Most people would agree that ‘increasing automation’, ‘reducing transaction timescales’ and ‘lowering costs’ are all noble goals which are difficult to object to in any industry. However, in a world where lenders are central to the process that purchase conveyancing clients must navigate, there is a rapidly growing possibility the individual client risk is increasing, as an unwelcome and unanticipated by product of these initiatives.
I would argue that conveyancers have a role – perhaps even a duty, to mitigate this risk where possible.
The bad news is that we are starting from a sub-optimal position to begin with. For many years, the vast majority of purchase applicants have made the erroneous assumption that because a lender has instructed a valuer to inspect a security, provided there is a subsequent agreement to advance funds, then all must be well with the property in question.
This is an unfortunate assumption that has caused heartache and expense to many a purchaser. According to industry stats, circa 80%+ of applicants do not commission any form of independent assessment. Self evidently a mortgage valuation is not a survey – they are very different reports for very different purposes.
A mortgage valuation lets lenders understand that there is enough equity in the property to advance funds and also sadly to recoup the loan, in the event of a default and sale after repossession. It is for the lender’s reliance alone and contains very limited information on the condition and future maintenance costs of the structure.
In any case, most lenders don’t disclose the report to the applicant these days. Lenders themselves are formally required to suggest applicants seek private survey advice – although the fact that many applicants evidently miss this guidance, which can be buried in the copious paperwork is perhaps understandable.
The fact is that private surveys are the only types of report that provide the customer with detailed condition information and real protection in the event of any undetected issues surfacing after purchase.
However, this unsatisfactory position is actually rapidly getting worse. As confidence in data/AI driven assessments of value grow, in an increasing proportion of cases, the lender will rely on an algorithm to support the lending decision- meaning nobody has even visited or even viewed the property online, on their behalf.
Each lender has their own appetite for these automated tools and therefore it’s almost impossible to predict with certainly when they will be used in the place of a qualified professional. The consequence of this is that many purchasers are by proxy now relying on the output of a computer program that a lender may have paid a few pounds to access, to reassure themselves regarding the most expensive purchase they are likely to ever make.
The solution to this is pretty simple. As a trusted professional advisor, the conveyancer is ideally placed to recommend that professional private advice should be considered – in a similar fashion to the process of recommending specific searches as part of a basket of risk mitigation tools that help protect the purchaser.
Referring your customers to a trusted firm of surveyors such as Houzecheck will ensure they receive best advice and may also provide your business with the opportunity to supplement today’s very modest conveyancing fees with a meaningful additional income stream, genuinely delivering a win-win situation for all parties.
Advances in technology are making all our lives easier, but let’s make sure we don’t leave any stakeholders behind in our rush to embrace them.
