A mortgage valuation survey is a type of survey ordered by lenders, at the expense of home buyers, to determine that the value of the home is not less than the amount of the loan proposal. In most situations, lenders arrange the survey and simply bill the buyer.
It's important to note that in many cases the lender uses survey software for the bulk of the survey and that it should not replace a thorough home inspection before purchasing any property. This is not the same thing as a structural survey either.
Benefit to Lenders of Valuation Surveys
The obvious benefit to lenders, with properties slowly climbing back to pre-recession values, is that they aren't lending more money than the home is worth, thus making risks even bigger. With so many lenders being extremely risk averse, it's necessary for them to feel confident they will be able to recover future losses should the recession stall and a foreclosure becomes necessary.
The good news about lenders often relying on survey software for part of the home survey process and visual inspections for the other part, is that it saves money on what is normally an expensive process. A mortgage valuation survey, while highly beneficial to lenders, isn't solely beneficial to lenders. You can rest assured that if the home survey doesn't value your home at the asking or offer price, then another home may be a better investment for you.
What does Online Survey Look for With Home Valuations?
When it comes to the home valuation survey, there some things the survey tool looks for in particular. This includes basic facts about the home, such as the following.
- Number of rooms
- Square footage
- Age of home
- Community features
- Construction of home
- Outbuildings and other property features
Obvious repairs needed (some lenders will require these types of repairs be made before making the loan -- especially in the case of visible structural damage)
In some instances the survey tool will also recommend a specific dollar amount of insurance coverage for the home as well. Of course, you should remember that this is all observable home features and not something that involves a deep examination of the home. You'll need to invest in a formal home inspection for a better picture of the condition of the home.
Are Valuation Surveys Necessary?
If you're not getting a loan, you can skip the survey, though a thorough home inspection is always recommended when you buy a home. However, anyone seeking a mortgage loan is likely to be required, by the lender, to pay for this valuable survey. It helps prevent obvious money pit situations when buying a home and offers some degree of protection for buyers and lenders alike.
The bottom line is that a mortgage valuation survey is an essential part of the home buying process for most homebuyers today. Online survey software helps keep the costs down without sacrificing reliability in the results.