27th June 2022

We are on the edge of completing a commercial refinance deal for a client.  The property is worth about £4M; it was a complex valuation, and the valuer needed to be guided very carefully in the matter.  Valuating a building is not as easy as it sounds.  This commercial lump comprises of a range of properties ranging from a large night club to a nail salon, and in between a slot machine unit.


The whole complex is rented to an individual who then sublets all the individual premises out and pays our client a fixed rental.  Any voids or profits are his responsibility.  He knows the patch and has been in the locality for many decades; therefore, he has his finger on the pulse of the local commercial market.


We have had single properties, freehold, where they have been completely misvalued.  For example, one where we purchased the property for £5.2M, and a top firm appointed by the lender valued it at £3.2M, yet we sold the property on for £5.8M.  So, what was the point of the valuation?  And we paid handsomely for the privilege.


You have RICS surveyors, who are looking at the transactions academically, and simultaneously they want to protect themselves from being sued on one side; and on the other you have the commercial reality.  The two at times do not meet.  Any opposition to the valuation then triggers the ego of the valuer and they are likely to dig their heels in even further in regards to the valuation.


Therefore, when you have a potentially sticky valuation, it is better to come armed and guide the valuer gently.  Human nature generally means if one can get away with it, do the minimal work in order to meet your target.  Therefore, if you have the necessary information to hand, it will likely be used willingly.


The valuation was done some time ago and we are now looking to raise about £2M on the properties.  We could not risk another valuation being done; and if it was necessary then it would have had to be not only with the same firm but also with the same valuer.


The commercial lender we have sourced for this deal is aggressive by nature.  We have direct access to the owner of the firm, luckily he is commercially minded, and therefore took the decision no valuation was required.  Therefore, technically an outdated valuation was used for this finance offer.


In addition to this we also managed to secure an extremely competitive rate of 4.99% on this deal, which is very rare for a transaction such as this.


All the paperwork and queries have been addressed and just as we were waiting for a drawdown of the funds, something else came out of the woodwork.  The lender has last minute arranged for a senior member of the firm to visit the site, this was decided only on Friday, instead of the anticipated drawdown.  The visit took place Monday morning.  Hopefully, he was satisfied.  Although it seemed this way they often keep their cards close to their chest.


We are hoping for drawdown imminently.

Suresh Vagjiani

Suresh Vagjiani
Suresh Vagjiani
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