Property valuation by the Bank
Discussion
I wanted some insight from people here who are more experianced and knowledgeable than I am.
I've made an offer on a flat, which was accepted for price X. The bank were happy and the mortgage application has been all fine
The bank has since carried out their evaluation on the value of the property, which they value 3% cheaper than the price.
For this reason they want the extra money as a bigger deposit (not possible!) or to loan more money at a higher interest rate (pushing up monthly repayments).
I am confused - why are they doing this i.e. under what reasons are they doing this? The price has been agreed and based on that agreed price a morgage was sorted out based on borrowing Z amount over so many years with such and such deposit made. And now, despite having to pay the same amount, the bank has decided that actually they want to charge me and my wife more
I'm confused, and a little upset.
So elighten me and tell me how usual this is and what work-arounds there are.
[edit] should I chalk this up to experience and the importance of getting a valuation done BEFORE i make an offer? Have I made an error here myself?
I've made an offer on a flat, which was accepted for price X. The bank were happy and the mortgage application has been all fine
The bank has since carried out their evaluation on the value of the property, which they value 3% cheaper than the price.
For this reason they want the extra money as a bigger deposit (not possible!) or to loan more money at a higher interest rate (pushing up monthly repayments).
I am confused - why are they doing this i.e. under what reasons are they doing this? The price has been agreed and based on that agreed price a morgage was sorted out based on borrowing Z amount over so many years with such and such deposit made. And now, despite having to pay the same amount, the bank has decided that actually they want to charge me and my wife more
I'm confused, and a little upset.
So elighten me and tell me how usual this is and what work-arounds there are.
[edit] should I chalk this up to experience and the importance of getting a valuation done BEFORE i make an offer? Have I made an error here myself?
Edited by thatdude on Monday 18th August 15:45
You can't get the valuation done before the offer. The lender will instruct a valuer, and want to know how much the property is worth. They will only lend a certain %. If t's been down valued (and 3% is a bit harsh) then they may want you to increase what you put in as they will only commit to x % of the valuation.
Your position if you still want the property is to go back to the agent and renegotiate the purchase price on the back of the valuation.
ETA
Many banks use panels with larger firms on it. Changing lenders may still get you the same valuer.....
Your position if you still want the property is to go back to the agent and renegotiate the purchase price on the back of the valuation.
ETA
Many banks use panels with larger firms on it. Changing lenders may still get you the same valuer.....
The bank we're going with is one we've held savings with for a long time, as have my wife's family. They sort of know us so we trust them.
I dont think its too late to walk away, although we have paid some non-refunable fees. I'm going to have a chat with my father-in-law this evening and also look at what savings I have - it might be yet another opportunity to wave byebye to the money I had saved (for the third time) for a Yamaha FZ1S motorcycle.
Thanks for the replies, the loan-to-value thing puts it into perspective...I suppose essentially the bank "owns" the property until we pay it off.
Still, I cant help feeling a little robbed and would like to know how they arrived at their result.
I dont think its too late to walk away, although we have paid some non-refunable fees. I'm going to have a chat with my father-in-law this evening and also look at what savings I have - it might be yet another opportunity to wave byebye to the money I had saved (for the third time) for a Yamaha FZ1S motorcycle.
Thanks for the replies, the loan-to-value thing puts it into perspective...I suppose essentially the bank "owns" the property until we pay it off.
Still, I cant help feeling a little robbed and would like to know how they arrived at their result.
firstly you have not made an error.
The bank or building society will only lend to you the given percentage of THEIR valuation of the property in question, not your offer. There is little or nothing you can do with the existing proposed lender and even if you are tempted to switch and submit an application, bear in mind that a lot of surveyors 'sit on the panel' of a number of lenders, so you could be really unlucky and get the same surveyor again !
First thing I would suggest is you contact the agent if you found the property via an agent and explain the issue, in my experience they may ask for proof of the valuation, before they contact the vendor and see if there is any room for re-negotiation. If the vendor is keen to keep you as a buyer you may just get lucky.
The bank or building society will only lend to you the given percentage of THEIR valuation of the property in question, not your offer. There is little or nothing you can do with the existing proposed lender and even if you are tempted to switch and submit an application, bear in mind that a lot of surveyors 'sit on the panel' of a number of lenders, so you could be really unlucky and get the same surveyor again !
First thing I would suggest is you contact the agent if you found the property via an agent and explain the issue, in my experience they may ask for proof of the valuation, before they contact the vendor and see if there is any room for re-negotiation. If the vendor is keen to keep you as a buyer you may just get lucky.
So a couple of you wondered if the vendor will budge...well, no he wont! He already dropped 1k on his desired price for us, so I understand he wont go down (and to be fair, neither would I).
It's something to bear in mind for the future - how much will the property be worth and are we loosing money on it? Perhaps everyone looses money
oh, and mods - apologies for putting the thread in the wrong section. I wasnt sure.
It's something to bear in mind for the future - how much will the property be worth and are we loosing money on it? Perhaps everyone looses money
oh, and mods - apologies for putting the thread in the wrong section. I wasnt sure.
They've done it because they don't think it's worth what you've agreed to pay for it.
Unfortunately, it is common practice, especially when the forecasters are expecting house prices to fall which is widely expected at the moment. Changing lenders will make sod all difference as surveyors share information - chances are if you are going with one of the big high street banks it would be a different surveyor from the same company anyway.
So, you're options are a) stump up more cash b) use it as a bargaining tool with your seller. They may budge, they may not.
It's a very annoying situation and one I have been in before, but by going for b) above you may actually end up in a better situation anyway.
Unfortunately, it is common practice, especially when the forecasters are expecting house prices to fall which is widely expected at the moment. Changing lenders will make sod all difference as surveyors share information - chances are if you are going with one of the big high street banks it would be a different surveyor from the same company anyway.
So, you're options are a) stump up more cash b) use it as a bargaining tool with your seller. They may budge, they may not.
It's a very annoying situation and one I have been in before, but by going for b) above you may actually end up in a better situation anyway.
There is another option not yet mentioned, that is have a chat with the selling agents involved. If your in a 'chain' you may be able to persuade those agents to effectively drop their selling fee's to bridge the gap you are presented with. Obviously I have no idea about the numbers you are talking but by getting 'around the table' you may just be able to save the 'chain' from collapse. Of course it depends on many factors but just could be a way forward.
crankedup said:
There is another option not yet mentioned, that is have a chat with the selling agents involved. If your in a 'chain' you may be able to persuade those agents to effectively drop their selling fee's to bridge the gap you are presented with. Obviously I have no idea about the numbers you are talking but by getting 'around the table' you may just be able to save the 'chain' from collapse. Of course it depends on many factors but just could be a way forward.
Agent's likely 1 - maybe 1.5%. Been down-valued by 3%.You'd have to be a desperate agent to not say anything other than do one... Slippery slope!
We had our mortgage company do the same thing on our last house. We had gone to our maximum deposit - but the mortgage company simply said that the house wasn't worth the offer that had been accepted.
We went back to the seller with the mortgage valuation report - and after some negotiation, they dropped the price to the value the mortgage company had specified to keep the sale.
At the end of the day - if the mortgage company think the property is only worth so much - either the price has to come down, you have to stump up more cash (or both).
We went back to the seller with the mortgage valuation report - and after some negotiation, they dropped the price to the value the mortgage company had specified to keep the sale.
At the end of the day - if the mortgage company think the property is only worth so much - either the price has to come down, you have to stump up more cash (or both).
thatdude said:
So a couple of you wondered if the vendor will budge...well, no he wont! He already dropped 1k on his desired price for us, so I understand he wont go down (and to be fair, neither would I).
It's something to bear in mind for the future - how much will the property be worth and are we loosing money on it? Perhaps everyone looses money
oh, and mods - apologies for putting the thread in the wrong section. I wasnt sure.
If the bank valuation is lower than what vendor wants to sell for, he is likely to have this issue each time he tries to sell it.It's something to bear in mind for the future - how much will the property be worth and are we loosing money on it? Perhaps everyone looses money
oh, and mods - apologies for putting the thread in the wrong section. I wasnt sure.
Time to negotiate. or walk away.
Neil - YVM said:
If the bank valuation is lower than what vendor wants to sell for, he is likely to have this issue each time he tries to sell it.
Exactly. This will come up time and time again. Give the option to the seller to either make some money or no money. Any intelligent seller would entertain some form of further negotiation if a mortgage lender feels the property is over priced as it will stick around for a while.
Chris
I would be pretty positive about this situation, in fact have been in exactly the same position once.
It's a bit of a slight on your negotiation skills but will save you thousands over time.
Simple wave the valuation under the vendors nose and use as factual evidence to support your new,lower, offer.
In reality you do no such thing but let your estate agent do the dirty work.
Stand firm, the flat is simply worth less than you (and the vendor) thought. Trust the valuer's expert opinion, who has the qualifications in this situation?
It's a bit of a slight on your negotiation skills but will save you thousands over time.
Simple wave the valuation under the vendors nose and use as factual evidence to support your new,lower, offer.
In reality you do no such thing but let your estate agent do the dirty work.
Stand firm, the flat is simply worth less than you (and the vendor) thought. Trust the valuer's expert opinion, who has the qualifications in this situation?
Sharted said:
I would be pretty positive about this situation, in fact have been in exactly the same position once.
It's a bit of a slight on your negotiation skills but will save you thousands over time.
Simple wave the valuation under the vendors nose and use as factual evidence to support your new,lower, offer.
In reality you do no such thing but let your estate agent do the dirty work.
Stand firm, the flat is simply worth less than you (and the vendor) thought. Trust the valuer's expert opinion, who has the qualifications in this situation?
Point of order. Not your estate agent, but the vendors estate agent....It's a bit of a slight on your negotiation skills but will save you thousands over time.
Simple wave the valuation under the vendors nose and use as factual evidence to support your new,lower, offer.
In reality you do no such thing but let your estate agent do the dirty work.
Stand firm, the flat is simply worth less than you (and the vendor) thought. Trust the valuer's expert opinion, who has the qualifications in this situation?
Yeah I know, was just being provocative.
I've often felt that the agent is more on my side as a buyer, he (she) has closed the deal already with the vendor yet I am still undecided on the purchase and will need convincing to proceed to exchange.
You, however, are entirely correct in theory.
I've often felt that the agent is more on my side as a buyer, he (she) has closed the deal already with the vendor yet I am still undecided on the purchase and will need convincing to proceed to exchange.
You, however, are entirely correct in theory.
Thanks for all the replies. A resolution has been reached (my wife has been leant money from her father - a 0% interest loan he says!) and in the long run it actually works out better, as the morgage is less so less monthly repayments to them (at least for the first 2 years).
Certainly a lesson learned - the vendor wasnt going to budge, but the property really is very nice - especially compared to other properties of a similar asking price. If we wanted somewhere as nice but cheaper, it would mean moving quite far.
Certainly a lesson learned - the vendor wasnt going to budge, but the property really is very nice - especially compared to other properties of a similar asking price. If we wanted somewhere as nice but cheaper, it would mean moving quite far.
FlashmanChop said:
Congratulations!! well, I say congratulations, but can you actually celebrate for paying too much for something?
Mortgage lenders are being very conservative with valuations at the moment, the same thing happened to me 6 months ago, they valued 5% under.It means nothing as the house would have sold several times over at the price I paid.
Congratulations OP.
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