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HELP! 2nd valuation on new build for £10k less
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carlydoherty1980
Posts: 10 Forumite
Hi All,
advice needed. We reserved a plot in Feb 09 and the property was valued at £175k. As the builder has dragged their feet we have had to have a new survey which has come back today at £165k. We have exchanged contracts and paid £2500 for extras. Advice needed on our situation and comments about your own experiences.
Thanks
advice needed. We reserved a plot in Feb 09 and the property was valued at £175k. As the builder has dragged their feet we have had to have a new survey which has come back today at £165k. We have exchanged contracts and paid £2500 for extras. Advice needed on our situation and comments about your own experiences.
Thanks
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Comments
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Can't help you, but how can a plot be worth £175k before the house is built? I really don't get this off plan lark at all, I'd never buy somewhere that only existed in potential.0
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Carly, you are committed to buying at the price you agreed. So, assuming you need a mortgage, how does the reduced valuation affect how much you can borrow, and if there is a shortfall how do you propose to raise the extra funds?
If you cannot raise the money needed to complete at the agreed price, you will lose your deposit and may be sued for any loss the builder makes.No reliance should be placed on the above! Absolutely none, do you hear?0 -
tek-monkey wrote: »Can't help you, but how can a plot be worth £175k before the house is built? I really don't get this off plan lark at all, I'd never buy somewhere that only existed in potential.
I don't get it either, nobody has ever given me a sensible answer to why someone would commit to something that may not even exist for a year or two, except filpping, which seems a bit old hat now.0 -
We can't make up the shortfall. Our only option is that the housebuilder reduce the price. If not I've been advised by our solicitor that potentially we can be sued for breach of contract and for £17.5k. Bellway would need to consider whether this is worth their while though as we were purchasing on a 75/25 shared equity scheme so have put up no deposit at all so should understand the fact that we don't have any money to be sued for. We're just waiting for the mortgage adviser to challenge the valuation and for our solicitor to see if Bellway will reduce the asking price to £165k. Fingers crossed!
I am aware of our legal position but don't need advice on this. I am wanting to see if this has happened to anyone else and what the outcome was or how negotiations went.0 -
carlydoherty1980 wrote: »Hi All,
advice needed. We reserved a plot in Feb 09 and the property was valued at £175k. As the builder has dragged their feet we have had to have a new survey which has come back today at £165k. We have exchanged contracts and paid £2500 for extras. Advice needed on our situation and comments about your own experiences.
Thanks
Did you not have any contingency plan or emergency fund ?0 -
You might think you have no money, but they have up to 12 years to come after you for it. In 12 years' time you could be sat mulling through a cruise brochure wondering which one to pick, looking out over the garden of the house you've lived in for 10 years and thinking just how lucky you were to have found the perfect house and inherited/won the extra .... and a letter drops through the door.0
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Our only option is that the housebuilder reduce the price.
Or that they force you into bankruptcy ... No help I know. This appears to be a common issue as lots of developments finishing at the moment -- if you search the forum people have recently posted a link to a support group/action group that is full of people in the same situation as you.0 -
Or that they force you into bankruptcy ... No help I know. This appears to be a common issue as lots of developments finishing at the moment -- if you search the forum people have recently posted a link to a support group/action group that is full of people in the same situation as you.
Ultimately its the price one pays by taking responsibility for ones actions. Breaking contracts when it goes against you is not the way forward. Who is going to bail out the banks when the property developers go bust.
You and I am........:mad:0 -
These guys have been into this with Berkeley Homes, not the same builder but I think they are happy to talk to people signed up to buy from other builders:carlydoherty1980 wrote: »I am aware of our legal position but don't need advice on this. I am wanting to see if this has happened to anyone else and what the outcome was or how negotiations went.
http://www.berkeleyhomescollective.com/0 -
Hi
So you have exchanged contracts before the house was built and agreed the price of 175k. A new valuation carried out on behalf of the lender several months down the line now values the property at £165k.
The lender will likely only give you a mortgage based on the valuation of £165k. There is therefore a shortfall of 10k which you need to find otherwise you will be in breach of contract and can be sued if you don't complete at the agreed price.
1) You could try and contest the valuation if you genuinely believe the valuer has made a mistake. You can do this by supplying comparables of recently sold similar property.
2) You could apply for a mortgage with a different lender but you would obviously have to pay for another valuation, booking fee etc. and may not get a better rate.
3) Borrow 10k from friends and family
4) Relenquish more equity so the split becomes 70/30. That way, the builder gets the extra 10k or so when you sell. This is in effect an additional equity loan.
5) Go cap in hand to the builder and beg them to lower the price. They don't have to do this of course but may be sympathetic to your plight. You could do this in combination with 3 or 4 above.
I was in a similar situation to this just recently. I hadn't exchanged contracts yet so I managed to negotiate £2.5k off the price and alter the equity split to 82/18% from 85/15%. I also managed to get flooring and a dedicated car parking space thrown in.
Ask them at least to pay for your extras and throw in additional freebies to justify the higher purchase price as a gesture of goodwill. My conclusion was that the builder was dead set on achieving the agreed asking price which will probably be the same for your builder so bear this in mind during your negotiations and what to ask for.
Good luck and hope this helps
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