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ja3h
Posts: 9 Forumite
Ok some context, myself and a sibling are extremely fortunate to be given a lump sum from a relative as an advance on inheritance to get us on the property ladder.
My relative has a property for sale which my partner and I want to purchase, my relative has said that instead of a lump sum they will reduce the price on the property instead. When the sale has gone through my sibling will get the lump sum gifted to them.
The problem is that the valuation has come in at 20% lower than I expected the original sale price to be. So in effect the discounted price is actually the valuation price.
The bank is HSBC and they're using SDL surveyors. I know that valuations are often conservative, but I think that 20% must mean that the original price my relative wanted was more than it's worth.
It's an awkward situation because I'm extremely grateful for the gesture towards my sibling and I. But I want it to be a fair one, where we both get an equal amount.
I'm not too sure how to approach this, perhaps inviting some estate agents to value the property. The problem I have with that is, when I was helping my mother sell her home I had 5 different valuations ranging from 375k to 475k. In the end it sold for £395k but it was on the market for months before we decided to lower the price. I suppose this is the best thing to do.
My relative has a property for sale which my partner and I want to purchase, my relative has said that instead of a lump sum they will reduce the price on the property instead. When the sale has gone through my sibling will get the lump sum gifted to them.
The problem is that the valuation has come in at 20% lower than I expected the original sale price to be. So in effect the discounted price is actually the valuation price.
The bank is HSBC and they're using SDL surveyors. I know that valuations are often conservative, but I think that 20% must mean that the original price my relative wanted was more than it's worth.
It's an awkward situation because I'm extremely grateful for the gesture towards my sibling and I. But I want it to be a fair one, where we both get an equal amount.
I'm not too sure how to approach this, perhaps inviting some estate agents to value the property. The problem I have with that is, when I was helping my mother sell her home I had 5 different valuations ranging from 375k to 475k. In the end it sold for £395k but it was on the market for months before we decided to lower the price. I suppose this is the best thing to do.
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but it was on the market for months before we decided to lower the price. I suppose this is the best thing to do.
House prices are in a downward spiral, the bank has a right and duty tobe conservative in a downturn in house prices.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
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I'm not sure what the point of getting agents in to give a valuation is?
You've already been given a valuation courtesy of your bank and the qualified chartered surveyor that they've used.
It looks like your relative (who it appears wasn't doing you such a great favour after all) is going to have to reduce their asking price accordingly and then you base the split with your sibling on that revised figure of what your relatives property is actually worth rather than the pie in the sky aspirational figure that your relative obviously thought it was worth.0 -
"Seeing as we are related I'll help you out. I'll sell you this £10 note for £10. I could get £12 for it from anyone else."
This is what has happened. Now, there are two possibilities.
1 - Your relative was not aware of this. they do genuinely want to help you out, so will drop the price to £8.
2 - They knew exactly what they were doing and will refuse.
There's nothing to talk about. The ball is in their court. They drop the price, or you walk away from it. If they don't drop the price, the only thing to feel awkward about is that your relative made a ham-fisted attempt to swindle you.0 -
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If the relative isn't living in the house then capital gains tax will probably have to be paid. Any gift of property will also have to be valued scrupulously by a surveyor as it's seen as a potential death duty if the relative dies within 7 years of gifting. There are guides online to all this, print one out to show the relative that a fair valuation cannot be got around.0
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As far as I know surveyors will rarely value the property more than the purchase price so if you had been buying it at the full market price the valuation probably would have come back as that value so don't be too concerned about thinking you're getting a bad deal.0
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Thanks for the responses!
So I'll just use figures now as the percentages are getting confusing. Initially we were told/thought that the property is worth £600k. We had agreed to buy it for £500k under that assumption and pending valuations etc. The valuation has come back and as it's a leasehold maisonette with under 70 years left on the lease it's been valued at £450k, with the bank telling us it is valued at £500k with an extended lease. My relative is in the process of extending the lease at the moment.Thrugelmir wrote: »Is that the amount you applying for as a mortgage?
Yes, we were told it would be worth £600k so got a mortgage for £500k. As the advanced inheritance was £100k.I'm not sure what the point of getting agents in to give a valuation is?
You've already been given a valuation courtesy of your bank and the qualified chartered surveyor that they've used.
I've read online that valuations are conservative, and sometimes they can be a bit under market value? So if I get an estate agent in and they value it at £520k or £550k then maybe I try to pursue buying it from them at £430-450k.
I know that they're not trying to give me a bad deal, I think that the estate agents they got in 4-5 months ago overvalued it in order for them to go with that particular estate agent. When my partner and I let them know we were interested they took it off the market straight away as they'd rather see it go to family. It's been in limbo for a long time because my relative has been dealing with land registry to get the freehold sorted out.thecoffeehouse204 wrote: »As far as I know surveyors will rarely value the property more than the purchase price so if you had been buying it at the full market price the valuation probably would have come back as that value so don't be too concerned about thinking you're getting a bad deal.
As I mentioned above, with the short lease they valued it at £450k and only with the lease extended they value it at £500k. Could the bank value it a whole £100k under what the expected market value is?0 -
ScorpiondeRooftrouser wrote: »"Seeing as we are related I'll help you out. I'll sell you this £10 note for £10. I could get £12 for it from anyone else."
This is what has happened. Now, there are two possibilities.
1 - Your relative was not aware of this. they do genuinely want to help you out, so will drop the price to £8.
2 - They knew exactly what they were doing and will refuse.
There's nothing to talk about. The ball is in their court. They drop the price, or you walk away from it. If they don't drop the price, the only thing to feel awkward about is that your relative made a ham-fisted attempt to swindle you.
I know they wouldn't intentionally want to do this, but you're right - this is what has happened unless the bank valuation is out.0 -
Could the bank value it a whole £100k under what the expected market value is?
Market value is subjective. As it is only what someone might pay for a property not actually will. Perhaps try a couple of different EA's now and see what their view is.
What's the issue with the Freehold?0
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