The Art of Property Underwriting

By Mark Blackwell, lending and surveying services director at eTech Solutions
This article was originally published on the Howden Group website Dec 17 

In an unsettled market which is becoming increasingly difficult to predict, insightful property underwriting has never been more important.

Conflicting reports on house prices show marked regional differences. A background of economic instability with the potential to affect property prices further is only compounding the current confusion. Several commentators say it is difficult to pinpoint specifically what is driving this mood and momentum.

Today’s housing market has become an exclusion zone to many wishing to get on the property ladder for a range of political and economic reasons, despite the helping hand of Government schemes and a low interest rate environment.

However, for those who join the property ladder using mortgage finance to purchase their own home there has never been such a demand for one key aspect in the moving process and that is speed. Would be borrowers want rapid decisions and updates on mortgage applications right through to completion, as with every other purchase they make.

Lenders are boldly trying to address this need by using various methods of valuation to assess a property’s value. In some instances, leaving the condition to the borrower to determine.

Recent announcements by lenders removing upfront fees in redesigning their product ranges mean valuation assessments are still required to be carried out but at a cost more palatable to the lenders.

Thanks to the emergence of digital solutions in the mortgage market, the variety of valuation options available to lenders today is comprehensive, ranging from AVMs to full on-site inspections.

With better technology and improved data availability, the recent increasing use of AVMs has brought considerable efficiency savings to property valuation, but at the same time, there is more risk exposure with reliance on particular data sets to provide accurate valuations.

Traditionally, a full on-site inspection would be the option most frequently chosen, in the absence of readily available technology to provide a desktop valuation or in eTech’s range of solutions a Remote Valuation. A physical valuation represents the lowest risk to a lender and in the case of unique or unusual properties, data led valuation assessments would be off the list. This option is, however, the most costly in terms of surveyor time and money and reliance on such methods alone means less capacity for surveyors and ultimately longer waiting times for buyers.

The alternative to this is the Remote Valuation or desktop valuation as a way of valuing a property without the premium cost and time it takes to do a physical on-site inspection, utilising available data and information, and in our solution the knowledge of a local surveyor. This local knowledge mitigates the risk of a lack of expertise provided by a traditional desktop valuation.

The Remote Valuation uses advanced technology, data assets, photo imagery and the knowledge of a skilled, local surveyor. The surveyor would carry out a valuation remotely from an office or car by utilising essential third-party data from various sources such as land registry, EPC, flood, subsidence, non-standard construction registers and various AVM providers, combined with digital maps, satellite imagery and street views, whilst using their local knowledge of the area to significantly improve the accuracy of the valuation.

In today’s uncertain property market, whilst data assets present powerful insights and efficiencies into property valuation, we cannot rely on this information in isolation and underestimate the human element, the skills and knowledge of a local surveyor to balance the information collated. All these tools together with technology helps capture the right information, combined with inbuilt lender guidance, validation of data and formatting. This will ensure property valuation risk is minimised, whilst keeping the valuation process efficient and more profitable.

Property underwriting to support the assessment of value is adding greater importance to lenders and surveyors alike. Improving the digital customer journey with data and tech fuelled valuation solutions is a must in today’s marketplace. Surveyor capacity constraints and diary log jams caused when the mortgage market bows under supply pressures to book a timely valuation, should be hurdles that are removed.

Convenient access to available booking slots for customers to book their own appointments, supported by optimisation and scheduling tools is changing the way technology is helping the surveying process. Our experience shows supplementary benefits alongside those optimised resources deployed in the field – a lighter carbon footprint as time in the car and time spent following other surveyors to the same street, are greatly reduced.

If the market is getting tighter, surveyors will need more tools in their hands to deliver against SLA’s and more data to help make better valuation decisions. They will certainly need to get through their journeys more efficiently creating more time to be more productive.

The surveying profession is doing all it can to be more sustainable and offering lenders a more valuable service offering, as each lender considers its digital strategy.