Mortgage : Lender down valued a huge amount, advice.
Discussion
superlightr said:
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? 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.
Its a funding issue - not a buyer/seller price issue. They have agreed the price. The buyer just has to sort out their funding.
so, while they may not be the owner they are lending against an asset, so have the right to decide whether or not an asset is sufficiently valuable for that level of borrowing...
if seller values at 20% over the market price and one buyer comes along prepared to pay that - that doesn't make the house worth that 20% extra - because if they default / try to sell again, the market price is more likely to be accurate...
so any 'under-valuation' by mortgage lenders is an opportunity to check whether the pricing is right - yes, they will get it wrong, but either their appetite for risk is low, or it is possible the property is over-priced
superlightr said:
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.
The entity lending the funds is buying on behalf of its client. It’s the lender’s funds at risk, they hold the title and to all intents and purposes it is theirs until they hand those deeds over. If they are saying that the price is wrong then this isn’t really the market to go arguing with the lender to change their mind but rather the seller. If it transpires that there is no error in the valuation then obviously you can stump up the shortfall but as the OP has said they can’t then this is moot and what the lender says is fair value is fair value. Plus, what does happen when you rollover your debt and want to do so with another lender? Having the issue once does suggest it may crop up again and as we are now at the bottom of the rate cycle and both rates and margins on deposits are heading upwards over the next few years then it’s some risk you’d be taking on. Its a funding issue - not a buyer/seller price issue. They have agreed the price. The buyer just has to sort out their funding.
maxest said:
Hi deesee, i'll be on the look out for a commercial lender in the near future,Ive tried emailing you but you don't accept, if you could email me please..
Maxest, Sorry nothing had come through, but I checked and had not ticked the box for contact, sorry now corrected and have sent you a note to say hi!
Time for a quick update. For some technical reason we don't have the full report, just a screenshot from the lender, but in short they discounted two of the compariables as not being similar enough, and the third which was already the lowest value and £/sqm they 'explained away' by it condition. No mention of the adopted or otherwise road.
So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
I understand Accord require out homebuyers to be within a month so I'm currently waiting for the surveyors to get back and see what we can do there in terms of re-issuing the survey, with or without a second visit to the property.
They may also decided to do their own valuation on top I understand as a second opinion, which will either be Legal&General who the previous valuation was with or Seseme Bankhall. Sigh.
Daniel
They may also decided to do their own valuation on top I understand as a second opinion, which will either be Legal&General who the previous valuation was with or Seseme Bankhall. Sigh.
Daniel
dhutch said:
Time for a quick update. For some technical reason we don't have the full report, just a screenshot from the lender, but in short they discounted two of the compariables as not being similar enough, and the third which was already the lowest value and £/sqm they 'explained away' by it condition. No mention of the adopted or otherwise road.
So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
You’ve ind of answered why their valuation isn’t necessarily absorbed though. So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
‘If selling in a rush this property would have to go for less than market value.‘
That’s really the key as a lender must price their deal based on default and if you defaulted then they would be selling their property quickly and at a hefty discount. What they are really telling you wuite clearly is that they will lend all day long but they want it to be your cash that covers the ‘at risk’ element of the transaction and not theirs. Which is perfectly fair and very sensible.
Other lenders may be willing to value differently so it has to be worth getting other offers so as to confirm to yourself whether it’s restricted to that one lender. But if they also come back with the same sort of valuations then you really do have to start thinking that as we head further and further into a buyers market that they might be correct and the heavily financially incentivised vendor and their commissioned agent might be wrong.
Oh yes, absolutely. I would have slightly more truck with it if they said 'its valued at this, but due to house in question we require a minimum of XX% deposit' but ultimately the lender are protecting their investment and the surveyor their name etc and as they hold the cards and have been burnt before I can't fault it.
Obviously in with this we will be looking to re-evaluate the offer made and get a discount on the house, and we can do some back filling, but it's still a big ask all round if we can't secure any more lending.
Daniel
Obviously in with this we will be looking to re-evaluate the offer made and get a discount on the house, and we can do some back filling, but it's still a big ask all round if we can't secure any more lending.
Daniel
Yup. The trouble with mass lenders is the chances of finding the person who will specifically tell you what it is they are really saying or what the issue is is highly unlikely. The decision is made and then the person you end up conversing with has no real idea of the finer details. The most common is that that particular lender doesn’t want any more exposure to that little ‘box’ that your property falls into for bond packaging but that’s an easy fix as you should find other competitors who are keen to find more of that property type to fill their books up with but it sounds like in your case that they are pricing the asset with risk in mind. Try another lender or two to see if it’s unique but it often isn’t. What that tells you is that you are likely to get hit when you want to sell later and also that other buyers are going to have the same problem as you. In other words the vendor and EA have priced it wrong. It’s just a bugger at that point to get the vendor to see that immediately. It usually takes months of sitting there for a seller to pluck up the courage to price it correctly and to have run out of hope that a crazy, cash buyer is going to suddenly save them like Richard Gere at the end of Pretty Woman.
[quote=dhutch]Time for a quick update. For some technical reason we don't have the full report, just a screenshot from the lender, but in short they discounted two of the compariables as not being similar enough, and the third which was already the lowest value and £/sqm they 'explained away' by it condition. No mention of the adopted or otherwise road.
So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
[Here is your problem d this is half an Edwardian mansion with 4-5bedrooms.
split up semi stateleys are very hard to value, all the downsides of an historic building but not all the value, buyers are not queuing up for these, maybe find a specialist lender
So very annoying, I feel like they haven't given it the time and consideration even this second time round, but also was half prepared for it as I understand they rarely overturn them and that this isn't the simplest or more attractive mortgage so computer says no.
Their valuation is imo absurd. It's hard to value a property, with our offer being something we where happy with but by no means purely driven be economics. If selling in a rush this property would have to go for less than market value. However certainly from what we have seen, you would never in a month of Easter Sundays get this house for 380k given others in the area for that price are tatty 1970's 3bed semi-dets and this is half an Edwardian mansion with 4-5bedrooms.
[Here is your problem d this is half an Edwardian mansion with 4-5bedrooms.
split up semi stateleys are very hard to value, all the downsides of an historic building but not all the value, buyers are not queuing up for these, maybe find a specialist lender
Rangeroverover said:
Here is your problem, split up semi stateleys are very hard to value, all the downsides of an historic building but not all the value, buyers are not queuing up for these, maybe find a specialist lender
Yes, fair. We are currently applying for a mortgage from a Lender who claims to lend against homebuyers valuation. We shall watch this space.Do you have ant suggestions of specialist lenders? Not really something I'm overly aware of.
Daniel
Douglas Quaid said:
Have you told the vendor what the bank thinks their house is worth? Surely it has to be worth telling them their asking price is much higher than valuation before doing anything else?
I think the issue is that even if you go to a series of lenders and establish quite firmly what the value of the property is from the lending side you wouldn’t expect the vendor to drop to that level but rather compromise somewhere in between depending on how bullish he feels on finding either a cash buyer who is will to pay over the odds or a leveraged buyer who is willing to ignore his lender and throw in the additional money themselves. And the issue there is that the OP mentioned that they don’t have a bean to throw in to the pot so even if the vendor lowered towards fair value it wouldn’t help?The lender is aware of the valuation given by the Lender (NatWest) by the agents used (Legal and General) and that other lenders we have looked at (Santander etc) also use Legal and General with the implications of that.
We have reserves sufficient to meet half way if we pulled everything together, but then there is also a reasonable amount of work needed on the house in the next free year. Full rewire, bathroom, and all the rendering is shot which is likely the time to consider external wall insulation as it's solid walls.
Hence we are looking to get a reasonable but closer, and then out forwards a reasonable, but likely somewhat lower, offer to the vendor.
Daniel
We have reserves sufficient to meet half way if we pulled everything together, but then there is also a reasonable amount of work needed on the house in the next free year. Full rewire, bathroom, and all the rendering is shot which is likely the time to consider external wall insulation as it's solid walls.
Hence we are looking to get a reasonable but closer, and then out forwards a reasonable, but likely somewhat lower, offer to the vendor.
Daniel
I thought I had mentioned, but we have also put my property up for sale. I'm not based out of my partners flat for work anyway so it makes sense to sell now.
This doesn't free up much capital as we can use the bank of mum and dad to bridge, but also simplifies my financial obligations.
Daniel
This doesn't free up much capital as we can use the bank of mum and dad to bridge, but also simplifies my financial obligations.
Daniel
Sarnie said:
This isn't a lender issue.............they didn't down value the property.
What is your broker saying?
What have Accord said?
What is your broker saying?
What have Accord said?
Fair.
He doesn't say a huge amount, but appears to be doing a reasonable job and pushing onwards.
Accord have said they no longer do mortgages off the back of a homebuyers. Fully admit their advisor gave us the wrong advice, and have offered to wave both the valuation fee and £1000 product fee as an apology. That was this afternoons news.
Obviously that great, but only if they come back with a valuation that works for us. We appear to have little to loose on pushing on with that, so watch this space. Obviously it might come back fine, and we may be able to lean on them a little even if it's a bit low.
My house is also attracting a lot of interest, so hopefully we can pull off a sale there and free up some liquidity and go back to the vendor with a strong enough offer, and enough documented evidence that they need to move, that we can close the sale, which is what everyone wants.
Time only will tell.
Daniel
Accords Surveyor went out to the property this morning, took photos, confirmed report will be with us in two days time.
This was a Legal and General surveyor, as per the Natwest valuation, but not the same person and obviously certainly not a 'desktop' valuation based on the other.
I guess only time will tell, fingers are crossed it comes out more generous than 380k.
However on the flipside I have recently learned that Natwest will lend us the full 380k they have valued the house at, rather than 90% of that (342k) so while still £39k below the original 419k requested is more than we previously thought. Not sure how we got this wrong as I am sure we questioned it. However interesting none the less.
Movement from the vendors is expected in my mind I think unless this latest valuation comes up bang on the mark, to reflect the issues with have and the risk should we come to re-sell. However with sale of my house looking manageable, it looks to me that we could perhaps get there somehow either way, We might view a couple of current houses on the market this weekend, just to keep this 'dream house' in perspective, but either way, onwards and upwards.
Daniel
This was a Legal and General surveyor, as per the Natwest valuation, but not the same person and obviously certainly not a 'desktop' valuation based on the other.
I guess only time will tell, fingers are crossed it comes out more generous than 380k.
However on the flipside I have recently learned that Natwest will lend us the full 380k they have valued the house at, rather than 90% of that (342k) so while still £39k below the original 419k requested is more than we previously thought. Not sure how we got this wrong as I am sure we questioned it. However interesting none the less.
Movement from the vendors is expected in my mind I think unless this latest valuation comes up bang on the mark, to reflect the issues with have and the risk should we come to re-sell. However with sale of my house looking manageable, it looks to me that we could perhaps get there somehow either way, We might view a couple of current houses on the market this weekend, just to keep this 'dream house' in perspective, but either way, onwards and upwards.
Daniel
Gassing Station | Finance | Top of Page | What's New | My Stuff