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The irony of Bank Valuations: When quantity trumps quality and the Valuer is left to blame

A bank mortgage transaction is usually hundreds of thousands of € or £ or $. Yet to protect themselves, the banks worldwide restrict the fees of valuers for valuations to the level where only the desperate will get out of bed in the morning to do them. There is no time for quality, only quantity, and the timescale of requirement doesn’t permit proper research of all the matters that create or reduce value.

So, it will soon become a time when AI can do it all, except actually confirming that the property exists other than on Google Street View. They can’t know of basements, or major defects, but then it’s up to their customer to tell them. And all the customer wants is the money and many a pretty tale may have been told to get that.

Ah, but when the market crashes, who is to blame? Yup, the valuer. In boom times like now, the world is awash with money, so the banks want to get it working and lend 100% or more. When the market crashes and values reach bottom and there’s little chance of loss, they restrict lending to 60%.

In Europe they are now considering instructing valuers to predict future values! My crystal ball from RICS must have got lost in the post. The banks are the ones with the economist and research departments, so predictions and trends are their job.

The valuer needs to guess what their neighbour will pay for a house, and with all the personalities in the world, it’s a psychology degree that’s required. Funny old world.

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