CeMAP Property Valuation and Surveys 2 — Questions and Answers
Question 1: What is 'gazumping' in the UK property buying process?
- A buyer withdrawing an offer after survey
- A seller accepting a higher offer from another buyer after already agreeing a sale (Correct answer)
- A lender withdrawing a mortgage offer
- A solicitor delaying the exchange of contracts
Correct answer: A seller accepting a higher offer from another buyer after already agreeing a sale
Gazumping occurs when a seller accepts a higher offer from a new buyer after having already accepted an offer from another buyer.
Question 2: In which circumstance would a lender most likely instruct a 'retention' following a mortgage valuation?
- When the applicant has adverse credit history
- When the surveyor identifies repair work that must be completed before full funds are released (Correct answer)
- When the property is a new build
- When the LTV exceeds 90%
Correct answer: When the surveyor identifies repair work that must be completed before full funds are released
A retention is applied when a surveyor identifies necessary repairs, with a portion of the loan withheld until the work is verified complete.
Question 3: What is the difference between 'market value' and 'mortgage lending value'?
- They are identical terms used interchangeably
- Market value reflects current sale price; mortgage lending value is a more conservative long-term sustainable value (Correct answer)
- Mortgage lending value is always higher than market value
- Market value is set by the government; mortgage lending value is set by the lender
Correct answer: Market value reflects current sale price; mortgage lending value is a more conservative long-term sustainable value
Mortgage lending value is a more cautious, long-term sustainable figure, while market value reflects what a buyer would pay today.
Question 4: What is 'negative equity' in a mortgage context?
- When a borrower has no savings to pay the deposit
- When the outstanding mortgage balance exceeds the current market value of the property (Correct answer)
- When monthly payments exceed the borrower's income
- When a property is unmortgageable due to structural defects
Correct answer: When the outstanding mortgage balance exceeds the current market value of the property
Negative equity occurs when the outstanding mortgage is greater than the property's current market value, leaving no equity for the borrower.
Question 5: Which of the following property types is typically considered 'non-standard construction' by mortgage lenders?
- Victorian terraced house with brick walls
- Timber-framed detached house with tiled roof
- Concrete prefabricated property built post-WWII (Correct answer)
- 1990s new-build semi-detached property
Correct answer: Concrete prefabricated property built post-WWII
Post-war prefabricated concrete properties are classified as non-standard construction and can be harder to mortgage due to structural concerns.
Question 6: What does a HomeBuyer Report (Level 2 survey) include that a basic mortgage valuation does not?
- A full structural analysis of every accessible element
- A summary of condition ratings, visible defects, and recommendations for repairs (Correct answer)
- A guaranteed rebuild cost for insurance purposes
- Planning permission history for extensions
Correct answer: A summary of condition ratings, visible defects, and recommendations for repairs
A HomeBuyer Report provides condition ratings for key elements and highlights visible defects, going beyond the lender's basic valuation.
CeMAP Property Valuation and Surveys 2
What is 'gazumping' in the UK property buying process?