structural problems even where underpinning has taken place. The percentage value depends upon how the housing market is, which in a booming market/upward market tends to be towards ten percent or possibly even five percent. In a recession or reducing downward house price market then the percentage discount gets towards the twenty to thirty percent.
Monitoring the structural problem
It is very common to monitor the structural problem for some time. We prefer a whole year as a minimum.
Trees can affect the property
This then allows the chartered building surveyor or chartered engineer to understand how the building is working over the seasons. If there are such things as trees nearby they can then see how these affect the property, whether it is a clay soil and how this affects the property. Together with the summer sun (hopefully) and the winter snow and frost and rain that we have and the time in between!
Influencing distance of trees to a house
Insurance companies solutions
The insurance company will then come up with a solution. We have to say that we have disagreed with the insurance companies solutions over the years in some instances where we have been instructed to act. We do feel the insurance companies act in their best interests. We could give you a few examples and we are more than happy to if you telephone us and wish to have a chat.
Getting the structural problem repaired
The next stage is going out to tender to various contractors as insurance companies will have preferred or approved contractors that they use in an area that they have established as being to the standard that they require. Normally they will be given a timetable and specification of works to be carried out and contact numbers via the insurance company or whatever surveying company they are getting to work on their behalf. All things being equal the work will be finished to everyone’s satisfaction however we would say there are still things that tend to be forgotten.
1. Does a structural repair mean the problem is solved?
Not always, there can always be an error, for example time pressure to produce a solution or the tradespeople could simply have not carried out the specified work if it is not being supervised. There are all sorts of reasons why the structural work can go wrong just as there are with a normal building project. Normally this does not happen but it can happen.
2. Is the property still worth the same value?
We feel this is the biggest problem that occurs after structural work has taken place. The usual example we give is two properties exactly the same in exactly the same area, condition, etc etc but one has had a structural problem that has been repaired. Normally people will want to buy the property which has not had the structural problem. You then offer a five percent discount and people will still normally want to buy the property that has not had a structural problem. With a ten percent discount some people will start to be happy to buy the property that has had the structural problem that has been repaired. This discount may have to go higher depending upon whether the property market is high or low as anyone who has experienced these two phenomena will know during a high and good property market you can sell almost anything. During a low and poor property market you can sell almost nothing at all and any defects in a property get adversely affected by the property market.
Some people will just not buy a property that has had a structural problem
You need to be aware that there are an element of people, we would say it is a growing proportion of people, that simply will not even look at a property that has had structural problems. So you may well be removing thirty to fifty percent of the market if you buy a property with a structural problem or your property has a structural problem. We do not know of any facts or figures in relation to this; this is just our feel from working in the surveying industry for many, many decades.
Certificate of Structural Adequacy
In our experience a Certificate of Structural Adequacy may or may not help with how the value is affected as generally we feel that people do not wish to buy a problem property and this includes a property that has had structural problems, even if they have been repaired. We believe that approximately seventy percent of people would not buy a property that has had structural problems even if they have been repaired and even if a Certificate of Structural Adequacy is available and even if that certificate of Structural Adequacy had been double checked as being correct by an independent chartered building surveyor. As such we would always recommend for strong negotiation if you are buying a property that has had structural problems and expect reductions in the range of typically ten to twenty percent.
Property that has had structural problems,
Do you or don’t you buy?
We are not saying you don’t buy and we are not saying you do buy, we are saying that you need to have your eyes wide open when you are buying this type of property and make sure you buy it at the right price but also understand potential future problems.
Of course we would always recommend a structural survey by an independent surveyor.
Please free phone 0800 298 5424 to discuss further.
You may be interested in our other articles about issues with walls including cracking to walls:
How, in our experience, Insurance Companies deal with Cracks in Properties
Cracks in my Wall
Tree problems in a nutshell
Why have one of our independent building surveys?
We always recommend you have an independent building survey as this will highlight any property problems such as cracking. Caveat emptor means buyer beware and is why you need to have a building survey to find out if there are any problems within the property.
Remember the Building Surveyor that you employ will be the only person working for you with your interests at heart.
We have developed our surveys over many years, in fact several decades. We have listened to feedback from our clients and amended and altered our surveys to make them easy to read and describe issues clearly. The key factor we believe is that our surveys are easy to understand in plain English.
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