When you’re selling your property, we understand that you may be a little apprehensive while waiting for your buyer’s mortgage valuation.
So, we appreciate the confusion and worry that some sellers feel when the lender’s mortgage valuation report contains a “nil” or “zero” valuation.
What is a “nil” or “zero” valuation?
Rightly or wrongly, the terms “nil” or “zero” valuation are commonly used within the mortgage industry.
But, let’s be clear: almost every property has an intrinsic value. A “zero” valuation doesn’t mean that your property is worthless.
Most lenders have automated processing systems, and, in some cases, they want to stop cases being processed automatically if there are elements of the report that need further review.
A “zero” is simply the character the valuer is asked to insert into the mortgage valuation report for it to be considered further by the lender. It could just as easily be an “X” or “N/A”.
A “zero” valuation occurs when a property may not meet the mortgage lender’s lending criteria or if further information is needed. This may be because the property has some characteristics that need addressing before a mortgage valuation figure can be confirmed.
Alternatively, the valuing surveyor may need further information about the property to complete the valuation e.g. the property features an external wall system (cladding) and an EWS1 form needs to be provided.
Why has my property received a “zero” valuation?
When valuing property, valuers follow the guidance determined by each mortgage lender, and every mortgage lender is different. For example, some lenders require the valuer to inspect the loft area, others do not.
Mortgage lenders rely on the expertise and experience of valuers to identify issues that could pose a safety risk, along with aspects of the property that (according to their lending risk criteria) could make the property impossible or very difficult to sell in the future, in their opinion.
Characteristics such as substandard cladding, fire hazards, social issues due to the property’s location, or even the presence of invasive plants like Japanese Knotweed, can all trigger a “zero” valuation if the lender wants the valuer to report in this way.
To reiterate then, a “zero” valuation doesn’t mean that the property isn’t worth anything. It means the mortgage lender requires further information before they are comfortable to lend against the property for the reasons uncovered by the valuer during the inspection.
What can I do if my property is given a “zero” / “nil” valuation?
While receiving a “zero” valuation can be disappointing, it’s not necessarily irreversible.
If your initial mortgage valuation report carries a “zero” valuation, you should discuss the valuation with your mortgage lender to understand why the property has been given a “zero” value and what you can do to rectify the issues.
Accurate mortgage valuations, supported by plenty of data, are vital for all stakeholders in the home buying and selling process, and a “zero” valuation will never be given without good reason. However, should you wish to challenge the “nil” valuation (and your lender accepts your grounds for challenge), your lender will work with e.surv Chartered Surveyors to conduct a thorough investigation of the case via the Post-Valuation Query (PVQ) process. It may just be that the lender requires more information.
Got a question?
At e.surv Chartered Surveyors, we offer the UK’s leading residential valuation and surveying service and are happy to answer any questions about this blog or the broader mortgage valuation process.
If you do have any question, please get in touch. You can call our customer helpline on 0800 169 9661 or email us at [email protected].