Cut corners and you'll be in the corridor of uncertainty

Most people go for a basic valuation to save money. But, as Esther Shaw finds, this could turn out to be a false economy
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The Independent Online

When you set about buying your first home, it can feel as though you're haemorrhaging money. Not only do the funds have to be found for a deposit but you have to pay legal fees, stamp duty and removal costs - all before you've started on the mortgage.

But while you might be looking for ways to save money, one area where corners can't be cut is on the property survey.

All sorts of valuations and surveys may appear to be on offer, with lots of different names, but in essence, you can choose from only three types of survey; the basic valuation, the homebuyer's report and a full structural survey.

Prices range from around £100 to £250 for the basic valuation, to as much as £800 to £1,000 for the in-depth structural investigation.

The problem is, with so many expenses already making demands on a buyer's money, many simply plump for the cheapest option.

This could prove a false economy as your decision not to fork out a few extra hundred pounds at the outset might end up costing you thousands of pounds in the long run.

"Paying for a thorough [full structural] survey can actually help you budget once you move in," says Paul Fincham of the Halifax. "For example, it might reveal that the central heating is an old system that will need replacing at great expense in the future."

So what do the different surveys offer?

The most basic model covers only factors such as a property's age, type and state of repair, and features only a brief appraisal of the home's exterior.

Crucially, it doesn't guarantee that a building is structurally sound or that it has no serious defects.

"The basic valuation is really only for the lender - to ensure the property is worth the amount you are borrowing [from the bank or building society]," says David Hollingworth at broker London & Country.

Despite these limitations, however, most homebuyers ignore the case for any further survey in a bid to save money, says Simon Tyler of broker Chase de Vere Mortgage Management.

For peace of mind, the homebuyer's report is the minimum to go for, he stresses. This looks at the property's general condition and state of repair. Unlike the basic survey, it includes inspections of drains, windows and the space beneath downstairs floors.

"In most cases, a homebuyer's report will flag up any major problems, and on the back of that, you might need to get a specialist in to give you a full assessment," says Mr Tyler.

The full structural survey is the most detailed and, in particular, it is recommended for old and listed buildings, and properties in a bad state of repair.

While you may be put off by the cost - only a fifth of borrowers have a full structural survey, according to Mr Tyler - this will unearth any problems that you may need to deal with now or in the near future.

Every part of the survey is detailed - on roofing and the walls, for example. Foundations will be checked and central heating and the electrics tested.

If all goes well, your survey report will give you peace of mind about your prospective new home - or, at the very least, make you aware of the work that needs doing.

However, don't despair if it reveals hidden damage that will cost thousands to repair. You can use such findings to your advantage as a bargaining tool to force the seller to drop their asking price.

On the flipside, however, your survey may reveal sizeable problems that persuade you to reconsider your buying decision altogether.

And galling as the thought of pulling out of the deal at a late stage may seem, there is no point buying an unsuitable property that you will subsequently come to regret.

If you go for either a homebuyer's report or full structural survey, your lender will usually offer you a list of three or four surveyors. You don't have to go with any of these firms; you can shop around the market instead and compare the fees and the services offered. For a full list, visit the website of the Royal Institute of Chartered Surveyors at www.rics.org.

It's worth noting that the homebuying landscape is set to change in the next few years with the launch of Home Information Packs.

Set to become compulsory from 2007, these packs shift the workload from buyer to vendor. They are designed to make the process less stressful, more transparent and faster by requiring sellers to compile a detailed assessment of the property they are selling.

Critically, they will include details of local area searches, a home-condition report based on a professional survey, planning consent and an energy-efficiency assessment.

'OUR ONLY WORRY: THE PINK WALLS'

When operations manager Steve Lamb bought a new home in Crowborough, East Sussex, a year ago, he was grateful for the peace of mind provided by his homebuyer's report.

He and his wife, Carmel, had been looking to buy for some time before they found the right property - one that offered them the space they wanted. They then put in an offer on the six-year-old, four-bedroom detached house - and had this bid accepted.

"The property was in excellent condition when we looked around it," adds Steve, 43. "But on the advice of our solicitor, we had a homebuyer's report carried out. We saw this as a calculated gamble [instead of going for a full structural survey]."

The couple organised their homebuyer's report through the Chelsea building society at a cost of £295.

"The survey findings gave us a degree of reassurance that we felt we needed. Then our only worry was the pink walls, blue carpet and Artex ceilings - changes we knew we could make ourselves."

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