| Comment | The 'realtor' (by which I assume you mean estate agent) doesn't do the HR, it's done by independent assessors
I gather that not long after HRs were introduced, there was a case where an assessor was sued for giving too high an HR value and this leading to negative equity or something
Anyway, the result is the same - assessors are incentivised to be conservative in their estimates to avoid comeback later, but their valuation is treated as hewn in stone by mortgage companies
HRs are broadly a very good thing - they massively simplify the homebuying process - but the valuation process and how it is treated by mortgage companies needs to be revised because it's being treated as 'market value' when it clearly isn't.
You see the same misconception here with people consistently asking how many % above HR to bid - that's not how it works, and that's why you're being outbid. You need to consider the market value, which may or may not have any connection to the HR value. A 3-bed flat in the West End sells for £300k because a 3-bed flat in the West End is worth £300k to somebody, not because that's 20% over some notional HR. |
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