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BollaRonJohn
Posts: 8 Forumite
Looking for some urgent advice on what to do with the following scenario.
We are in the process of buying a new build property using Help to Buy.
We agreed on a sale price of £425k and have already paid our deposit and been accepted onto the Help 2 Buy scheme.
Our mortgage provider is Santander and in July they sent out their surveyors (L&G) out to value the house. They valued it at £400k - £25k less than the agreed price.
Obviously we were shocked, having never bought a new build before, we took it on face value that the agreed price was a fair market price.
So we checked with our Mortgage Broker how we should proceed and found out that H2B stipulate, that they will only provide funding if the agreed sale price matches or is below the mortgage providers independent valuation.
So we went back to the developer and advised him of our predicament.
Two days later he emailed us to advise that he would drop the price to £415k (£10k less),
we advised while we appreciate the reduction it's still not enough based on the H2B scheme rules. He asked us to go with another mortgage supplier as "it's only one person opinion"
We advise ok, but that it would take a lot of time and as the first valuation was out by £25k, we could find ourselves in the same situation with other Mortgage Providers. As it's a lot to get wrong, so we suggested we'd check first with Santander to see if there is anything that could be done, before taking on another provider. (never mind the fact that we might be getting a worse mortgage offer!)
Santander provided the feedback from the surveyors report, which indicated that it was down valued because of two issues.
1. No like for like comparable sale prices in the area
2. Closeness to the main road could affect value now and in the future.
Santander gave two options to the Developer.
a) Provide them with proof of comparables.
b) The developer pays for a 2nd valuation, whereby they get to walk round with the surveyor and explain their pricing structure.
The developer spoke to the Estate Agents marketing the properties and who provided their original valuation, and the pair tried option a), providing Santander with multiple examples of other properties sold in the area or currently being marketed. All were rejected as being no similar enough to be a good comparsion.
After a week the developer decided to pay for a 2nd valuation.
The 2nd valuation came back yesterday and guess what!
It's £425k!
We were shocked at the first valuation, but are really shocked at the 2nd.
We expected him to get either the same valuation or more likely a small increase to say £410-£415k.
I mean really, how can two professional surveyors be out by £25k!!!
Anyway, we then decide to call the developer to check what price we were submitting to Help2Buy, because there was still an offer made of £415k that we gladly accepted.
The conversation went like this:
"So obviously you've been made aware of the 2nd valuation, however, you had offered us a price of £415k, so before we proceed can we just confirm that this is still the agreed sale price?"
The developer "Erm no, that was when we were trying to help you out. It's now been valued at £425k, so that's the price we are sticking at"
I advised we'd need some time to digest this and would come back to him before this week is out.
So what should I be doing at this point?
Is it worth us getting an independent valuation, in the hope that should we get a lower figure back, we can justify a negotiation on the price.
Is it also worth becoming a member of the HomeOwners Alliance? Would they be able to help in this situation?
We are in the process of buying a new build property using Help to Buy.
We agreed on a sale price of £425k and have already paid our deposit and been accepted onto the Help 2 Buy scheme.
Our mortgage provider is Santander and in July they sent out their surveyors (L&G) out to value the house. They valued it at £400k - £25k less than the agreed price.
Obviously we were shocked, having never bought a new build before, we took it on face value that the agreed price was a fair market price.
So we checked with our Mortgage Broker how we should proceed and found out that H2B stipulate, that they will only provide funding if the agreed sale price matches or is below the mortgage providers independent valuation.
So we went back to the developer and advised him of our predicament.
Two days later he emailed us to advise that he would drop the price to £415k (£10k less),
we advised while we appreciate the reduction it's still not enough based on the H2B scheme rules. He asked us to go with another mortgage supplier as "it's only one person opinion"
We advise ok, but that it would take a lot of time and as the first valuation was out by £25k, we could find ourselves in the same situation with other Mortgage Providers. As it's a lot to get wrong, so we suggested we'd check first with Santander to see if there is anything that could be done, before taking on another provider. (never mind the fact that we might be getting a worse mortgage offer!)
Santander provided the feedback from the surveyors report, which indicated that it was down valued because of two issues.
1. No like for like comparable sale prices in the area
2. Closeness to the main road could affect value now and in the future.
Santander gave two options to the Developer.
a) Provide them with proof of comparables.
b) The developer pays for a 2nd valuation, whereby they get to walk round with the surveyor and explain their pricing structure.
The developer spoke to the Estate Agents marketing the properties and who provided their original valuation, and the pair tried option a), providing Santander with multiple examples of other properties sold in the area or currently being marketed. All were rejected as being no similar enough to be a good comparsion.
After a week the developer decided to pay for a 2nd valuation.
The 2nd valuation came back yesterday and guess what!
It's £425k!
We were shocked at the first valuation, but are really shocked at the 2nd.
We expected him to get either the same valuation or more likely a small increase to say £410-£415k.
I mean really, how can two professional surveyors be out by £25k!!!
Anyway, we then decide to call the developer to check what price we were submitting to Help2Buy, because there was still an offer made of £415k that we gladly accepted.
The conversation went like this:
"So obviously you've been made aware of the 2nd valuation, however, you had offered us a price of £415k, so before we proceed can we just confirm that this is still the agreed sale price?"
The developer "Erm no, that was when we were trying to help you out. It's now been valued at £425k, so that's the price we are sticking at"
I advised we'd need some time to digest this and would come back to him before this week is out.
So what should I be doing at this point?
Is it worth us getting an independent valuation, in the hope that should we get a lower figure back, we can justify a negotiation on the price.
Is it also worth becoming a member of the HomeOwners Alliance? Would they be able to help in this situation?
What would you do? 12 votes
Abandon the purchase
66%
8 votes
Give developer an ultimatum £415k or none.
33%
4 votes
Pay for own valuation and try and negotiate
0%
0 votes
0
Comments
-
Do you have a solicitor involved at all in this?
What have Santander said?
Did you get the 415k price in writing - you say in email - were there any conditions in there?
It's a difficult situation. Not sure what to suggest but I can see how it may happen with new builds as the prices tend to go up as the development gets further along!
I suppose your action will come down to how set you are on THIS property, and also a bit of how desperate the developer is to sell it...0 -
LOL, walk away. The developers are obviously scammers.They arranged a second valuation which just magically happened to be at the original purchase price. The valuation isn't worth the paper it is written on. Don't overpay by £25,000 - think how much you could buy with this money instead of handing it over to the developer and losing it straight away (as your home value will still be just £400k
Walk awaypoppy100 -
You got what you wanted. You were prepared to pay £425k.
You asked the developer to pay for another valuation, which it did and you now have the valuation you wanted to allow your purchase to continue.
Developers have constant communication with surveyors both before and during the build process and a downvaluation usually only occurs when an out of area surveyor comes out during busy/holiday periods. Another valuation at the agreed price by the same firm suggest this was the case here.
The developer can also produce comparables, recently completed sales of similar property on the site to justify the higher value to the later surveyor, of required.
Either pull out, or carry on but don't now expect to get money off having given the developer the upper hand.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
I think you need to add 'suck it up' to your poll.YNWA
Target: Mortgage free by 58.0 -
I'd try to find some middle ground to be fair. You were willing to pay 425, they said they'd be willing to drop to 415 to help you out with the valuation, that has now been resolved another way.
I'd be trying something down the road of 'I appreciate your help in this matter, after discussing it, we'd still be willing to pay the full asking price of 425, but in light of the 415 offer being put forward and the problems we have had regarding the valuation, would like XXX in incentives to be included in the price of 425'.
Incentives won't cost them anywhere near the price they charge for them on paper, so they should be more open to negotiating on them, only problem is that they would have to be reported to the mortgage provider, which in turn might trigger another valuation.0 -
Santander gave two options to the Developer.
a) Provide them with proof of comparables.
b) The developer pays for a 2nd valuation, whereby they get to walk round with the surveyor and explain their pricing structure.
Interesting thread. If option b) happens/were to happen, is the surveyor chosen by the mortgage provider or the developer? If the latter, I'm guessing the surveyor has to legally be unbiased but surely there's always the possibility that they are biased? Especially if they have a regular business relationship e.g. receive payments for referrals with the developer?0
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