Valuation

A property valuation is a formal assessment of a property's value at a specific point in time, carried out by a qualified RICS-registered valuer. Valuations are required by mortgage lenders before advancing funds against a property - the lender needs to confirm the property is worth at least as much as the purchase price to protect their security.

Types of valuation: - **Mortgage valuation**: Arranged by the lender, minimum assessment required for lending purposes. It is not a survey - it does not identify defects or condition issues. It primarily confirms value and basic mortgageability. - **RICS valuation (Red Book valuation)**: A formal independent valuation for a specific purpose, such as probate, divorce, refinancing, or dispute resolution. Carried out to RICS Valuation Standards. - **Desk-top valuation (AVM)**: An automated valuation model used by some lenders for straightforward remortgages or lower-risk situations. No physical inspection.

For investors, the post-refurb valuation in a BRRR strategy is the critical moment: it determines how much the lender will advance on refinance and therefore how much capital can be recycled. A valuer's assessment of the comparable evidence can make or break a BRRR deal.

Down-valuations (where the lender's valuer values the property below the agreed purchase price) are a real risk. The lender will only advance against the lower value, meaning the buyer must fund the shortfall from their own resources.