Surveyors and over-valuing

nooners-princess · 24 March 2007 at 8:11PM

Hi. Just wondering if anyone can give me any advice on this? We bought our flat almost 3 years ago for £148k. It was a new flat at the time but we bought from someone who had bought from plan. The surveyor surveyed it and told us it was worth the £148k (it was on as a fixed price). We suspect that the person we bought it from either worked in the estate agency that was marketing it or was at least related to someone who worked there.

We're now trying to sell it and the same estate agency have told us that we will only get £140k for it, if we are lucky. I am furious about this and I can't understand how a flat can lose £8k of value in 3 years. I am wondering if there is anything I can do or anyone I can ask to investigate this. My feeling is that the surveyor valued it for far more than it was worth 3 years ago because they knew the person who was selling.

Any advice would be welcome.

Thanks

yorkshirejen · 24 March 2007 at 8:20PM

I can't answer your question -perhaps someone with more knowledge will be along soon.

Have you had more than one agency to value your property? I ask as I had a similar experience with a flat about 10yrs ago - an agency valued it well below what we owed on the mortgage. However, after the intial panic, we had further valuations done and sold within 2 weeks of that valuation for £15,000 more than they had been willing to market it for. When selling a house 5 yrs ago the 3 valuations had about £10,000 from lowest to highest.

HTH (a bit!)
Jen

nooners-princess · 24 March 2007 at 8:33PM

Thanks Jen. Unfortunately, another agency has surveyed it at the £140k too. We've changed estate agency now as the original one get pushing us to drop the price even further which is just not financially possible.

lynzpower · 24 March 2007 at 8:34PM

there are 2 issues here Im afriad.

1) new build, ie you are the 1st person to live in it, means they are prized more highly. Maybe given the fact the property was brand new, with a 10 year NHBC, untouched, pristine, means its worth more than one used.

2) maybe the market was stronger then? Not all proprties have risen in value over the last few years contrary to what some people will tell you

Sorry its not good news, but you definately want to get 3 EAS round and take a average of the 3 valuations, just to make sure EA isnt undervaluing.

At the end of the day the value has to sail past survey without downvaluing- its a tricky one!

Tiger_greeneyes · 24 March 2007 at 8:35PM

When you buy a brand new property, you pay a premium for it because it's never been lived in - it's called New Build Premium. It's the same principle as buying a brand new car as opposed to buying one that's second hand, even only a couple of months old. I'd hazard a rough guess (I don't know where you live) that you'd have paid around £10k over market value for a similar second-hand flat. You can check on rightmove.co.uk or nethouseprices.com for sold prices in your area at that time. This link http://www.nationwide.co.uk/hpi/calculator.asp might also help you.

It could also be that the market in your area has levelled out since you bought the flat, or if there are lots of flats similar to yours on the market then it could be that the market is flooded right now - which also helps keep the prices down.

Check the links out, anyway

nooners-princess · 24 March 2007 at 8:41PM

Thanks for your advice. It is just terribly frustrating because it is a lovely flat and we are having a rough time trying to sell it.

yorkshirejen · 24 March 2007 at 8:57PM

Hope that the links from the others help you find out your position on this. Sorry it sounds so difficult for you. Could you sit tight for a while to see if the market changes?

Good luck
Jen

Tiger_greeneyes · 24 March 2007 at 9:00PM

You're welcome, nooners - I hope it works out for you

Have you thought about marketing at a fixed price btw? If prospective purchasers know they're not getting into a sealed bid situation it might make it more appealing to them.

dwight-van-man · 24 March 2007 at 9:56PM

Hiya, I'm assuming from your profile that the flat is in Glasgow? If so and its a city centre flat, then three/four years ago, when there was loads of new build going up city centre, it was priced at a level that assumed people would want to buy it and live there. There was two problems - firstly, this assumption was generally wrong, secondly, loads of BTL investors bought off plan and couldn't let becasue the prices they had to charge to recoup their money were far too high, the result beign swathes of empty flats and loads of For Rent/For Sale boards. What compounded the problem was that at this time, surveyors were generally valueing at the level the builders were asking, or putting rentla values down which were little more than guestimates (often on the adviceof the BTL investor) City centre new build at the time was a new market so you can kind of see how it happened. What you are probably finding now is that the market has settled and property has found it's true value, and your 3 year old flat is being marketed up against hte new flats which are still being built.

Its a crappy position to be in, I hope you don't think I'mbeing smug with my reply, but if you are city centre this is pretty much what my own experience has shown me. If you can pull some equity out at all, and the rental is ok, you might want to think about doing a let to buy, on the assumption that the value will start to grow a bit....

Massive_2 · 24 March 2007 at 10:20PM

Indeed - valuers simply value new builds at the full purchase price set by the developer.

The developer then typically offers various discounts and incentives to the value of around 15%.

I suspect that the original purchaser took advantage of these, but did not pass on a similar discount to you.

It takes a couple of years for the dust to settle and for real valuations to emerge, and it's only then you realise it takes a few years to break even.

It's no reassurance, but I'm afraid you're far from unique. Good luck with your situation, and I hope you find success.

movieman · 25 March 2007 at 1:09AM

You're lucky: I've read of some new-build flats that have been sold recently for 30% less than their purchase price a few years ago.

Anyone buying a new-build flat is being extremely brave, because there's simply no way to tell what they're really worth until several years later. Worse than that, if there are still flats for sale in the block where you bought, the developer can afford to sell a new flat for less than you can afford to sell yours used, while still making a big profit.

Surveyors and over-valuing

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