Getting 'valuation' of a unique property

[timetex]

TA14 said:

I wonder what the sellers would make of this if they read this thread.

I've not said anything I wouldn't already expect they've been thinking for themselves, and nothing I wouldn't discuss with them, either directly or via the Agent.

It doesn't stop me loving the property and wanting to live there, but the simple fact is, either the valuer is WAY out of line with his comments, or there really is an underlying issue with potential re-sale which we really should be taking seriously.

...especially when what we are selling to buy this is a predictable, 'normal', new(ish) build, which is easy and safe to value, in an area seeing continued strong gains!

Was happy (in fact, looking forward!) to getting out of this place to somewhere more unique, more rural, with more character - and happy to trade the 'certainty' of the current property for something a bit different - but not to the extent that the very first valuation we have done comes back as 'unmortgageable'. That's a step too far.

[timetex]

Croutons said:

Your broker did the maths on the ERC's and the cost to move you to another lender and was nigh-on forced to tell you staying made sense, as any other recommendation would be remarkably difficult to justify with (I strongly suspect) the assumption that they would lend.

I very seriously doubt they would have called your lender and asked what they'd make of a church conversion, as I think like most people (s)he would reasonably assume an expensive property that is not that uncommon for people to live in is mortgageable, and what is in it for them to do so if you've told them you can port your loan...

Given the % of property purchased without mortgage is increasing, I think you just need the right lender(s) (of which there will be many), not to think this is catastrophic.

Actually at least one of your assumptions is wrong. The broker had already spoken to the Head of Leading and Head of Surveying at Santander and since the church is brick, with normal roof, and they were (in principle) happy to lend on it.

It is just the comments from the valuer which have caused the issues.

I've spoken again to the broker, and a) the valuer is definitely independent, b) there are reasons why the relatively low LTV doesn't make much difference, and c) nobody knows why the valuer didn't just put a value (even if marked down significantly) rather than just 'computer says no'

If anyone cares, the reasoning for b) was as follows. In the event of a repossession, the lender has a duty to get the highest possible price for the house. They can't just sell it for 50% of the value to cover the amount of the mortgage.

c) we can't be sure of, but its possible he just couldn't make an accurate valuation, and didn't want to be 'wrong', so giving no valuation whatsoever is the cop-out option.

Broker is certain he can get it mortgaged with a different main stream lender, so perhaps the way forward is to have a new application made, a new valuation done (this time, hopefully one where the valuer will commit to a valuation range!) and see what that comes back with. For a few hundred quid, I know it sounds mad, but I may even go 'best of 3' and instruct a 3rd, totally independent valuation. The thinking being, if 2 of the valuations are 'bad' or 'avoid', then I have my answer - but if 2 of them are 'good' then it makes the current one more of an anomaly and give some confidence that we aren't buying a total white elephant for too much money!

[timetex]

surveyor said:

Bizarre thread in lots of ways.

OK. First of all - if the property falls outside the lenders criteria a valuer will return no value. Presumably as his take is the as the property is not saleable to the general market it falls outside the criteria.

Secondly. It's bull. It's a conversion - a nice one by the look of it. It has walls, doors, roof and window. It's not in a sthole of an area - in short there is no reason why the market would be restricted other than it will be an expensive property. I wonder aloud whether Santander can be lent on to get a second opinion.

On the initial idea of getting a second valuation - I'd normally say that's pointless as the lenders valuer should be working to a fairly standard criteria. Unfortunately this valuer has proved me wrong.

I saw somewhere someone say it will be a valuer not a surveyor - the chances are that the Valuation will have been done by a Chartered Surveyor. They will not be doing a full survey obviously but will be expected to report on either value significant defects or defects that will effect the lenders security. EG if it's falling down....

There is no database of previous valuations- unless done by someone in the same firm. Typically little or no relevance should be given to a valuation which either is not a sale or does not complete. To anyone looking on the database though - sales which collapse may not be obvious.

Lastly... Valuation of unique properties is an art - and the cause of grey hair. Having said that in my view it's more likely that you will get valued at the sale price - the general argument being that a willing buyer and a willing seller agreeing a price is pretty good open market evidence - and there is likely to be limited evidence to show that the price is too high...

Thank you so much for this response. It kinda sums up exactly where I'd got to in my own mind. The only thing I question is why the valuer is working to the lender's criteria so closely. I would have anticipated he'd return comments and figures and the lender would then interpret these according to their own criteria, as each lender would have slightly different rules. In other words, he's independent, doesn't work for Santander, so I thought he'd give an opinion independent of their 'rules' and let them decide. But its a moot point as that's obviously not what happened.

Santander cannot be leant upon to deal with a second valuation. That's a no-no with their internal policies, I'm told. It used to be OK, but they won't anymore. I can understand this - so if we need to deal with a second lender that's fine by me, as long as it doesn't need to be a specialist one (which it won't be) as I don't want that to be a condition of purchase (that it can only be mortgaged through a specialist).

Mrs Timetex is now pretty nervous about the whole thing, naturally - although I'm a bit more 'let's just find another route and sort it out', now I'm more convinced the original valuer / valuation was a cop-out. So the challenge is to convince her to move forward, if only to get it revalued and then re-evaluate our position from there. Although most people are suggesting this course of action, it's quite easy to say 'oh the valuer is obviously wrong' when it isn't their cash at stake, so apologies for being perhaps overly-cautious but that's just the way it is.

Have had feedback from the vendor - they were obviously shocked by this as well.

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julian64 said:

Rights and wrongs aside, I am somewhat confused that they refused, based on the fact that you are contributing half the cost of the house.

The bank can't be worried that they will get their money back here, and they will have first lean on the entire value of your house.

So if its a pretty safe bet that they are contributing to half your house but have the ability to sell all of it to recover their money if you default, why are they objecting?

This was my question... but I received a satisfactory answer which may be buried in the mumblings above, plus what surveyor has said above as well.

Aside from the answer given by surveyor, the other answer I received (which I've also independently verified) is that the lender is under a legal obligation to try and get back as close to market price for the property as possible. They cannot just dump the house at any price, sufficient to cover their own loan, and have done with it... if they don't hold out out for a reasonable price, they are open to action by the mortgage holder.

So assuming the lender repossessed the property, they could potentially be tied up with it for a longer period (being a unique, niche house) to get that 'reasonable price' than if it was just another 'box' in a row of other houses.

So presumably taking that to the extreme, they could be landed with a slow-selling 'unique' property, with a 'high' valuation but no prospect of a quick sale. Without the opportunity to severely down value the property to sell it quicker.

Even so, I can't understand why not just give the place a value, but say it might need to be discounted by a larger % in order to realise a quicker sale.