Benefits of using a RICS Registered Valuer for Probate Valuations
When assessing the value of a property for probate it is common practice for people to obtain 3 estimates from estate agents and take the average figure of the three. However, this can cause issues as in many cases there can be a wide variance in the figures and the resulting figure can often create a challenge from HMRC.
Using a valuation by a RICS registered valuer rarely produces a challenge but if it does, it is far easier to be resolved. The example below is from a recent challenge on a valuation carried out by our company and we believe highlights the advantages of instructing a valuer for probate over a free open market valuation from Estate Agents.
A probate valuation is a figure that should value the asset as of the date of death. Many agents are unaware of this and will provide a current open market valuation, a figure based upon the price that they believe they can achieve in the open market going forward. As we have seen in recent years, market conditions can generate huge fluctuations in property prices in certain areas, even within a relatively short period of time, and this is evidenced in our example below.
We were instructed to carry out a RICS probate valuation on a four-bedroom detached house in Bedford where the lady had unfortunately passed away on 26th February 2020. The family dealt with funeral arrangements etc and then of course at the end of March, the UK went into lockdown. We gained access when restrictions were lifted and gathered strong weighted comparable evidence that clearly backed up opinion that as of 26th February 2020, the property had a value of £460,000.
In the summer of 2020, the beneficiaries decided to market the property and a bidding war occurred with offers eventually getting up to the level of £510,000. This in itself is not uncommon and the marketing agent had clearly done a very good job on behalf of their client. We subsequently received a call from the vendor’s solicitor in December 2020 stating that they had received a challenge from HMRC regarding the final sale price achieved versus the probate figure provided.
In this instance, we had a phone conference with the District Valuer as face to face meetings could not occur due to COVID. We pointed out the comparable evidence and the reasons why the valuation had been weighted to £460,000. Furthermore, we looked at the marketing conditions that had rapidly changed since the date of death. The market had in fact jumped into life following lockdown and many agents had reported their best activity for years. Rightmove had reported a record number of hits/enquiries on their site and the chancellor had also announced a stamp duty holiday to help kickstart the housing market. After a lengthy discussion where all of these factors were taken into consideration, the District Valuer finally agreed with our process and subsequently the probate valuation of £460,000 was accepted by HMRC even though the house sold for £50,000 more in less than a year of the lady passing away.
This outcome can only come from broad experience of the property market and a full understanding of the valuation process that RICS insist upon before a surveyor can become a member. A RICS surveyor will not only give an honest valuation, they will also have the conviction to stand by it and explain their reasoning. It is very rare for HMRC to challenge a RICS valuation, but as shown it can happen. In this instance the client certainly got value for money and were delighted with the result.