What are the different types of valuations for lending purposes?

There are a number of ways lenders will value a property for mortgage purposes. Here are some of the most common: 

Market Value
Market value, Bricks and Mortar or Buildings Valuations are the most common type of property valuations. They are commonplace if the property is a normal single (C3) dwelling and are based on what price a property would fetch in the open market. They take into account various factors such as location, size, age, and condition when compared to similar properties.

MV-1 Specifically for a commercial business, the valuation also takes into consideration the fixtures and fittings if the business is a going concern and what the annual yield of the property would be – typically for HMO properties with 7 or more bedrooms, Multi Unit Blocks & Commercial property, which may be higher than a bricks and mortar Market Valuation.

Residual Value
Residual value is the value of a property after all costs associated with its development or refurbishment have been deducted.

Gross Development Value (GDV)
GDV is the estimated value of a property development project upon completion. It is calculated by taking into account the total revenue generated by the project, including the sale of all units.

90 Day Value – also 180 day value
90 Day Value is the estimated value of a property that has to sell within 90, this can significantly decrease the value of a property by upto 25% of the MV1 figure, 180 day value is more lenient and usually comes in at the MV1 as most properties sell within 6 months, apart from unique or large assets these still could be down valued on this basis as they take over a year to sell in some cases.

Open Market Value
Open Market Value is similar to market value, but it takes into account any conditions or restrictions that may affect the sale of the property, such as a long lease or a shared ownership arrangement.

Vacant Possession Value
Vacant Possession Value is the value of a property if it were vacant and available for immediate occupation. This type of value is often used in cases where a property is subject to a tenancy agreement, as it takes into account any restrictions on occupancy or use of the property.

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