'Sold my house' for £219k but buyers valuation is 14k shy!!!
Discussion
My estate agent has not yet seen a copy of the buyers valuation, but i thought i would just pop in here and get opinions on what my options might be..
Will i have to drop my price by that full amount or is this the start of a negotiation?
I understand the buyer was VERY keen at the agreed price.
Will i have to drop my price by that full amount or is this the start of a negotiation?
I understand the buyer was VERY keen at the agreed price.
It depends how much of a mortgage they need. This is probably a lenders valuation. They will base the amount they are prepared to lend upon it. Very common when banks are full of property and reluctant to take on lots more at full prices.
If it's any consolation we had a commercial building "undervalued" by £100k. Needless to say the sale fell through!
If it's any consolation we had a commercial building "undervalued" by £100k. Needless to say the sale fell through!
doogz said:
Wait, they've offered you the asking price, but they reckon it's worth £14k less, yes?
No, the buyer has offered X and the valuation for their bank say it's worth X-14k.They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
Similar thing happened to me when I was selling last year. Buyer said his valuation had come in much lower than the asking price. Fortunately I had recently changed my mortgage supplier and their valuation was much closer to the asking price.
I would speak to your agent to get details of recent sales of similar properties in the area to prove the price is valid
I would speak to your agent to get details of recent sales of similar properties in the area to prove the price is valid
pilchardthecat said:
No, the buyer has offered X and the valuation for their bank say it's worth X-14k.
They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
In theory the banks valuer shouldnt be forecasting what he expects the market to be doing in the next 12-18 months as he is suppossed to be valuing today in todays market conditions. However the valuer will be considering his professional indemnity insurance and therefore valuing it a figure he knows is supportable easily, and will probably be valuing on the basis of a quick forced sale which will knock the value down.They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
The buyer will either now offer £14k less or come back seeing a compromise and use the valuation report to support it. Its up to the OP to decide what to accept, and if part of a chain to seek to argue that he can no longer afford the propoerty he is buying and therefore wants a 14k discount etc along the chain.
Essentially you marketed your property at X, a buyer approached you and either offered you X or negotiated on price to Y. Deal done.
Buyer approaches bank/ building society for a mortgage. As part of that process a Mortgage Valuation is required. This could either me a full internal valuation or a drive by valuation depending on the lender and the loan to value (LTV).
The valuation completed by the bank/ building soc returns a figure of Z. Cock.
The buyer now has three choices;
1) Ask you to lower the sale price by the required amount
2) Borrow less cash and make up the shortfall with savings etc
3) Appeal the valuation figure returned by the bank/ building soc
Option 3 - Most banks do not advertise this fact and you'll probably find at the bottom of the valuation report some spiel such as 'the valuation figure provided is final and cannot be contested'. This is not the case, most banks/ building socs will have an appeals procedure whereby if the buyer feels the property is worth more than the value provided in the val report they can contest it. Most will require the buyer to produce evidence that the figure given in the val report is too low. This will be in the form of SOLD comparable properties, usually sold within 90 days and as close in proximity and type to the subject property as possible.
If your buyer is applying for a mortgage through the largest building society on the high street i may be able to assist them as i work in valuations...
Buyer approaches bank/ building society for a mortgage. As part of that process a Mortgage Valuation is required. This could either me a full internal valuation or a drive by valuation depending on the lender and the loan to value (LTV).
The valuation completed by the bank/ building soc returns a figure of Z. Cock.
The buyer now has three choices;
1) Ask you to lower the sale price by the required amount
2) Borrow less cash and make up the shortfall with savings etc
3) Appeal the valuation figure returned by the bank/ building soc
Option 3 - Most banks do not advertise this fact and you'll probably find at the bottom of the valuation report some spiel such as 'the valuation figure provided is final and cannot be contested'. This is not the case, most banks/ building socs will have an appeals procedure whereby if the buyer feels the property is worth more than the value provided in the val report they can contest it. Most will require the buyer to produce evidence that the figure given in the val report is too low. This will be in the form of SOLD comparable properties, usually sold within 90 days and as close in proximity and type to the subject property as possible.
If your buyer is applying for a mortgage through the largest building society on the high street i may be able to assist them as i work in valuations...
This happened to me but in reverse - I was the buyer. Offered 129,995 and seller accepted but bank only valued at 127,995. They wouldn't budge and I couldn't afford the 2k extra deposit as was already maxed out (first time buyer!) but luckily and kindly the seller took pity on me and accepted the 127,995.
Burgmeister said:
Essentially you marketed your property at X, a buyer approached you and either offered you X or negotiated on price to Y. Deal done.
Buyer approaches bank/ building society for a mortgage. As part of that process a Mortgage Valuation is required. This could either me a full internal valuation or a drive by valuation depending on the lender and the loan to value (LTV).
The valuation completed by the bank/ building soc returns a figure of Z. Cock.
The buyer now has three choices;
1) Ask you to lower the sale price by the required amount
2) Borrow less cash and make up the shortfall with savings etc
3) Appeal the valuation figure returned by the bank/ building soc
Option 3 - Most banks do not advertise this fact and you'll probably find at the bottom of the valuation report some spiel such as 'the valuation figure provided is final and cannot be contested'. This is not the case, most banks/ building socs will have an appeals procedure whereby if the buyer feels the property is worth more than the value provided in the val report they can contest it. Most will require the buyer to produce evidence that the figure given in the val report is too low. This will be in the form of SOLD comparable properties, usually sold within 90 days and as close in proximity and type to the subject property as possible.
If your buyer is applying for a mortgage through the largest building society on the high street i may be able to assist them as i work in valuations...
Thanks very much, that gives me something to bring up, if they don't..Buyer approaches bank/ building society for a mortgage. As part of that process a Mortgage Valuation is required. This could either me a full internal valuation or a drive by valuation depending on the lender and the loan to value (LTV).
The valuation completed by the bank/ building soc returns a figure of Z. Cock.
The buyer now has three choices;
1) Ask you to lower the sale price by the required amount
2) Borrow less cash and make up the shortfall with savings etc
3) Appeal the valuation figure returned by the bank/ building soc
Option 3 - Most banks do not advertise this fact and you'll probably find at the bottom of the valuation report some spiel such as 'the valuation figure provided is final and cannot be contested'. This is not the case, most banks/ building socs will have an appeals procedure whereby if the buyer feels the property is worth more than the value provided in the val report they can contest it. Most will require the buyer to produce evidence that the figure given in the val report is too low. This will be in the form of SOLD comparable properties, usually sold within 90 days and as close in proximity and type to the subject property as possible.
If your buyer is applying for a mortgage through the largest building society on the high street i may be able to assist them as i work in valuations...
Chrisgr31 said:
pilchardthecat said:
No, the buyer has offered X and the valuation for their bank say it's worth X-14k.
They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
In theory the banks valuer shouldnt be forecasting what he expects the market to be doing in the next 12-18 months as he is suppossed to be valuing today in todays market conditions. However the valuer will be considering his professional indemnity insurance and therefore valuing it a figure he knows is supportable easily, and will probably be valuing on the basis of a quick forced sale which will knock the value down.They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
The buyer will either now offer £14k less or come back seeing a compromise and use the valuation report to support it. Its up to the OP to decide what to accept, and if part of a chain to seek to argue that he can no longer afford the propoerty he is buying and therefore wants a 14k discount etc along the chain.
If the bank is forecasting a drop in book asset prices of 20% in the next year, they won't expose themselves to that risk - they will push it onto the borrower via LTV. It happened in the 90s housing crash, happened in the US, Ireland, Spain... and it will happen here.
pilchardthecat said:
Chrisgr31 said:
pilchardthecat said:
No, the buyer has offered X and the valuation for their bank say it's worth X-14k.
They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
In theory the banks valuer shouldnt be forecasting what he expects the market to be doing in the next 12-18 months as he is suppossed to be valuing today in todays market conditions. However the valuer will be considering his professional indemnity insurance and therefore valuing it a figure he knows is supportable easily, and will probably be valuing on the basis of a quick forced sale which will knock the value down.They will adjust their mortgage offer so the Loan to Value ratio is based on the valuation. Either the buyer has to increase the deposit, the seller drops the price, or the bank won't lend.
Banks are starting to factor in the 15-25% drop is house prices they expect over the next 12-18 months.
The buyer will either now offer £14k less or come back seeing a compromise and use the valuation report to support it. Its up to the OP to decide what to accept, and if part of a chain to seek to argue that he can no longer afford the propoerty he is buying and therefore wants a 14k discount etc along the chain.
If the bank is forecasting a drop in book asset prices of 20% in the next year, they won't expose themselves to that risk - they will push it onto the borrower via LTV. It happened in the 90s housing crash, happened in the US, Ireland, Spain... and it will happen here.
To quote the old saying - it's worth what someone is prepared to pay for it. Since when was it's the banks role to mess with the market? If the buyer has a good enough LTV that's all the bank should care about. It sounds to me like the banks are messing with 'market valuation' to skew the LTV in their favour.
Mike
Mike
MH said:
To quote the old saying - it's worth what someone is prepared to pay for it. Since when was it's the banks role to mess with the market? If the buyer has a good enough LTV that's all the bank should care about. It sounds to me like the banks are messing with 'market valuation' to skew the LTV in their favour.
Mike
Good. Given recent events I'd far rather banks were reducing their exposure.Mike
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