January 2019
By Stephen Todd, co-founder and managing director, VAS Group
Every news story reminds us that 2019 will remain nigh-on unpredictable, and some say volatile, across specialist property markets.
With this in mind finding and appointing the right valuer not only brings the benefits of speed and quality, but also plays a hugely important step in reducing property specific lending risks.
Everyone understands the importance of a valuation, and while a residential valuation can be a relatively straightforward affair, the requirements of the specialist finance market are completely different, and by their nature more complicated.
I was in a meeting recently where I described commercial / development and residential valuations to rugby union and rugby league respectively, while there are plenty of similarities, swapping between the codes is not straightforward. Many players have successfully transitioned from union to league, but those going in the opposite direction are far less prevalent.
In effect commercial and development work has a far larger and more complex set of rules and requirements and requires a completely different skill-set.
(If I’ve offended any rugby fans from either code I apologise unreservedly!)
It’s just not rugby
Customers can pay a lot of money for their valuations and they want to ensure the advice that has been provided is accurate and correct.
Here is the acid test. If a lender repossesses a commercial property and puts it on the market, what would they get for it? A valuer who operates in the residential sector would look at the building, its location and condition, but a commercial valuer would also consider potential other variables such as tenancies, planning status, appropriate valuation methodology and a large variation of other important analytical data.
Naturally speed and experience is also of the essence for clients, therefore finding the right valuation company first-time, in the right location and with the correct experience, is critical to the specialist finance chain.
Let’s say we have a semi commercial retail unit, a small ground floor retail unit with flat above, why go to a large multi-disciplined practice, which would be more expensive and most likely take longer to complete when a local company can do the job far more efficiently.
On the reverse we would not advise giving a local practice a large scale developments site, when a multinational practice with an array of internal departments with different property sector disciplines would be best placed to provide an overall picture. This clearly contributes to achieving the correct valuation with robust methodology and justification.
In an ever more uncertain market – as we have at the start of 2019 – securing the best possible valuation firm is critical.
The system has to protect the client and lender’s property specific lending risks, and to meet this goal the lender must use a system that is designed to ensure this happens.