The system of producing a Home Report for the sale of residential property was introduced to the Scottish market in December 2008 and, unlike its equivalent Home Information Packs which were scrapped in England and Wales by the Westminster coalition government earlier this year, Home Reports are here to stay.
CKD Galbraith are Chartered Surveyors but practice as estate agents in the residential market and do not conduct Home Reports on behalf of clients. However, being at the forefront of the buying and selling process, the firm believes the introduction has been an excellent innovation, bringing transparency and an element of stability to the market.
Bob Cherry is partner at CKD Galbraith and head of the firm’s residential division in the Ayr office.
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He said: “We are experiencing a buyers’ market at present, and it is helpful that the buyer is able to gain an independent opinion of value and condition report for the property. Surveyors who are on lenders’ valuation panels also provide a valuation certificate for loan purposes to be utilised by the buyer, obviating the need for expense on further valuations.
“It must however be noted that the surveyor undertaking the report is doing so on behalf of the seller. Valuation is not an exact science, and thus leading to a range of possible values for all properties. As the surveyor is commissioned by the seller, the tendency we have experienced is for the value to be at the higher end of the range. Of course surveyors can’t overvalue, as they have a professional duty of care to potential buyers as well as the seller. The effect of this is that in our current difficult market, Home Report valuations often represent a cap on the price which the purchaser is willing to pay, unless of course competition between several purchasers can be generated.”
In the current buyers’ market the traditional ‘offers over’ pricing has been replaced in many cases by ‘guide prices’ and ‘offers around’ as the report allows for more transparency with regards to the value of the property. ‘Offers over’ prices are still used in some instances, with the upset price pitched slightly lower than the Home Report valuation.
The cost of producing a Home Report came under scrutiny when first introduced as initially they were quite high. This has gradually reduced over the two years due to healthy competition among surveying practices.
CKD Galbraith believes that, from the viewpoint of both the seller and the buyer, using a genuinely independent surveyor is most important. Using one who is too closely aligned with the estate agent does undermine the whole purpose of Home Reports, is a disservice to the buyer, and may also be a conflict of interest.
(GK)
