Mortgage lender has down valued potential property purchase
Discussion
We've been using a recommended broker for our mortgage application process.
He's been great & i can't fault him, or his work ethic.
We had our offer accepted on a house, slightly under the ask, great!
We passed all the credit checks & things were going very smoothly, until i received an email yesterday from Nationwide saying that the property we were set to purchase was down valued by £15,000 post valuation.
I asked to see a copy of the surveyors report, however as it was a 'free' service (i know it'll be added into the mortgage somewhere), that they won't give me/the broker a copy.
The broker asked if it was anything wrong with the property, or it's condition for the down valuation, or work that needs doing, there was nothing to report other than 'we value the property at this much'.
We are pretty gutted to say the least & felt that what we had accepted was pretty much bang on for the area, i've relayed the above info to the EA, who was also pretty shocked (but they would be).
The property is in tip-top condition, fantastic condition throughout, new everything & immaculately decorated, with recent full re-wire & a new roof.
We're at a bit of a cross-roads what to do, either we raise our deposit amount (this is not an option as we don't physically have any access to any more money for this).
Or the seller comes down £15k - i also cannot see this.
The only question i'm left wondering is could the surveyor have got it so wrong? - My brain is saying, a few thousand here or there, maybe, but not £15k!
Comparison wise, there's only been 2 houses sold on the road in the past 12-18 months:
One of them is of a similar sort of size, but, not in as good condition throughout, or outside, which sold for £10k less than the one we were buying was valued at.
The other was a 4 bed that sold for nearly £45k more than the one that we offered on was valued at by the mortgage lender, again, in similar condition to the one we offered on.
The house is within the catchment area for the best local primary school & best local secondary school also, as well as having good transport links etc.
Whilst it is an ideal first home for us & we love it, we're also realists, but i was wondering if people on PH had any experiences/advise on this as it's our first property purchase.
He's been great & i can't fault him, or his work ethic.
We had our offer accepted on a house, slightly under the ask, great!
We passed all the credit checks & things were going very smoothly, until i received an email yesterday from Nationwide saying that the property we were set to purchase was down valued by £15,000 post valuation.
I asked to see a copy of the surveyors report, however as it was a 'free' service (i know it'll be added into the mortgage somewhere), that they won't give me/the broker a copy.
The broker asked if it was anything wrong with the property, or it's condition for the down valuation, or work that needs doing, there was nothing to report other than 'we value the property at this much'.
We are pretty gutted to say the least & felt that what we had accepted was pretty much bang on for the area, i've relayed the above info to the EA, who was also pretty shocked (but they would be).
The property is in tip-top condition, fantastic condition throughout, new everything & immaculately decorated, with recent full re-wire & a new roof.
We're at a bit of a cross-roads what to do, either we raise our deposit amount (this is not an option as we don't physically have any access to any more money for this).
Or the seller comes down £15k - i also cannot see this.
The only question i'm left wondering is could the surveyor have got it so wrong? - My brain is saying, a few thousand here or there, maybe, but not £15k!
Comparison wise, there's only been 2 houses sold on the road in the past 12-18 months:
One of them is of a similar sort of size, but, not in as good condition throughout, or outside, which sold for £10k less than the one we were buying was valued at.
The other was a 4 bed that sold for nearly £45k more than the one that we offered on was valued at by the mortgage lender, again, in similar condition to the one we offered on.
The house is within the catchment area for the best local primary school & best local secondary school also, as well as having good transport links etc.
Whilst it is an ideal first home for us & we love it, we're also realists, but i was wondering if people on PH had any experiences/advise on this as it's our first property purchase.
Dan_M5 said:
Get an independent valuation done and see what they say, yes it will cost a couple of hundred but if its the house you want then its worth it.
Depends on the valuation swell I've heard of them just doing a drive by to get a valuation & at the end of the day its opinion on value. Unless they did a bigger valuation/survey and found issues with the property but they should tell you if thats the case.
The surveyor actually went in the house, this i do know.Depends on the valuation swell I've heard of them just doing a drive by to get a valuation & at the end of the day its opinion on value. Unless they did a bigger valuation/survey and found issues with the property but they should tell you if thats the case.
I'm happy to pay a couple of hundred to get an independent valuation, but won't the lenders just poo-poo it given that theirs was so much lower?
There isn't really any comparible data other than the 2 i'd mentioned that i can find.
timetex said:
Increasing your deposit wouldn't necessarily help in this situation anyway. The mortgage company may still decline to lend on it, as they need to protect their investment and be able to resell the property if they repossess it. A house which values significantly less than the agreed price could indicate that it needs to be dropped further in order to sell it...
Nobody has yet mentioned talking to the EA and vendor about reducing your offer. You could be in a strong negotiating position, even though the valuer hasn't given specific reasons.
I've an email from the lender basically stating that we need to put in a bigger deposit, it says their surveyor values the property at £185k and they will not move on that valuation.Nobody has yet mentioned talking to the EA and vendor about reducing your offer. You could be in a strong negotiating position, even though the valuer hasn't given specific reasons.
I have just spoken with the EA, he has confirmed what the lenders have said & said maybe a compromise combining the following: we increase deposit, the vendor reduces their accepting offer & they reduce their fees.
I did say we came up on the offer once already & there isn't anymore money available for a bigger deposit.
It appears the vendor is trying to get the house they're buyind reduced (the house they're buying is a a refurbed house currently empty).
The EA did say and i quote 'i must admit i didn't think we'd have an issue with this one'. What that means i don't know.
I guess this comes down to 1 thing, which is how much the vendor needs to be able to move to where they want too & i know they're super keen to buy the property they want.
Nationwide offered a 'free' survey as part of the finance product, they under no circumstances will share it as it's a 'free' product.
I did say to my broker about getting an independent valuation & he said not to bother, there won't be a £15k fluctuation in it.
I also spoke with my dad who had a word with a friend of his who sells property (all be it commercial), he has also made some calls & said the property is over valued by the EA in the first place & suspects it's what the sellers need to buy the property they need.
i subsequently have had a meeting with the EA & they've said the sellers are desperate to sell to us, but have no conceded that it was over valued, although they won't actually fully admit it in those words.
I've told them our lender won't lend on the agreed price unless we almost double our deposit, which is just not possible.
The EA have also contacted the EA of the property our vendors were purchasing to see if they can get any movement on the price which they cannot, they also claim to have another party interested in the property.
The only option left is now for the vendors of our property to be able to find the difference they need to purchase the new place from relatives, which will mean they can sell to us at the valued price, although i would say its 99% now not happening!
We're pretty gutted to say the least!
Although, rather that than be in the red portentially a few months down the line!
I did say to my broker about getting an independent valuation & he said not to bother, there won't be a £15k fluctuation in it.
I also spoke with my dad who had a word with a friend of his who sells property (all be it commercial), he has also made some calls & said the property is over valued by the EA in the first place & suspects it's what the sellers need to buy the property they need.
i subsequently have had a meeting with the EA & they've said the sellers are desperate to sell to us, but have no conceded that it was over valued, although they won't actually fully admit it in those words.
I've told them our lender won't lend on the agreed price unless we almost double our deposit, which is just not possible.
The EA have also contacted the EA of the property our vendors were purchasing to see if they can get any movement on the price which they cannot, they also claim to have another party interested in the property.
The only option left is now for the vendors of our property to be able to find the difference they need to purchase the new place from relatives, which will mean they can sell to us at the valued price, although i would say its 99% now not happening!
We're pretty gutted to say the least!
Although, rather that than be in the red portentially a few months down the line!
sideways sid said:
Your vendor must realise that if they sell the property to anyone else who will be using a mortgage, the same situation is likely.
Whilst I wouldn't usually suggest letting a valuation affect the price paid, it sounds like it is up to the vendor to either accept the lower price or justify their valuation to the valuer/lender. The former is more straightforward if they can absorb the lower price.
Slightly O/T but I re-mortgaged my home last year. The lender-appointed valuer actually visited, which I found surprising, but then astonishingly, agreed the valuation with me before he left, which was convenient!
This is currently where we are at, the vendor has said they can come down a bit more (still £10k off what the valuation is at, apparently borrowing money off of their family), i've said we're maxed out and they need to find the difference of £10k otherwise the deal just isn't going to go any further, they're fully aware that they will get this situation further down the line now, we could go to a 95% mortgage, however the repayments are a lot of money & it's not something we feel comfortable doing.Whilst I wouldn't usually suggest letting a valuation affect the price paid, it sounds like it is up to the vendor to either accept the lower price or justify their valuation to the valuer/lender. The former is more straightforward if they can absorb the lower price.
Slightly O/T but I re-mortgaged my home last year. The lender-appointed valuer actually visited, which I found surprising, but then astonishingly, agreed the valuation with me before he left, which was convenient!
We've been told by the EA that we'll know what's going on by the morning as i've said i don't want this to drag on for too much longer, i will update the thread either way.
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 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.
Totally what you've just said & then some!
I've spoken with the EA, the vendors are desperate to move. (This i already know).
They've offered 2 options:
They pay for us to go to another lender & have a survey done at their cost.
We pay £5k more, they drop £5k & they get £5k off their property they want to buy.
I had to AGAIN explain to the EA the lenders only value the property at £185k so they won't lend on anything more than that so it's pointless going round and round with this, they either find the £15k it's needed to drop by or the deals off. We won't pay a considerable amount more than it's valued at.
I also said they can pay for an additonal survey but the broker is saying it's pointless (which i agree with) & so did the EA come the end of the phone call.
I offered to pay half their EA fees in cash (circa £1500) to get the deal done.
But other than that i can't see this happening now, we're just too far apart.
I've spoken with the EA, the vendors are desperate to move. (This i already know).
They've offered 2 options:
They pay for us to go to another lender & have a survey done at their cost.
We pay £5k more, they drop £5k & they get £5k off their property they want to buy.
I had to AGAIN explain to the EA the lenders only value the property at £185k so they won't lend on anything more than that so it's pointless going round and round with this, they either find the £15k it's needed to drop by or the deals off. We won't pay a considerable amount more than it's valued at.
I also said they can pay for an additonal survey but the broker is saying it's pointless (which i agree with) & so did the EA come the end of the phone call.
I offered to pay half their EA fees in cash (circa £1500) to get the deal done.
But other than that i can't see this happening now, we're just too far apart.
We're both FTB with no chain, so they know we're serious as everything was going swimmingly until the valuation!
I think personally looking at it now being offered the £185 is a banging deal, not a lot of people would offer bang on what it's worth.
I've given them until lunchtime to give us a definitive answer or the deals off.
I'll keep updating the thread.
I think personally looking at it now being offered the £185 is a banging deal, not a lot of people would offer bang on what it's worth.
I've given them until lunchtime to give us a definitive answer or the deals off.
I'll keep updating the thread.
What i did learn was the vendors had made the offer on the property before theirs sold (was even up for sale), hence the mad rush.
They then had 2 offers fall through, so they've been more flexible with the price this time around.
As i said, nothing more we can do, making the deal happen is up to them & they've got until Monday to get it done or we walk & they know this now.
They then had 2 offers fall through, so they've been more flexible with the price this time around.
As i said, nothing more we can do, making the deal happen is up to them & they've got until Monday to get it done or we walk & they know this now.
So as a small update, from Friday eve it was left the vendors were trying to find the additional £15k.
I got a call this morning to say they'd found £10k of it but couldn't raise anymore, (so we were still £3k adrift).
I offered an additional £1k, however was told it wasn't enough.
I thanked the EA for their efforts but said the money tap was now dry.
I then put it in writing to them, confirming that we can't afford anymore & the deal was off, however if they wanted to sell at the agreed amount (£2k short still) we would be open to the idea.
Within 10 minutes i had a call saying they'd increased their mortgage again to cover the difference. (A bit convenient).
However in the grand scheme of things we're paying less before & overall for something we really, really want.
So currently we're back on, i've been told it should all move pretty darn quickly from here onwaeds.
I got a call this morning to say they'd found £10k of it but couldn't raise anymore, (so we were still £3k adrift).
I offered an additional £1k, however was told it wasn't enough.
I thanked the EA for their efforts but said the money tap was now dry.
I then put it in writing to them, confirming that we can't afford anymore & the deal was off, however if they wanted to sell at the agreed amount (£2k short still) we would be open to the idea.
Within 10 minutes i had a call saying they'd increased their mortgage again to cover the difference. (A bit convenient).
However in the grand scheme of things we're paying less before & overall for something we really, really want.
So currently we're back on, i've been told it should all move pretty darn quickly from here onwaeds.
Oh i'm a total novice when it comes to home-buying.
When we first viewed i offered the EA £190k - he pretty much told me to foxtrot oscar as every other offer they'd had (& subsequently turned down) had been considerably higher.
Fingers crossed it all goes through now, i was beginning to resent the place a bit.
However on the other side of the coin, we've got the place we really wanted, for less money & with a smaller mortgage!
When we first viewed i offered the EA £190k - he pretty much told me to foxtrot oscar as every other offer they'd had (& subsequently turned down) had been considerably higher.
Fingers crossed it all goes through now, i was beginning to resent the place a bit.
However on the other side of the coin, we've got the place we really wanted, for less money & with a smaller mortgage!
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