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Recently, I refinanced a block of flats I own as an active investor and landlord, a process that reinforced how critical it is to manage valuation risks effectively.
In this case, working with two lenders meant instructing two separate valuations. The results were eye opening: one valuation came in at £395,000, while the other was £450,000.
We don’t typically recommend ordering multiple valuations because of the extra upfront cost, but there are occasions like this one where it’s warranted. When the success of a deal hinges on achieving the right valuation, taking this step can prevent significant setbacks. In this instance, the discrepancy proved the value of hedging against valuation risk, and despite the initial cost, I was grateful for the decision.
As a broker, I often see deals broken by overly conservative valuations or valuers unwilling to consider challenges. It’s a shared frustration for developers and landlords who know their market but are stymied by figures that don’t reflect reality.
That’s why as brokers we believe it is critical to minimise valuation risks where possible. At times, commissioning multiple valuations can be the right move, especially when you anticipate discrepancies. For me and others who’ve taken this approach, the short term cost often pays off, ensuring deals remain viable.
Our Approach
As both an investor/landlord and advisor, I understand the struggles investors face because I’ve experienced them firsthand. That’s why we work to:
1. Minimise valuation risk: Strategically assess when extra steps are necessary.
2. Support investors and developers: Recognising that the stakes are high for everyone involved.
3. Operate with transparency: Sharing the lessons we’ve learned from our own investments.
Key Takeaways
1. Anticipate Discrepancies: Valuations are too subjective, and a second opinion can save a deal.
2. Pick Flexible Lenders: Lenders open to suggestion over valuations give you more certainty.
3. Advocate for Your Valuation: Don’t hesitate to challenge figures that don’t align with market data. But you must have good data to support any challenge.
For those of you that are active and in particular looking to grow in the property space, proactive planning is essential. As this experience shows, a well informed strategy can make all the difference in keeping a deal moving forward and growth on the right trajectory. Whether it’s your first investment or your fiftieth, do not let a single valuation define your future potential.
If you're working on a project and are in need of funding solutions, please get in touch.
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