Mortgage : Lender down valued a huge amount, advice.
Discussion
Let the EA know your offer stands for two weeks and that you’re off looking at other properties this weekend. It’s up to the agent now to try and get his commission.
It’s a royal pain but you’ll find another property and when you do you’ll fall in love with that one and praise the Lord that you didn’t buy that overpriced thing from the crazy vendors, especially after you drive past one day and see that the people who did buy it are having to replace the roof.
The markets not going anywhere and the vendors need you far more than you need them. Give it a shot sweating them out but in the meantime get on with your lives.
It’s a royal pain but you’ll find another property and when you do you’ll fall in love with that one and praise the Lord that you didn’t buy that overpriced thing from the crazy vendors, especially after you drive past one day and see that the people who did buy it are having to replace the roof.
The markets not going anywhere and the vendors need you far more than you need them. Give it a shot sweating them out but in the meantime get on with your lives.
I think this is pretty common in London market. 4 years ago I sold a flat in central London, the buyer's mortgage surveyor came up with a nearly 20% less estimation than our original agreed price. I simply told them(the buyers), the deal is off if they can't make the difference or listen to their surveyors, as I was lucky I already had a few other potential buyers. Not sure what they did with the bank, but the surveyor corrected his value to the original price in a few days or so, and we exchanged contracts without any problem.
I've heard a few people's transactions did not happen due to this value discrepancies, especially the chains usually fail, pretty annoying.
I've heard a few people's transactions did not happen due to this value discrepancies, especially the chains usually fail, pretty annoying.
dhutch said:
Buggers have said know. I mean, maddness really.
Dont know what the plan is with that. Sigh. If I had 10k worth of car I would sell it, but my cars worth £1800 and the drivers door handle has just fell off.
Daniel
It's not madness though, sorry to be blunt but you've created this problem by offering 465k in the first case. How was that OK and achievable back then but not now?Dont know what the plan is with that. Sigh. If I had 10k worth of car I would sell it, but my cars worth £1800 and the drivers door handle has just fell off.
Daniel
Mortgage lenders want a valuation based on the price which could be achieved at auction, on a forced sale.
It's not rocket surgery.
If the borrower can't pay, they need to be able to repossess and sell the property asap, knowing that their loan isn't at risk. They don't want to have funds tied up in a property that won't sell, simply because somebody fell in love with it and was prepared to pay over the odds, borrowing 90% of the value to do so.
It's not rocket surgery.
If the borrower can't pay, they need to be able to repossess and sell the property asap, knowing that their loan isn't at risk. They don't want to have funds tied up in a property that won't sell, simply because somebody fell in love with it and was prepared to pay over the odds, borrowing 90% of the value to do so.
A neigh on half a million pound house requiring a lot of work is not something you want to be taking on if you are having to get the bean counter out.
Borrowing from this parent for this and that one for that and if this happens and the sister can do such and such hopefully within 3yrs time is just bonkers.
I firmly believe life's to be enjoyed and not tied to paying for a home, don't push yourself into financial hardship for the sake of an old period house.
Borrowing from this parent for this and that one for that and if this happens and the sister can do such and such hopefully within 3yrs time is just bonkers.
I firmly believe life's to be enjoyed and not tied to paying for a home, don't push yourself into financial hardship for the sake of an old period house.
I read the usual rubbish on this thread... Time to add some facts
1. Valuers have been told to value at auction value / downvalue etc. Nope. not ever. Valuers are told to provide Market Value - this is an RICS definition assuming willing buyer and seller at the end of the marketing period - although lenders may have specific requirements of lending policy to be taken into account (eg number of kitchens / ex LA flats etc). Generally the policies don't effect the value - other than if it falls outside the valuation stops and comes in at £0.
2. They are valuing at auction value. Nope - some lenders will ask for an alternative valuation figure, based on a restricted marketing period. This will sometimes be lower. Valuer has no way to know what emphasis is based on this value.
3. It never ceases to amaze me when borrowers question down valuations, without stopping to consider whether the Surveyor is right. I have in the past been in the situation where a new house was sold at a value of £3,500 per sq m, when the nearest comparable was at £2,500 per sq m. The comparable was a good sized character property - the sold house a typical modern box with lots of small rooms... I didn't see it and down-valued. Over the next week I had the broker at me (threatened to ensure that no more work ever came my way - cheers for that!), the developer and the borrower. Not one of them looked at what I was relying upon - and no-one had any other comparable to help their case. I stuck to my ground....
Which brings me to the OP's second valuation... We did not get another instruction for the same house, but a colleague did for a house on the same estate. We had previously chatted as part of my 'thought check' - I knew my down valuation was going to piss someone off so had got a second opinion from the same colleague heading out there... I asked him what he had done - told me he had valued his up at £3,500 per sq m... Once I had stopped coughing I asked how come? The answer.... He'd seen the pushback I had received and did not fancy it.... The difference was that he was a staff valuer with company PI, whereas I was a consultant on my own PI....
1. Valuers have been told to value at auction value / downvalue etc. Nope. not ever. Valuers are told to provide Market Value - this is an RICS definition assuming willing buyer and seller at the end of the marketing period - although lenders may have specific requirements of lending policy to be taken into account (eg number of kitchens / ex LA flats etc). Generally the policies don't effect the value - other than if it falls outside the valuation stops and comes in at £0.
2. They are valuing at auction value. Nope - some lenders will ask for an alternative valuation figure, based on a restricted marketing period. This will sometimes be lower. Valuer has no way to know what emphasis is based on this value.
3. It never ceases to amaze me when borrowers question down valuations, without stopping to consider whether the Surveyor is right. I have in the past been in the situation where a new house was sold at a value of £3,500 per sq m, when the nearest comparable was at £2,500 per sq m. The comparable was a good sized character property - the sold house a typical modern box with lots of small rooms... I didn't see it and down-valued. Over the next week I had the broker at me (threatened to ensure that no more work ever came my way - cheers for that!), the developer and the borrower. Not one of them looked at what I was relying upon - and no-one had any other comparable to help their case. I stuck to my ground....
Which brings me to the OP's second valuation... We did not get another instruction for the same house, but a colleague did for a house on the same estate. We had previously chatted as part of my 'thought check' - I knew my down valuation was going to piss someone off so had got a second opinion from the same colleague heading out there... I asked him what he had done - told me he had valued his up at £3,500 per sq m... Once I had stopped coughing I asked how come? The answer.... He'd seen the pushback I had received and did not fancy it.... The difference was that he was a staff valuer with company PI, whereas I was a consultant on my own PI....
DonkeyApple said:
Let the EA know your offer stands for two weeks and that you’re off looking at other properties this weekend. It’s up to the agent now to try and get his commission.
It’s a royal pain but you’ll find another property and when you do you’ll fall in love with that one and praise the Lord that you didn’t buy that overpriced thing from the crazy vendors, especially after you drive past one day and see that the people who did buy it are having to replace the roof.
The markets not going anywhere and the vendors need you far more than you need them. Give it a shot sweating them out but in the meantime get on with your lives.
It's a fair angle to take, and a lot of me would love to play hard ball with them.It’s a royal pain but you’ll find another property and when you do you’ll fall in love with that one and praise the Lord that you didn’t buy that overpriced thing from the crazy vendors, especially after you drive past one day and see that the people who did buy it are having to replace the roof.
The markets not going anywhere and the vendors need you far more than you need them. Give it a shot sweating them out but in the meantime get on with your lives.
Truth is however we have been looking for 8 months including two other houses this weekend and this is the house we like most. For reasons we may never know fully, or mortgage for it has been a pain, and to get a mortgage offer from this application rules out waiting two weeks as I understand it. A few days, maybe Tuesday, else we have to revisit it.
It's also been an emotional rollercoaster for the pair of us and we're just about ready to get off. The roof was replaced 20 years ago and appears sound. I'm going to push the Estate Agent this afternoon and see what they say, but ultimately we can pay the original offer price and still think it's worth it to us. Even with the potential risk of it being harder to get a buyer if we do come to sell it in time.
Daniel
Fast and Spurious said:
It's not madness though, sorry to be blunt but you've created this problem by offering 465k in the first case. How was that OK and achievable back then but not now?
Dermot O'Logical said:
Mortgage lenders want a valuation based on the price which could be achieved at auction, on a forced sale.
It's not rocket surgery.
Yeah, both valid points. Obviously when we made the offer we didn't expect an 85k down valuation on our first lender. That's what's rattled it. I have no doubt the 'value' is closer to 465 than 380, what some might pay with time. But also that a forced sale could net a lot less.It's not rocket surgery.
We understand the lenders are rightly risk averse and would like a larger deposit, fairly really. But also a potential future risk and bargaining chip. If the risk is negligible, you would be mad not to ask.
Daniel
dhutch said:
Yeah, both valid points. Obviously when we made the offer we didn't expect an 85k down valuation on our first lender. That's what's rattled it. I have no doubt the 'value' is closer to 465 than 380, what some might pay with time. But also that a forced sale could net a lot less.
We understand the lenders are rightly risk averse and would like a larger deposit, fairly really. But also a potential future risk and bargaining chip. If the risk is negligible, you would be mad not to ask.
Daniel
It’s not a valid point. Lenders want market value valuations. Think about what happened with yours. They lost the lending. That’s not good business and constant down values will be spotted...We understand the lenders are rightly risk averse and would like a larger deposit, fairly really. But also a potential future risk and bargaining chip. If the risk is negligible, you would be mad not to ask.
Daniel
surveyor said:
It’s not a valid point. Lenders want market value valuations. Think about what happened with yours. They lost the lending. That’s not good business and constant down values will be spotted...
Yeah, I mean obviously they want good business and not undue risk. Where they and the surveyor draw that line is an issue for the market, customer, and there business. But it also is where it is?My posts earlier crossed with your last one and I didn't hit refresh, but I'll read it now.
Edited by dhutch on Monday 30th April 09:03
surveyor said:
I read the usual rubbish on this thread... Time to add some facts
1. Valuers have been told to value at auction value / downvalue etc. Nope. not ever. Valuers are told to provide Market Value - this is an RICS definition assuming willing buyer and seller at the end of the marketing period...
...It never ceases to amaze me when borrowers question down valuations, without stopping to consider whether the Surveyor is right....
....The difference was that he was a staff valuer with company PI, whereas I was a consultant on my own PI....
Fair enough. Interesting information. And it's good that lenders are not asking for overly harsh valuations, if not a surprise to me. However obviously if the surveyor is insuraning themselves they will air to caution at times.1. Valuers have been told to value at auction value / downvalue etc. Nope. not ever. Valuers are told to provide Market Value - this is an RICS definition assuming willing buyer and seller at the end of the marketing period...
...It never ceases to amaze me when borrowers question down valuations, without stopping to consider whether the Surveyor is right....
....The difference was that he was a staff valuer with company PI, whereas I was a consultant on my own PI....
I guess also even 'market value' has a timescale, if it's been on two years at 495/485 even for a larger and more character house that's a while. If it's also been on a 550 for 18months before that.
We absolutely are questioning if the surveyor had a point at 380k. But then ive also had a nice chat to the local guy who did our homebuyers.
Maybe the second guy from L&G just saw it differently.
What do you think about the fact the first valuer incorrectly had it down as on an unmaked unadopted road? Didn't even mention this in the response to the valuation challenge?
Daniel
dhutch said:
Fair enough. Interesting information. And it's good that lenders are not asking for overly harsh valuations, if not a surprise to me. However obviously if the surveyor is insuraning themselves they will air to caution at times.
I guess also even 'market value' has a timescale, if it's been on two years at 495/485 even for a larger and more character house that's a while. If it's also been on a 550 for 18months before that.
We absolutely are questioning if the surveyor had a point at 380k. But then ive also had a nice chat to the local guy who did our homebuyers.
Maybe the second guy from L&G just saw it differently.
What do you think about the fact the first valuer incorrectly had it down as on an unmaked unadopted road? Didn't even mention this in the response to the valuation challenge?
Daniel
Market Value assumes at the end of the marketing period - so the time on the market is irrelevant. Only Special Assumptions that a client will for would mean the valuer takes into account a restricted marketing period. I guess also even 'market value' has a timescale, if it's been on two years at 495/485 even for a larger and more character house that's a while. If it's also been on a 550 for 18months before that.
We absolutely are questioning if the surveyor had a point at 380k. But then ive also had a nice chat to the local guy who did our homebuyers.
Maybe the second guy from L&G just saw it differently.
What do you think about the fact the first valuer incorrectly had it down as on an unmaked unadopted road? Didn't even mention this in the response to the valuation challenge?
Daniel
Adopted/Unadopted Road? Value difference depends on state of road. Locally to us was a road that was a wreck - eventually the residents sorted it - now they pay into a fund at £20 a year for maintenance. Not really value significant.... -especially as unadopted roads tend to end up with nicer houses in my experience.
surveyor said:
Market Value assumes at the end of the marketing period - so the time on the market is irrelevant. Only Special Assumptions that a client will for would mean the valuer takes into account a restricted marketing period.
Adopted/Unadopted Road? Value difference depends on state of road. Locally to us was a road that was a wreck - eventually the residents sorted it - now they pay into a fund at £20 a year for maintenance. Not really value significant.... -especially as unadopted roads tend to end up with nicer houses in my experience.
Fair. Just seems odd that they would down value 85k, with the only reason being lack of comparables (fair, to a point) and that it's on an un-made and un-addopted road (which isn't isn't).Adopted/Unadopted Road? Value difference depends on state of road. Locally to us was a road that was a wreck - eventually the residents sorted it - now they pay into a fund at £20 a year for maintenance. Not really value significant.... -especially as unadopted roads tend to end up with nicer houses in my experience.
Then after we challenge the valuation including proof it's a well kept publicly maintained road, to not even make any reference to that mistake. Who knows.
Daniel
coljoh148 said:
A neigh on half a million pound house requiring a lot of work is not something you want to be taking on if you are having to get the bean counter out.
Borrowing from this parent for this and that one for that and if this happens and the sister can do such and such hopefully within 3yrs time is just bonkers.
I firmly believe life's to be enjoyed and not tied to paying for a home, don't push yourself into financial hardship for the sake of an old period house.
Obviously anything at nearly half a million is a reasonable punt. You do your research, get some checks carried out, do some sums, and then buy it and it becomes yours.Borrowing from this parent for this and that one for that and if this happens and the sister can do such and such hopefully within 3yrs time is just bonkers.
I firmly believe life's to be enjoyed and not tied to paying for a home, don't push yourself into financial hardship for the sake of an old period house.
However as said, the right spot is not buying the house, but buying it ahead of getting the money from selling our current two properties, specifically my house which has a reasonable amount of equity in it.
While it needs a fair amount of work to bring it up to modern expectations it would also live in with no work at all for years. It's not a showroom spec Barrat box, but that is why we like it.
Daniel
paulrockliffe said:
I assumed that the LTV ratio was used to hedge against a fire sale price.
Yup. I don’t think the valuer has any input at all on curve fitting properties to fit a particular lender’s risk book. They’ll just derive a market value based on an industry standard set of criteria that the lender can then trust and work with to determine if they want that property in their balance sheet, what LTV to then give and what rate is then a function of what, where and who. Another important role they play will be to make it harder for for parties to defraud lenders or their potential clients. Yeah, there has been mention earlier that surveyors can get scared if they see 90% LTV, which on one level you can see but on another feels like them trying to do the lenders job not their own.
Our lenders detailed our personally affordability, the rates offered, and the LTV ratio, before we had selected the house let alone surveyed it.
However we where originally 90% LTV which is what the lenders will give, but on the second application this was 86% having putting the extra to get over the affordability limits.
As said, I would love to play hard ball with the seller, however they are never going to sell it for 430k which I wouldn't either, and short of throwing this mortgage offer away and or risking loosing the house, its not an option. Obviously their will be other houses, but in 6-8 months of looking its the best we have found, including everything which is currently on the market this side of 500k.
Never easy to know, but personally, I feel the house is worth going for and worth being fairly tight for cash for a few months while we buy one and then sell the others. We have said we will do the original 465k/ Having already said we can do 455k its 'only' another 10k. Roll on the next hurdle.
Daniel
Our lenders detailed our personally affordability, the rates offered, and the LTV ratio, before we had selected the house let alone surveyed it.
However we where originally 90% LTV which is what the lenders will give, but on the second application this was 86% having putting the extra to get over the affordability limits.
As said, I would love to play hard ball with the seller, however they are never going to sell it for 430k which I wouldn't either, and short of throwing this mortgage offer away and or risking loosing the house, its not an option. Obviously their will be other houses, but in 6-8 months of looking its the best we have found, including everything which is currently on the market this side of 500k.
Never easy to know, but personally, I feel the house is worth going for and worth being fairly tight for cash for a few months while we buy one and then sell the others. We have said we will do the original 465k/ Having already said we can do 455k its 'only' another 10k. Roll on the next hurdle.
Daniel
Gassing Station | Finance | Top of Page | What's New | My Stuff