Drive-by valuation

The people who want to buy our house have had a bank valuation done, which values the house too low for them to take a mortgage. It was a “drive-by” valuation, meaning nobody visited the house to physically see it, they calculated the price by comparing the square meters to that of the last house sold on the same street. However, the last house to sell on this street was derelict and we’ve just spent four years renovating ours. Surely it can’t be right to put a value on a house without seeing it. Has anybody else experienced this type of valuation, and where do we go from here? Thanks in advance.

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Generally drive by vals are done when the prospective buyer does not pay for a Bank val,depnding on the price of the property this could range from 200-300€.

If they pay for the val they will visit the property and issue a detailed report including photographs and m2.

hope this helps

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Some val companies will do a pre-val with inspection and its a halfway step. Not as much as a full valuation but does include a trip to the property and a 2 page document. SHould the purchaser decide to proceed then the val company for further remit will issue a full report.

Sometimes good to have this done yourself to prove valuation but specify its for mortgage (hipoteca) purposes and not market valuation!

Costs around 120-150 euros for the part val.

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Further to previous comments an official bank valuation for mortgage purposes is not a "drive by" - it is a very extensive report (usually 20 to 30 pages long) with photographs of almost all the rooms and measured according to official records at held at the Land Registry. They will use price comparisons but they are not the foremost factor in the equation. If however you have extended the property by adding rooms or closing in terraces or something like that and you haven't followed correct procedures having the additions registered and had the additional build licensed (a more complex but similar process to planning permission in the UK) then that will not be valued as it is not officially recorded. Bank values here unlike the UK would not make allowance for something like a brand new kitchen that has cost 20,000€ or something like that - they do work on a cost per sq m to build formula so it is not necessarily to ones advantage to spend fortunes on a refurb unless the original deal to buy the property was extremely good.

This message was last edited by Smiley on 1/26/2008.

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Thanks for that, it makes sense now. I still think it's crazy that a valuation can be done without actually seeing the house, and that a renovated house is compared to one which needs a total reform, but at least I now see it's simply a case of "you get what you pay for" when it comes down to valuations. Thanks again.

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Regarding bank valuations, has anyone had a bank valuation which was 'over valued' in order for them to receive a mortgage?

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Smiley (our mortgage expert) can correct me if I'm wrong here but over the past few years over-valuations were quite common, especially with off plan purchases as on completion the theory was that the property will have gone up from the time the deposit was paid.

However, all the banks are tightening up now and I think valuations are becoming more realistic, so over-valuation isn't as easy as it used to be. 

In fact, many people we know have been caught up in negative equity traps as they are now trying to sell properties that they bought on 100% mortgages (through over valuation)

Bank use different valuers and some are more "generous" than others but valuations are always based on the size of the property.

Justin

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Valuations as our resident moderator so rightly states are based on cost per sq m to build - it is quite frequent that bank valuation bears no relation to purchase price and can in fact be lower than paid as well as higher - seems to have happened quite a lot of late on a particular urbanisation  in Almeria  that has been promoted by  one of the people who has blogged on here  - guess only the buyers can decide whether to complete or not in that case? Valuers at one time were corruptible (not through us) and a VALUATION could be paid for in order that a buyer could maximise borrowings - there are still companies out there promoting this philosophy - whether the valuers are as corruptible as they were I couldnt tell you (as I say something we have never got involved with) but the Bank of Spain was scrutinising them very closely and think most of them have been caught and done. Thats not to say it couldnt still happen. While the valuers will do price comparisons and consider actual transactions (not the estates agents window) it still comes back to cost per sq m. Negatives (next door to a tyre factory) do not have such a dramatic impact and nor do positives (overlooking the golf course) as they probably would in the UK. The banks themselves have specific valuers they use and these are specific to each bank.

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