Mortgage : Lender down valued a huge amount, advice.

Mortgage : Lender down valued a huge amount, advice.

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dhutch

Original Poster:

14,198 posts

196 months

Wednesday 21st March 2018
quotequote all
We are in the process of trying to buy a house, asking price 485k, offer accepted at 465k, valuation has just come in at 380k!

Fairly stumped how, as we have been looking for a while and think the offer was fair, we have a homebuyers which agrees with 465k.

Only reasons given are that 'the report is not backed up by compariables' and that its on an 'unmaded and unadopted road' which it is not.

We have the local searches and streetview images as proof it's a publicly maintaibed tarmac road.

Compariables are slightly harder to come by, there is nothing sold within 6months and 0.25miles, only three within 0.5miles and another 4-5 upto 1mile. Thats if you take everything, detached, semi det, bungalow. So we're looking at cost per sq ft, and patching it together.
Other half of the semi sold for a similar price to our offer in 2012.

Estate agents valuer is clearly very busy with the day job and rushing it at best, mortgage advisor fairly busy, etc.

However we now have a Legal&General appeal form from the lenders NatWest. In which we need to list our three comparables.

Basically any advice and or thoughts welcome.


Daniel

Casa1862

1,062 posts

164 months

Thursday 22nd March 2018
quotequote all
Look for another lender who uses a different surveyor, assuming you strongly feel he has it wrong, very rarely will an appeal succeed.

fido

16,752 posts

254 months

Thursday 22nd March 2018
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dhutch said:
Only reasons given are that 'the report is not backed up by compariables' and that its on an 'unmaded and unadopted road' which it is not.

We have the local searches and streetview images as proof it's a publicly maintaibed tarmac road.
Perhaps it's an error on their part - send them the information and asked for a revaluation?

GT03ROB

13,207 posts

220 months

Thursday 22nd March 2018
quotequote all
You're not having much luck with this mortgage business....

...seriously that's a heck of difference. Seems odd.

Sarnie

8,025 posts

208 months

Thursday 22nd March 2018
quotequote all
Casa1862 said:
Look for another lender who uses a different surveyor, assuming you strongly feel he has it wrong, very rarely will an appeal succeed.
The problem with that is that a lot of lenders use the same panels (E-surv, Connells etc) who will panel it out to a surveyor on their panel in that post code with a strong chamce of the very same firm/surveyor being instructed........and returning the same figure.

Whilst a certain element of a valuation is based on what the surveyor actually sees in front of him........a lot of it will also be based on the data they have to hand (comparable sold prices, other similar properties for sale in the vicinity, House price index's) meaning that if they don't have this to to support the purchase price, it's going to be difficult for a surveyor to put his name to a purchase price that he can't justify on square footage alone.

"very rarely will an appeal succeed."

^Agreed......in 16 years I don't think I've ever seen an appeal overturned.....

Deesee

8,329 posts

82 months

Thursday 22nd March 2018
quotequote all
I do mainly commercial stuff (lending) but will do some residential (specialist) too for existing clients.

Having something tucked out of the way in a nice location where nothing else has sold or has any kind of comparable is frankly problematic for a valuer.

I had a lovely one go up for 750k, and the valuer came in at 450k.

We managed to negotiate a discount on the property as well as having a 300k deposit, so loan was agreed & so did not cause the client any issues as he wanted the property at any cost.

I’m not sure how everyday mortgage lenders would see this but in my world if one valuer has got to x we would struggle to see another valuer get to x +20/30% unless something fundamental has been missed, and the funder would also want to know why there is such a spread in difference.

Hopefully your report is more than 2 sides of paper, and apon reading should give you more of an idea of the valuers rational for that value, I’d pick up the phone to the firm and ask them to explain, once you have a few “comparables” of your own.

Alternatively is back to the vendor and more cash down.

Good luck!




Sarnie

8,025 posts

208 months

Thursday 22nd March 2018
quotequote all
Deesee said:
I do mainly commercial stuff (lending) but will do some residential (specialist) too for existing clients.

Having something tucked out of the way in a nice location where nothing else has sold or has any kind of comparable is frankly problematic for a valuer.

I had a lovely one go up for 750k, and the valuer came in at 450k.

We managed to negotiate a discount on the property as well as having a 300k deposit, so loan was agreed & so did not cause the client any issues as he wanted the property at any cost.

I’m not sure how everyday mortgage lenders would see this but in my world if one valuer has got to x we would struggle to see another valuer get to x +20/30% unless something fundamental has been missed, and the funder would also want to know why there is such a spread in difference.

Hopefully your report is more than 2 sides of paper, and apon reading should give you more of an idea of the valuers rational for that value, I’d pick up the phone to the firm and ask them to explain, once you have a few “comparables” of your own.

Alternatively is back to the vendor and more cash down.

Good luck!
Great post!

dhutch

Original Poster:

14,198 posts

196 months

Thursday 22nd March 2018
quotequote all
Thanks all for the thoughts.

We have just submitted the form to the broker, having significantly improved it from the two drafts the estate agents valuer produced. its only two pages, three comparabilities max, must be within 6 months, and ideally within 0.5 miles although some allowed on that, must all be sold obviously.

In addition we have an excel sheet which contains nearly 20 properties sold within the last year, tabulated with saleprice/area/£perarea and RM links.

I could share these with specific people if appropriate and or helpful, Om me your email address.

The waiting game begins!


Daniel

coljoh148

1,687 posts

176 months

Thursday 22nd March 2018
quotequote all
Is the 385k not enough for mortgage purpose? I've had one valued down before, didn't matter as the value didn't exceed the loan amount.

dhutch

Original Poster:

14,198 posts

196 months

Thursday 22nd March 2018
quotequote all
coljoh148 said:
Is the 385k not enough for mortgage purpose? I've had one valued down before, didn't matter as the value didn't exceed the loan amount.
No, we don't have the funds to bridge from 380k to 465k.

The AIP was for 90% ratio, allowing us to be buy no-chain with retaining my current house during the transition.

We have maybe 20k additional we have access to, but no. Even with my house sold we wouldn't be able to bridge the gap.


Daniel

TheAngryDog

12,394 posts

208 months

Thursday 22nd March 2018
quotequote all
Had this with my house when I was buying. EA admitted they had over priced. We came to an arrangement with the vendors and paid £5k on top of the deposit, so we ended up paying £5k more for the house than the mortgage surveyor valued it at. We are better off regardless as our original offer was £30k more.

hepy

1,260 posts

139 months

Friday 23rd March 2018
quotequote all
Had this 3 or 4 years ago when looking at a re-mortgage, no extra lending.

My opinion is that the valuer just went off rightmove and google maps:
1. Valued it at exactly the same price as one that sold 3 months before - however it was a smaller property
2. Said it was a flood risk - canal 300 metres away, but we are about 50 feet higher

Just went to another lender, next valuer was fine.


Du1point8

21,604 posts

191 months

Monday 26th March 2018
quotequote all
The remortgage valuation of my property basically went off the Zoopla report, remarkably close to what Zoopla said.

I didnt need to get the offer any higher otherwise I would have been very annoyed they simply used the zoopla estimate, despite it being 100k less than the average in the street for the property type and 100k less than what the smaller properties have been selling for, for example the downstairs property which is smaller, etc.

DonkeyApple

54,921 posts

168 months

Monday 26th March 2018
quotequote all
Which of the valuations is correct? Ought to be worth establishing that first before demanding to pay an extra £80k because a chap who gets paid more the higher the price says so?

Obviously, you need to check that the valuation has no glaring error but isnt this where you take the gamble that anyone attempting to buy the property is going to discover the valuation disparity and ask the vendor and their estate agent to price it correctly?

loafer123

15,404 posts

214 months

Monday 26th March 2018
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Many mortgage valuations are done by Automated Valuation Models, basically a sophisticated version of Zoopla.

On more unusual properties, the human input will be low quality as they are paid little to reflect the relative easiness of the average process.

Hopefully your appeal for a closer look will get some focus from a more experienced valuer.

DonkeyApple

54,921 posts

168 months

Monday 26th March 2018
quotequote all
loafer123 said:
Many mortgage valuations are done by Automated Valuation Models, basically a sophisticated version of Zoopla.

On more unusual properties, the human input will be low quality as they are paid little to reflect the relative easiness of the average process.

Hopefully your appeal for a closer look will get some focus from a more experienced valuer.
Indeed but what happens after your 2 year fix comes up for renewal and your lender is not competitive? Surely if there is no manifest error in the valuation then this is going to be an ongoing issue at each debt rollover point going forward? You certainly doing want to be paying 465 to find that in two years time no lender will value above 385 etc?

My personal view is that the time to push values to allow you to spend more than something might be worth has passed and that it’s better now to let the vendor reprice to suit the lenders?

superlightr

12,842 posts

262 months

Monday 26th March 2018
quotequote all
DonkeyApple said:
loafer123 said:
Many mortgage valuations are done by Automated Valuation Models, basically a sophisticated version of Zoopla.

On more unusual properties, the human input will be low quality as they are paid little to reflect the relative easiness of the average process.

Hopefully your appeal for a closer look will get some focus from a more experienced valuer.
Indeed but what happens after your 2 year fix comes up for renewal and your lender is not competitive? Surely if there is no manifest error in the valuation then this is going to be an ongoing issue at each debt rollover point going forward? You certainly doing want to be paying 465 to find that in two years time no lender will value above 385 etc?

My personal view is that the time to push values to allow you to spend more than something might be worth has passed and that it’s better now to let the vendor reprice to suit the lenders?
That makes no sense ! If a seller wants to sell for x and a buyer wants to buy for x then its priced correct.

The issue that the buyer may struggle to get their funding is not the sellers fault. its a funding issue for the buyer. doenst make the sale price incorrect.
The fact a mortgage company may not want to lend on x is their risk formula - again doenst make the sale price as wrong. The buy simply has to fund more themselves.

superlightr

12,842 posts

262 months

Monday 26th March 2018
quotequote all
superlightr said:
DonkeyApple said:
loafer123 said:
Many mortgage valuations are done by Automated Valuation Models, basically a sophisticated version of Zoopla.

On more unusual properties, the human input will be low quality as they are paid little to reflect the relative easiness of the average process.

Hopefully your appeal for a closer look will get some focus from a more experienced valuer.
Indeed but what happens after your 2 year fix comes up for renewal and your lender is not competitive? Surely if there is no manifest error in the valuation then this is going to be an ongoing issue at each debt rollover point going forward? You certainly doing want to be paying 465 to find that in two years time no lender will value above 385 etc?

My personal view is that the time to push values to allow you to spend more than something might be worth has passed and that it’s better now to let the vendor reprice to suit the lenders?
That makes no sense ! If a seller wants to sell for x and a buyer wants to buy for x then its priced correct.

The issue that the buyer may struggle to get their funding is not the sellers fault. its a funding issue for the buyer. doenst make the sale price incorrect.
The fact a mortgage company may not want to lend on x is their risk formula - again doenst make the sale price as wrong. The buyer simply has to fund more themselves.

DonkeyApple

54,921 posts

168 months

Monday 26th March 2018
quotequote all
superlightr said:
That makes no sense ! If a seller wants to sell for x and a buyer wants to buy for x then its priced correct.

The issue that the buyer may struggle to get their funding is not the sellers fault. its a funding issue for the buyer. doenst make the sale price incorrect.
The fact a mortgage company may not want to lend on x is their risk formula - again doenst make the sale price as wrong. The buy simply has to fund more themselves.
It does make sense though. The buyer is the bank and they are saying it’s not worth X. Why would you automatically assume that they are wrong and that the seller and the commission agent who both benefit from a higher price are correct? wink

superlightr

12,842 posts

262 months

Monday 26th March 2018
quotequote all
DonkeyApple said:
superlightr said:
That makes no sense ! If a seller wants to sell for x and a buyer wants to buy for x then its priced correct.

The issue that the buyer may struggle to get their funding is not the sellers fault. its a funding issue for the buyer. doenst make the sale price incorrect.
The fact a mortgage company may not want to lend on x is their risk formula - again doenst make the sale price as wrong. The buy simply has to fund more themselves.
It does make sense though. The buyer is the bank and they are saying it’s not worth X. Why would you automatically assume that they are wrong and that the seller and the commission agent who both benefit from a higher price are correct? wink
the mortgage company is not the buyer though is it. It has the first charge on the property.
Its a funding issue - not a buyer/seller price issue. They have agreed the price. The buyer just has to sort out their funding.