As the housing market suffers its most serious bout of the jitters for at least two years, nervous buyers are already being hit with another dilemma - discrepancies between the agreed sale price and that at which the mortgage lender's surveyor values the property appear to be on the rise.

"Down-valuation", as estate agents call it, was last widespread about five years ago and is, according to Barry Hall, chair of the residential survey and valuation group at the Royal Institution of Chartered Surveyors (Rics), characteristic of periods "when the market changes", or falls as those of us outside the industry put it.

Experiences vary according to location, and valuations in buoyant local markets are tending to hold up well. That said, Tracy Kellett, managing director of home search consultancy BDI Homefinders, says: "I now expect the majority of offers we make to be down-valued. The tide turned at the beginning of September: there's now a very different feel to the market."

So, are surveyors really worried about a possible market crash? Kellett thinks not, saying much of the pressure to down-value actually comes from increasingly risk-averse mortgage companies. "It's caution as opposed to factoring in drops in value," she says. "Surveyors have some liability to mortgage lenders for their valuations."

Amy Smith of estate agents Chesterton Global says down-valuations are often a result of sellers having unrealistic expectations about prices. "Estate agents can't get instructions if we aren't bullish on valuations," she admits. "But many down-valuations occur where we didn't value the property at as much as the seller insisted on putting it on for."

Finding a value
A surveyor's job is to work out how much a property is worth - for the buyer, when carrying out a homebuyer report, or the lender, when carrying out the mortgage valuation.

Rics says the criteria for the valuation are set down in its "red book". "The valuer doesn't make the value," Hall says. "The market makes prices and the valuer follows the market. An estate agent looks weeks or months ahead to achieve the best price when making a valuation, but a surveyor has to assume contracts are being exchanged that day."

Variables under consideration by the surveyor include the property's layout, age and condition, as well as local transport links, while decoration plays a minimal role, says Hall. But the key factor is "comparable evidence".

Valuers speak to local estate agents to find out the price at which similar properties in a similar location have been changing hands - figures to which the public, who are reliant on three months'-delayed Land Registry figures, are sadly not party - and this information plays a large part in the valuation. This, says Monique Tapal of estate agents Ashley Milton, is a system open to abuse. "If the surveyor is rude or if the estate agent doesn't like the other agent who has the property under offer, they can give complete rubbish over the phone," she claims.

Next steps
Whatever it is based on, a down-valuation can be bad news for both sellers, who may be forced to accept a lower offer, and buyers, who may not be able to raise a big enough mortgage to buy a property if a seller refuses to drop the asking price.

Two years ago, Sara Haidari, 25, bought 50% of a flat in Fallowfield, Manchester, for £41,000 under a shared ownership scheme. When she decided to sell up this summer the housing association that owned the other half insisted she pay a Rics-accredited chartered surveyor to carry out a valuation in advance, for which she duly paid £150. She was delighted when he came back with a figure of £120,000, which meant her share was worth £60,000.

In July, she accepted an offer at the full asking price, but less than 10 weeks after her valuation the buyer's surveyor down-valued the property to £100,000 - a price Sara, nervous abut the market, grudgingly accepted despite the massive discrepancy between the two professional views.

So what can people in Haidari's, or her buyer's, position do?

For most buyers, unless they have found their "forever" home and are convinced the valuer has got things completely wrong, this will be an opportunity either to negotiate hard or walk away.

For sellers, meanwhile, the most common advice is to get your estate agent to earn his or her keep and negotiate with the rest of the chain to get everyone to share your financial pain.

Often, sellers will be tempted to pull out of the transaction and remarket their homes, and it's here the games of bluff begin. In some locations the vendor will easily find another buyer, perhaps with a big enough deposit for the valuation to not matter, who is willing to pay the full asking price.

However, the experts point out there is an equal risk this won't happen, and that a new survey will have the same, or a worse, valuation.

If all parties agree the surveyor was wrong, however, it is possible to appeal to the mortgage company. In such cases, says Ray Boulger of mortgage broker John Charcol,: "You need to ask the estate agent to come up with three recent comparable transactions. That might get the surveyor to change their opinion if they weren't aware of them before."

Realistic ambitions
There are some things you can do to reduce the likelihood of a down-valuation. As a seller, you should be realistic about prices and not insist your agent markets the property at a price beyond others in your area. As a buyer, you can try to keep your offer at a level a surveyor, and the seller, will accept.

Doing some research before you put in an offer could also pay off. Louisa Fletcher, a young pretender to Sarah Beeny's TV property guru throne, runs the website The site uses Land Registry figures and a frightening-sounding algorithm to calculate what a given style of house in a particular postcode is likely to be worth.

You have to work out whether you are in a "strong", "reasonable" or "slow" market to make sense of the results, but a bit of fiddling around will give you some idea of the relative contribution to a home's value of the different aspects.

Fletcher says that as a rule of thumb half a property's value is determined by its postcode, with the other half determined by its features. Of the latter, she continues, "bathrooms and bedrooms are the big ones. Second or third bathrooms add significant value. Off-road parking also adds great additional value." In the end, though, accurate pricing and offers will come down to how confident you are when dealing with estate agents. They have comparable price evidence on hand to share with surveyors, and if they want to stem the tide of failed transactions it is time they also started sharing some of it with you.

Source: Guardian Unlimited, November 14, 2007.