For decades surveyors have relied on lenders for their revenues which, until recently, have been generated by the need for mortgage valuations and also via referrals from banks and building societies.
But this long-standing inter-dependency is being disrupted both by lenders attempting to speed up mortgage decisions and the availability of new technology.
Lenders have been slimming down their need for physical visits and instead have been relying more and more on Automated Valuation Model (AVM) technology and super-light ‘drive-by’ valuations.
“As lenders have begun to remove themselves from the sale of survey products, this gives us the opportunity to produce a product which is more customer facing,” says Simon Jackson, Group COO of SDL Surveying.
“Lenders have been under pressure from borrowers to make a decision faster because they want to know sooner that they will be lent the money and this, along with the need for lower costs, has created the opportunity for digital valuations.”
Consequently, surveyors are now creating more consumer-friendly products to generate business, a sector of the market which is surprisingly weak given the huge amounts of money involved when purchasing a property.
Recent research by YouGov found that less than half of the home buyers it talked to had paid for a survey and that the rest relied on other sources including the mortgage valuation, their own inspection or even the agent’s property details.
Also, Jackson says the industry has become overly B2B orientated and that survey reports have in general become too technical and hard to understand for most consumers.
“We wanted to come up with a report that was simpler, in plain English and gave the customer everything they needed to know to make a decision about a home purchase,” he says.
Like SDS, which was first to market, the other leading surveying firms including Countrywide and Legal & General have this year both been readying more dynamic and digitally-driven ‘home condition reports’, which are comparable to a Level 1 RICS survey but do not include a valuation element, which is usually an optional extra.
“With the increase in data availability and the resulting rise in the use of AVM reports in favour of an on-site inspection, a gap has opened up for customers who purchase a house that has not been physically visited by a chartered surveyor,” says Mike Holden, Managing Director of property data firm Landmark Information.
James Ginley, Technical Director at L&G Surveying Services, says: “The misnomer in the market has always been that buyers think they’re getting a survey from their lender but of course they don’t, it’s only a valuation.”
Consequently, surveying companies of all sizes must now market the benefits of paid-for home surveys harder in order to create demand and, although TV ad campaigns are unlikely to materialise, there will be an increased effort to market them.
“You wouldn’t buy a car without an MOT certificate; it should be the same when you’re buying a home,” says Holden.
Countrywide, SDL and Legal & General all claim their new survey products will be ‘game changers’ featuring digitally-delivered content featuring lots of interactive elements, links and easy-to-understand ratings systems.
For example, Legal & General’s SmartSurvey will have clickable pictures that pop-up with a written description of the problem in the photograph.
“Ours is an entirely end-to-end digital and interactive customer journey,” says Legal & General’s Ginley.
“It also makes it easy for people to take content out of the report seamlessly which we believe is essential for them because they are buying a property worth hundreds of thousands of pounds with no advice.
“Homeowners don’t look at properties critically; trained surveyors do.”James Ginley, Legal & General
Countrywide Surveying Services is the latest to launch its product, and last week it gained considerable media coverage when Santander began offering its report for free to those buying homes via its two and five-year fixed rate mortgage deals.
“I believe our HomeFact service offers comfort and peace of mind to home buyers about the condition of their property before they buy, presented in a format that’s easy to understand and which offers more value for money than a mortgage valuation report, and costs less than a traditional survey,” says Paul Wareham, MD of Countrywide Surveying Services.
SDL Surveying, which was the first to enter the fray with its Homescore product in January 2018, says it talked to lenders about offering the product to its customers.
“But they didn’t want to get involved and although they do want their customers to be better informed, they don’t want to have to update all their documentation,” says Jackson.
“So we, like our competitors, have to enable customers to understand when there is, and isn’t, a surveyor involved in producing a valuation and we need to work with lenders to help buyers know what they are – or are not – getting.”
As all the players admit, the surveying market has ended up in an odd place. Hundreds of thousands of home buyers every year purchase properties that have had their value confirmed, but not their condition even though it’s most people’s largest financial commitment.
The trouble is, surveyors and lenders have stood by and watched this position evolve but done too little about it, and are now playing catch-up.