A valuation tells you what a property is worth, but the word covers several very different exercises. A mortgage valuation, an estate agent's appraisal and a formal Red Book valuation all produce a number, yet they serve different masters. Knowing which you are looking at stops you reading too much into the figure.
The mortgage valuation
When you apply for a loan, the lender commissions a valuation purely to protect itself. It confirms the property is worth roughly the amount you are borrowing against. It is brief, you may never see the full report, and it is not a survey. A clean mortgage valuation says nothing about the state of the roof.
The estate agent's appraisal
When you sell, agents give a free appraisal of what they think the home will fetch. It is informed by local sales, but it is also a pitch for your business, so figures can be optimistic. Get two or three and treat the cluster, rather than the highest number, as your guide.
The formal valuation
A chartered surveyor can produce a formal valuation, often for probate, tax or a dispute, following strict professional standards. This is the most rigorous and the most defensible, which is why courts and tax authorities accept it. It costs more, but when the figure carries legal weight that cost is justified.
- Comparable sales recent prices of similar nearby homes
- Condition repairs and modernisation needed
- Location schools, transport and local demand
Reading between the lines
Whatever the report, look at the evidence behind the number, not just the number itself. A valuation supported by three genuinely comparable sales is worth far more than a confident figure with nothing behind it. If you disagree, ask what comparables were used and whether anything unusual was excluded.