One of the biggest challenges when selling HMO is the possibility that the value of your property will decrease once a surveyor steps in the picture. If you’re still new to the industry, surveyors are hired to determine the market value of your property.
I used to dread surveyors, but after understanding the process and the responsibilities of surveyors I was able to come up with ways on how to improve your HMO property’s valuation:
How Do Valuations Work?
There are 5 methods in computing the value of a property: comparative, investment, residual, profits, and replacement cost.
In finding the value of HMO properties, most surveyors use the investment method where they use discounted cash flow techniques in order to find the true value of an HMO.
The other method useful to property investors is the comparative method. It uses the price of similar properties as a reference in finding the proper price for your property. This method is used commonly with residential property.
Other methods like residual, profits, and replacement cost are utilised for land development, commercial establishments, and building construction respectively.
How to improve the value of your HMO property
1. Greet the surveyor in person
I didn’t have a good relationship with surveyors before, because most surveyors I’ve previously encountered gave low values on the HMO properties I owned. Thus, I allowed their successors to wander into the property on their own whenever a buyer requests for a survey.
Turns out I’ve been doing things the wrong way. Welcoming surveyors personally into your property and offering them a cup of tea can help create a positive impact and in turn help improve the value your HMO property.
2. Explain the improvements thoroughly
Every time I welcome a surveyor into any of my HMOs, I tell them about all the improvements I introduced to the property. It doesn’t matter whether the project is small like fixing a broken door or something big like adding extensions into the home. If you made the improvement then you have to make it known to the surveyor.
Mentioning the improvements you introduced to the surveyor is especially important when the changes made aren’t easily visible such as changing the pipes and electrical wiring.
While you’re at it don’t forget to mention the costs you incurred and the circumstances surrounding the completion of these improvements. This information is essential so that the surveyor can have a solid estimate on the value of your HMO.
3. Present the opinion of third parties
The most important thing you have to remember when presenting a third party opinion is that it must be accurate and true. In short, don’t lie.
If you have any paperwork from the agents with their valuation estimate, you can present that to the surveyor. This gives the surveyor chance to discuss the value with the agent, while the agent gets the opportunity to show comparable evidence or basis on his/her valuation.
Remember these tips the next time a buyer asks for a survey on the value of your HMO property!