Buying a New Build, Valuation Less than Agreed Price!

franklee

CMOI1979 wrote: »

I will be on the phone to the solicitors on Monday, i work right near their office to so can easily go in there

Is that the solicitor from the legal team that are the people you had to use through the builder to get your deal? If so then perhaps what you really need is independent advice

I do think you've got some leverage otherwise you can just tell them you are going bankrupt and they won't get a sale. How much off that gets you I've no idea. If there is a loophole as you were coerced into using their team again I've no idea but worth asking an idependent solicitor?

Poppy9

I'm confused. You exchanged contracts in February, with a moving in date of February but you haven't completed. Was the moving in date February 2009 or is the builder just late completing the flats? If so what was in the contract about this?

I thought you couldn't exchange without a written mortgage offer in place, the offer being based on the valuation survey etc?

If you had a written mortgage offer at the time of exchange are they not liable to fulfil this offer?

CMOI1979

Poppy9 wrote: »

I'm confused. You exchanged contracts in February, with a moving in date of February but you haven't completed. Was the moving in date February 2009 or is the builder just late completing the flats? If so what was in the contract about this?

I thought you couldn't exchange without a written mortgage offer in place, the offer being based on the valuation survey etc?

If you had a written mortgage offer at the time of exchange are they not liable to fulfil this offer?

Apologies I didn't make everything entirely clear.

We were offered a First Time Buyers Deal.

They match our 5% deposit, pay our stamp duty and legal fees, however we had to use their broker and legal team.

We got a formal mortgage offer from Birmingham Midshires in February which was valid for 6 months.

We aren't due to complete due to them using our property as a show flat. For this they have carpeted the place, put in all light fittings and curtains which as part of the deal we have been allowed to keep.

So we exchanged contracts and the MA said that it was not a problem that we'd have to renew the mortgage offer. He seemed very trustworthey and up front, he was not your usual flash bmw driving wideboy if you know what I mean. Looking back this was stupid to listen to this advice without getting an independant viewpoint.

Anyway in May BM pulled the product in May (sub prime product) saying we'd need a 25% deposit.

Anyway our MA found us a much better deal with Halifax who have a deal with the developer. Anyway the rate was 5.99 which is incredible considering this happened 3 weeks ago.

Anyway to cut a long story short the original valuation came back between 220-250 and today we received Halifax's valuation (done by the same surveyor and the exact same person) which came in at 170-180k. A difference of between 50-70k.

Anyway I raised the issue of a lower valuation with the developer 3 weeks ago and they didn't dismiss negotiations.

I spoke to the sales guy again today (head office and aftersales unavailable at weekends) and he told me not to worry and that they have to be lenient in these times and usually something is done with regards to price.

Not sure what will happen, obviously worried as to the outcome but !!!!ed off I got caught up in the excitement of owning my first place that I didn;t seek independant advice.

How can the value of something change so much in such a small space of time?

Poppy9

You need to clarify if the developer is still paying 5% of the agreed price or whether it will be 5 % of the hopefully reduced price.

Your current position is

£220k purchase price,

Your 5% dep £11k
Dev. 5% dep. £11k

Balance to finance £198k.

If you can get them to drop price by 10% it you might get your mortgage.

Purchase price £200k

Your dep. £10k
Dev dep. £10k


balance for mortgage £180k.

If you can get this discount from the developer, and really he doesn't need to give you a discount as it's risk buying off plan, you then need to talk directly to the building society making you the offer. Take along more than the min. proof of earnings, details of your employer, job stabilty, promotion prospects etc. You might won't get a 5.9% mortgage deal but you might get your money.

Meanwhile work has hard as possible to increase your deposit and explore taking in a lodger to help pay the mortgage (if you have room)

If you can't negoiate a discount then you will need to explore completing in July based on your 6 month mortgage offer from BM which is still valid to July. Read the small print on their mortgage offer to see what it says about if you've committed to buy based on their offer.

Premier_2

CMOI1979 wrote: »

...How can the value of something change so much in such a small space of time?

The true value of any property is only what someone is prepared to pay for it.

Why were you prepared to pay so much more? You say you were caught in the excitement, but that was the price you agreed to and your solicitor should have explained exactly what you were agreeing to - although only you could decide on it's value to you.

Whatever you do, don't go to a time share presentation :eek:

CMOI1979

Premier wrote: »

The true value of any property is only what someone is prepared to pay for it.

Why were you prepared to pay so much more? You say you were caught in the excitement, but that was the price you agreed to and your solicitor should have explained exactly what you were agreeing to - although only you could decide on it's value to you.

Whatever you do, don't go to a time share presentation :eek:

Instead of lecturing me with sanctimonious crap go post on another forum. The fact is ours is in the first phase of the development, the flats were selling quickly at the time and the deal gave us a helping hand onto the ladder. Now as the credit crunch really bites they can;t sell the similar plots in other phases of the development so prices have obviously come down, I am just shocked as to the extent to which this can change. And I will not be the only one to be in this situation.

I am guessing you're an estate agent or something. Your patronising attitude stinks of the Mini Cooper driving wideboys who infest this city although this crunch seems to have thinned their ilk.

Thanks to those who have given me some genuine advice, I've taken it on board.

Premier_2

CMOI1979 wrote: »

Instead of lecturing me with sanctimonious crap go post on another forum. The fact is ours is in the first phase of the development, the flats were selling quickly at the time and the deal gave us a helping hand onto the ladder. Now as the credit crunch really bites they can;t sell the similar plots in other phases of the development so prices have obviously come down, I am just shocked as to the extent to which this can change. And I will not be the only one to be in this situation.

I am guessing you're an estate agent or something. Your patronising attitude stinks of the Mini Cooper driving wideboys who infest this city although this crunch seems to have thinned their ilk.

Thanks to those who have given me some genuine advice, I've taken it on board.

Well they say the truth hurts...

No I'm not an Estate Agent - I think I'm in a position to advise you as I've been in exactly the same position as you've been and learnt the hard way. I offer my advice not just to you but to the forum as a whole.

If you don't wish to see my posts, simply add my user id to your igore list

And remember, please be nice to all moneysavers is the motto here on MSE.

A_Nice_Englishman

If I've read this correctly, the OP exchanged contracts (i.e. irrevocably agreed to buy the property) without an unconditional mortgage offer in place. This seems a rather foolhardy thing to do and surely his solicitor would have advised against it?

However if the original mortgage offer is still valid then he can proceed with that and purchase the property, albeit not on such good mortgage terms as the Halifax might have offered and at a higher price than is available now.

muggz

CMOI1979 wrote: »

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

Halifax have just done the same thing to me, did Colleys do the valuation? I swear it looks like this is deliberate just to take the up front mortgage fee

CMOI1979

muggz wrote: »

Halifax have just done the same thing to me, did Colleys do the valuation? I swear it looks like this is deliberate just to take the up front mortgage fee

Yes it was Colleys.

Are you buying a new build too?

Something is very suspect when we're talking about a change of 30% in less than 6 month. I personally think they're being ultra conservative given the falls in value their group has predicted over the next year.

Do you what you're going to do? I guess you're probably as worried as I am.