Mortgage lender has down valued potential property purchase
Discussion
We had something similar selling our house last year as the buyers valuation was slightly lower.
The EA gathered together the evidence for the valuation which included the post code and price per square foot (metre) price and cost of houses in similar location and justified by the immaculate condition of the house with photos etc.
The valuation was agreed by the lender to be too low and so the EA valuation was agreed by the lender. The whole process took a rather nerve wracking week.
IMO it is down to the EA to justify the price which they should be able to do through the related properties
On related note the purchasers paid for an 'extra' survey as this was their first property and they wanted to be sure it was in good order. The guy was there for around 30 mins (4 bed detached with double garage) which consisted of 15 mins asking me questions about insulation, previous extension, location of meters, stop cock etc and the rest taking measurements of the rooms and he charged a bargain £1,200 for this!
The EA gathered together the evidence for the valuation which included the post code and price per square foot (metre) price and cost of houses in similar location and justified by the immaculate condition of the house with photos etc.
The valuation was agreed by the lender to be too low and so the EA valuation was agreed by the lender. The whole process took a rather nerve wracking week.
IMO it is down to the EA to justify the price which they should be able to do through the related properties
On related note the purchasers paid for an 'extra' survey as this was their first property and they wanted to be sure it was in good order. The guy was there for around 30 mins (4 bed detached with double garage) which consisted of 15 mins asking me questions about insulation, previous extension, location of meters, stop cock etc and the rest taking measurements of the rooms and he charged a bargain £1,200 for this!
I'm amazed... No-one ever pops up and says gosh that Surveyor (who see's loads of sold property day in day out), has just saved me from paying too much for my new house.
Now I've said my piece I will back down a little.
Surveyors do get it wrong. I sold a house cheap to my brother and a out of town took evidence from the inferior estate net door where the 3 beds were actually 2 + a box room. Local guy was off ill. Because my brothers mental girlfriend then decided I was making too much money that sale fell through.
Which was fine as I sold it for more money 2 weeks later. Close escape though after the lender appointed the same firm of valuers. Fortunately they agreed to decline the instruction.
Lenders at present seem to be fairly fixed and not at all willing to accept valuation is an art not a science - and sometimes better evidence that is not known at the time can change the valuers opinion.
I suspect if OP can't raise more money he may need to apply with someone else and hope that the same valuer does not get instructed.
Now I've said my piece I will back down a little.
Surveyors do get it wrong. I sold a house cheap to my brother and a out of town took evidence from the inferior estate net door where the 3 beds were actually 2 + a box room. Local guy was off ill. Because my brothers mental girlfriend then decided I was making too much money that sale fell through.
Which was fine as I sold it for more money 2 weeks later. Close escape though after the lender appointed the same firm of valuers. Fortunately they agreed to decline the instruction.
Lenders at present seem to be fairly fixed and not at all willing to accept valuation is an art not a science - and sometimes better evidence that is not known at the time can change the valuers opinion.
I suspect if OP can't raise more money he may need to apply with someone else and hope that the same valuer does not get instructed.
surveyor said:
I'm amazed... No-one ever pops up and says gosh that Surveyor (who see's loads of sold property day in day out), has just saved me from paying too much for my new house.
Almost. We have friends at the end of our street who agreed to buy a flat and the surveyor's valuation was too low to proceed; together with the EA et al they produced a document and persuaded the valuer to revise his figure enough that a new agreement could be made and the sale proceeded. When they sold for a sum less than expected they realised that the surveyor's original valuation was accurate and now say "if only we'd listened..."PositronicRay said:
TooMany2cvs said:
PositronicRay said:
What does Zoopla give it?
A totally random number.PositronicRay said:
TooMany2cvs said:
PositronicRay said:
What does Zoopla give it?
A totally random number.theguvernor15 said:
TheAngryDog said:
I went through the same thing with my house purchase. In the end we agreed that we go up 5k and they come down 10k.
Sorted.
Our problem lies in the fact the lender only values the property at £185k.Sorted.
We'd agreed a price of £200k for the house with a £20k deposit.
Our mortgage was 90%,
The vendors have said they can come down to £195k as they're potentially borrowing money off of their family.
We can't afford the payments of the 95% mortgage so they have to come down to what the property is valued at.
When looking more into local prices it seems for what has sold it will still (at £185) be the most expensive house sold by nearly £15k.
We eventually agreed at £320k, with us paying an extra £5k in cash. We also have a 90% mortgage.
surveyor said:
I'm amazed... No-one ever pops up and says gosh that Surveyor (who see's loads of sold property day in day out), has just saved me from paying too much for my new house.
Now I've said my piece I will back down a little.
Surveyors do get it wrong. I sold a house cheap to my brother and a out of town took evidence from the inferior estate net door where the 3 beds were actually 2 + a box room. Local guy was off ill. Because my brothers mental girlfriend then decided I was making too much money that sale fell through.
Which was fine as I sold it for more money 2 weeks later. Close escape though after the lender appointed the same firm of valuers. Fortunately they agreed to decline the instruction.
Lenders at present seem to be fairly fixed and not at all willing to accept valuation is an art not a science - and sometimes better evidence that is not known at the time can change the valuers opinion.
I suspect if OP can't raise more money he may need to apply with someone else and hope that the same valuer does not get instructed.
Saved me £15k. Caused me a headache or two but I'll take that for a decent amount less mortgage. Our surveyor also down valued it so they can't all be wrong. The problem was that houses down the street we have bought down rarely get sold and there aren't many 4 bed semi's in the area. There are only 4 semi 's down the street so no data to go on. Now there is however so at least we have a yardstick. That doesn't mean the house won't go down in value, but the area we live in is one of the higher increasing areas outside of London apparently. Now I've said my piece I will back down a little.
Surveyors do get it wrong. I sold a house cheap to my brother and a out of town took evidence from the inferior estate net door where the 3 beds were actually 2 + a box room. Local guy was off ill. Because my brothers mental girlfriend then decided I was making too much money that sale fell through.
Which was fine as I sold it for more money 2 weeks later. Close escape though after the lender appointed the same firm of valuers. Fortunately they agreed to decline the instruction.
Lenders at present seem to be fairly fixed and not at all willing to accept valuation is an art not a science - and sometimes better evidence that is not known at the time can change the valuers opinion.
I suspect if OP can't raise more money he may need to apply with someone else and hope that the same valuer does not get instructed.
sideways sid said:
Whilst I wouldn't usually suggest letting a valuation affect the price paid,
Aren't you kind of missing the point of the word 'valuation'? 9 times out of 10 the valuation will come back to support the price agreed between the buyer and seller - but if the valuer has reason to believe the property is overpriced, whether because it needs work discovered during a survey, or simply because local comparables don't stack up, then the valuation really OUGHT to affect the price paid. It is a valuation, after all.surveyor said:
I'm amazed... No-one ever pops up and says gosh that Surveyor (who see's loads of sold property day in day out), has just saved me from paying too much for my new house.
.
I have said that, in not so many words..
Or rather our surveyor made us look again at the re-marketability of the house we were buying. We considered that as we were going to probably need to flip it again in 5 years or so (wasn't a forever home) that we might be stuck with something we simply couldn't sell on without taking an absolute bath, so once the shock wore off we were pragmatic about it, and probably now grateful.
We're back to Plan A... just have to get a survey done on a plot of land to make sure we aren't over paying!
Happened to us back in the 90's.....twice in succession.....we went from looking at 3-bed semi's to buying a 4-bed detached. Seriously: that was the falling market at the time.
As others have said, very disruptive/upsetting at the time, but in the medium- to long-term, likely in your best interests.
Not saying things are this dramatic today, but other properties will come up and ultimately unless it is an amazing "forever home", chances are the valuer had saved you £££s - pay what th property is valued at, not what the vendor wants it to be valued at.
As others have said, very disruptive/upsetting at the time, but in the medium- to long-term, likely in your best interests.
Not saying things are this dramatic today, but other properties will come up and ultimately unless it is an amazing "forever home", chances are the valuer had saved you £££s - pay what th property is valued at, not what the vendor wants it to be valued at.
We love the property, however, at the end of the day with my sensible hat on, it is just a property, it's not life or death.
When making an initial offer i offered £190k they flat out refused it.
I'd based this on the sold prices i had seen for the local area & added a bit more on.
We then viewed a few more places, but decided we loved the first, so upped our offer until it was accepted, it was still a lot more (in comparible terms) to what had sold recently, however we really liked it, so were happy to pay it.
We were happy with the mortgage payments at the higher amount, however the lenders have down valued it, they hold all the cards.
I've had extensive talks with the broker, another EA, they all seem to share the sentiment that at £185k it's at the very ceiling of what it's worth, even in the condition it is (very good), i did think about paying for an independent survey, however my broker has advised against it, as the lender has flat out refused to value it any higher, the report states there is nothing wrong with the property, nor does it need any work doing, that is just the value. Fair enough, i see their logic.
He did say he could look at a different lender & another product but he says it's not going to bring the value up by £10-£15k.
When i met with the EA agent yesterday, i got the impression they'd known they'd been a bit on the optimistic side with the valuation as they looked a bit shifty when i said how have you got it so wrong, at the end of the day, we were happy to pay the higher amount, but if it's not worth it, it's not worth it.
She glossed over this & said she agreed with us & the lender now & had relayed that too the vendors.
We find out today whether they still wish to proceed as i've said i don't want this to drag on any longer & that our hands are tied as the lender will only lend on what they value the house at.
When making an initial offer i offered £190k they flat out refused it.
I'd based this on the sold prices i had seen for the local area & added a bit more on.
We then viewed a few more places, but decided we loved the first, so upped our offer until it was accepted, it was still a lot more (in comparible terms) to what had sold recently, however we really liked it, so were happy to pay it.
We were happy with the mortgage payments at the higher amount, however the lenders have down valued it, they hold all the cards.
I've had extensive talks with the broker, another EA, they all seem to share the sentiment that at £185k it's at the very ceiling of what it's worth, even in the condition it is (very good), i did think about paying for an independent survey, however my broker has advised against it, as the lender has flat out refused to value it any higher, the report states there is nothing wrong with the property, nor does it need any work doing, that is just the value. Fair enough, i see their logic.
He did say he could look at a different lender & another product but he says it's not going to bring the value up by £10-£15k.
When i met with the EA agent yesterday, i got the impression they'd known they'd been a bit on the optimistic side with the valuation as they looked a bit shifty when i said how have you got it so wrong, at the end of the day, we were happy to pay the higher amount, but if it's not worth it, it's not worth it.
She glossed over this & said she agreed with us & the lender now & had relayed that too the vendors.
We find out today whether they still wish to proceed as i've said i don't want this to drag on any longer & that our hands are tied as the lender will only lend on what they value the house at.
The EA can only provide advice to the vendors, they don't set the prices.
A couple local places have been but up @ £420k & £415k, neither has a USP. Typically similar houses selling around £380k (unextended requiring modernisation around £300k) The ceiling has been around £400k if very nice, on the right plot on the right road.
Not sure what will happen if mortgages required.
Your vendor sounds naive and short sighted if they won't accept independent valuations, maybe they'll just wait until inflation catches up!
A couple local places have been but up @ £420k & £415k, neither has a USP. Typically similar houses selling around £380k (unextended requiring modernisation around £300k) The ceiling has been around £400k if very nice, on the right plot on the right road.
Not sure what will happen if mortgages required.
Your vendor sounds naive and short sighted if they won't accept independent valuations, maybe they'll just wait until inflation catches up!
theguvernor15 said:
We love the property, however, at the end of the day with my sensible hat on, it is just a property, it's not life or death.
When making an initial offer i offered £190k they flat out refused it.
I'd based this on the sold prices i had seen for the local area & added a bit more on.
We then viewed a few more places, but decided we loved the first, so upped our offer until it was accepted, it was still a lot more (in comparible terms) to what had sold recently, however we really liked it, so were happy to pay it.
We were happy with the mortgage payments at the higher amount, however the lenders have down valued it, they hold all the cards.
They do, yes, because you're trying to access quite a lot of their money.When making an initial offer i offered £190k they flat out refused it.
I'd based this on the sold prices i had seen for the local area & added a bit more on.
We then viewed a few more places, but decided we loved the first, so upped our offer until it was accepted, it was still a lot more (in comparible terms) to what had sold recently, however we really liked it, so were happy to pay it.
We were happy with the mortgage payments at the higher amount, however the lenders have down valued it, they hold all the cards.
theguvernor15 said:
we could go to a 95% mortgage, however the repayments are a lot of money & it's not something we feel comfortable doing.
So I'm guessing that you're looking at 90% LTV?That, of course, means that the lender agrees that the loan is 90% of value. After all, if they need to repossess, they need to know that they can get that money back. And they simply don't see how - just because YOU think it's worth £200k doesn't mean anybody else will. They don't think they can sell it as a £200k-ish property, if they need to repossess.
£185k at 90% is £166,500 mortgage, £18,500 from you.
You've offered £200k - at 90% LTV, that'd be £180k lent.
Except, since they think it's only worth £185k, they're seeing that as 97%.
They'd be happy to go to 95% loan to their perception of value - which is £175k lent...
But that'd be a chunkier interest rate, and - since you disagree with their value - you don't see why you should do that.
You're forgetting that £175k lent against what they see as a £185k property is much riskier, in their eyes.
theguvernor15 said:
I've had extensive talks with the broker, another EA, they all seem to share the sentiment that at £185k it's at the very ceiling of what it's worth, even in the condition it is (very good), i did think about paying for an independent survey, however my broker has advised against it, as the lender has flat out refused to value it any higher, the report states there is nothing wrong with the property, nor does it need any work doing, that is just the value. Fair enough, i see their logic.
He did say he could look at a different lender & another product but he says it's not going to bring the value up by £10-£15k.
So, basically, the entire property industry agrees that it's only worth £185k.He did say he could look at a different lender & another product but he says it's not going to bring the value up by £10-£15k.
theguvernor15 said:
When i met with the EA agent yesterday, i got the impression they'd known they'd been a bit on the optimistic side with the valuation as they looked a bit shifty when i said how have you got it so wrong, at the end of the day, we were happy to pay the higher amount
Yup.The vendor pushed the EA to be optimistic, to get as much as possible for it - who can blame him? You didn't see it as optimism. Now that you've had that pointed out to you, you're blaming the EA...? You were quite happy to pay it, right up until everybody else said "Hold on a minute..."
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