Mortgage brokers face potential liability if they fail to talk to their clients about taking a property survey, according to Joe Arnold, managing director at Arnold & Baldwin Chartered Surveyors.
Talking at the Financial Adviser Event, Arnold said the rise of AVMs means that a growing number of property purchases are completing without a surveyor ever inspecting the condition of the property, and while this can speed the application process it may ultimately be financially damaging for homebuyers and for brokers.
He said: “AVMs can make the mortgage process much faster, which is obviously great news, but what happens if there is subsidence at the property or other defects that lead to unquantifiable costs.
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“It is currently up in the air where liability might shift in these circumstances and we are working with brokers who are already taking a more cautious approach, updating their terms of engagement to involve a conversation about a survey at an earlier stage.”
Arnold continued: “I’d recommend decoupling the mortgage valuation from the survey. That way the AVM can be carried out quickly and the mortgage application can proceed, but at the same time a surveyor can inspect the property on behalf of the client. As a broker, you should think about partnering with a local surveyor and discussing a survey with your clients as early on in the process as possible.
“After all, if there is a major defect in the property that would stop the transaction proceeding, it is better to find this out early, before you waste too much time on the case. We find that solicitors often raise the issue of a survey as a case approaches exchange and this can cause huge delays, and sometimes cause buyers to get cold feet.”