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Buying a New Build, Valuation Less than Agreed Price!
CMOI1979
Posts: 10 Forumite
Hello there
I am in need of some advice.
Basically my Girlfriend and I exchanged contracts on a new build flat in February of this year with a view to moving in in February.
We agreed to buy the flat at £220000 and got an agreement in principle on a mortgage.
At the end of May the Mortgage provider pulled the product (sub prime) and we had to search for a another mortgage. To cut a long story short my financial situation and credit rating has improved dramatically in that time as I have cleared much of my personal sebt and as such we're now prime borrowers and have got a much healthier rate.
Anyway the new mortgage provider is Halifax and the product we are going for is a deal they have with the builder.
Anyway we got the valuation today and it has come back at 180K. 40K less than the price we agreed in February and 70k less than the maximum of the previous valuation.
Both valuations were done by the same firm and in fact the same person. This means we're not going to get a mortgage on 220k and it would be suicide even if we could.
No considering we have legally exchanged contracts what is our position on this?
We would still like to buy the place but we're obviously not going to at 220k. What is our legal standing and what are the chances of them knocking off 40k?
It should be noted that the mortgage broker, mortgage provider, suveyors and legal team are all the people we had to use through them to get our deal which involved them matching our 5% deposit and paying various fees for us.
Your advice will be greatly welcome.
Chris
I am in need of some advice.
Basically my Girlfriend and I exchanged contracts on a new build flat in February of this year with a view to moving in in February.
We agreed to buy the flat at £220000 and got an agreement in principle on a mortgage.
At the end of May the Mortgage provider pulled the product (sub prime) and we had to search for a another mortgage. To cut a long story short my financial situation and credit rating has improved dramatically in that time as I have cleared much of my personal sebt and as such we're now prime borrowers and have got a much healthier rate.
Anyway the new mortgage provider is Halifax and the product we are going for is a deal they have with the builder.
Anyway we got the valuation today and it has come back at 180K. 40K less than the price we agreed in February and 70k less than the maximum of the previous valuation.
Both valuations were done by the same firm and in fact the same person. This means we're not going to get a mortgage on 220k and it would be suicide even if we could.
No considering we have legally exchanged contracts what is our position on this?
We would still like to buy the place but we're obviously not going to at 220k. What is our legal standing and what are the chances of them knocking off 40k?
It should be noted that the mortgage broker, mortgage provider, suveyors and legal team are all the people we had to use through them to get our deal which involved them matching our 5% deposit and paying various fees for us.
Your advice will be greatly welcome.
Chris
0
Comments
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...No considering we have legally exchanged contracts what is our position on this?...
If the valuation had come in at £40k more than you agreed to pay, would you have been prepared to pay the extra?
When you exchanged contracts, it was for an agreed price; that price cannot be varied.
If you fail to complete, you'll see the penalties involved detailed in the contract. It always means you will lose the 10% deposit, even if you haven't actually paid all of that yet, but usually means you may be subject to damages.
If the property is now valued at £40k less than you agreed, guess what the seller would likely achieve if they had to find a seller today? That loss would be the beginning of their damages, but could include extra costs such as that of re-marketing, legals, etc."Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 20100 -
If the valuation had come in at £40k more than you agreed to pay, would you have been prepared to pay the extra?
When you exchanged contracts, it was for an agreed price; that price cannot be varied.
If you fail to complete, you'll see the penalties involved detailed in the contract. It always means you will lose the 10% deposit, even if you haven't actually paid all of that yet, but usually means you may be subject to damages.
If the property is now valued at £40k less than you agreed, guess what the seller would likely achieve if they had to find a seller today? That loss would be the beginning of their damages, but could include extra costs such as that of re-marketing, legals, etc.
I have spoken to them beforfe the valuation was done asking them what would happen in the event that it comes in under the agreed price.
They said exactly the same as you regarding the price going up but the fact of the matter is it hasn't and in this situation neither of us wins.
It is neither mine nor the developers fault so surely we should be able to come to some agreement. Would they not rather sell the property at the price their own people are saying it is worth and get a sale? Their own mortgage company has told us this is the maximum they will lend.
Now the developer is Countryside properties, the sales office said they would have to negotiate when I took my parents to see the place a couple of weeks ago and the aftersales guy whilst shirty when I mentioned the idea said they are not intransigent and we would cross that bridge if it comes to it.
Is there anyone on here who has been in the same or similar situation? What was the outcome?0 -
...It is neither mine nor the developers fault so surely we should be able to come to some agreement. Would they not rather sell the property at the price their own people are saying it is worth and get a sale? Their own mortgage company has told us this is the maximum they will lend...
You both did come to an agreement - it was the contract you both signed.
Why should the seller worry now? All they want is the money promised, and ultimately they will get it. Either you pay and take the property as you agreed to do, or they'll start with the 10% deposit and if that doesn't cover any loss in re-selling the property, they'll charge you that to.
Your best bet is to go through with the contract you agreed to - at least you'll end up with the house at the end."Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 20100 -
You both did come to an agreement - it was the contract you both signed.
Why should the seller worry now? All they want is the money promised, and ultimately they will get it. Either you pay and take the property as you agreed to do, or they'll start with the 10% deposit and if that doesn't cover any loss in re-selling the property, they'll charge you that to.
Your best bet is to go through with the contract you agreed to - at least you'll end up with the house at the end.
The point is we won't have the money to do that.
If the mortgage company won't lend us £220k because they don't feel the property is worth that then we can't magically produce 40k to make up the difference.
And the developer will be worried because they are struggling to sell the properties on the development as it is. If they can't sell it, chasing people for 220k they haven't got is no good. We'd just end up filing for bankruptcy and the courts would be very lenient on us in the terms they give us because none of this is our fault.
No-one wins.0 -
And you took independent professional advice before signing a £220k contract?0
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Trollfever wrote: »And you took independent professional advice before signing a £220k contract?
No and believe me this morning the penny is dropping as to what a fool I have been.
I am a FTB and got caught up in the excitement of getting my first place.
You live and learn.0 -
You need proper legal advice sharpish.
It's not as simple as negotiating a drop in price - you've already contracted to pay the higher price....much enquiry having been made concerning a gentleman, who had quitted a company where Johnson was, and no information being obtained; at last Johnson observed, that 'he did not care to speak ill of any man behind his back, but he believed the gentleman was an attorney'.0 -
neverdespairgirl wrote: »You need proper legal advice sharpish.
It's not as simple as negotiating a drop in price - you've already contracted to pay the higher price.
I will be on the phone to the solicitors on Monday, i work right near their office to so can easily go in there.
I have realised that we've been badly advised.
On another note I have spoken to the guy who sold us the place and advised him of the situation. He has told me not to worry, that they have been hammered by this and the market conditions in the last couple of months and that they usually do something with regards to the price.
I'll be taking the day off on Monday to sort this mess out and in the meantime will read the T&Cs with a fine tooth comb. AGAIN.0 -
How many more of these cases will there have to be before someone gets the press interested?0
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Isn't this the same as all those off plans we have been seeing for years making money or do offplans remain subject to contract until complete? I can't see the press will be interested, apart from delighting in the drama of the green being caught by the crunch.0
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