Halifax valuation makes property 20k less than my asking price offer

PeteW

muggz wrote: »

Thats happened to me before on my first purchase. What kind of property is it?

3-bed semi-detached house.

gfplux

muggz wrote: »

ive heard of the credit crunch

Its a developer so the property has no mortgage

Hello muggz,
What ever makes you think that because the owner is a developer he does not have borrowings.
I imagine he is like most business's at the moment. he will owe some one some money. he will be well aware (in fact more than you) how good or bad (BAD) the market is. He wants to sell.
You have just been handed a piece of paper that cost you £400 that can save you £20000.

Premier_2

PeteW wrote: »

I'm a bit dissapointed with my valuation to be honest. They just put down the exact price that I offered, which being a slightly obscure one (£246,700) seems to suggeest they are just being lazy and can't be bothered to come up with a number. Is this standard practice?

It certainly used to be. The valuer has his neck on the line every time he values a property.

Even in a sharply rising market, the valuer could be sued for losses because of overvaluing a property that a bank then lends money on. The valuer would mitigate that risk by stating the actual agreed purchase price. (It's great when a number of identical properties is sold by a developer all for varying prices because of the differing situations of the buyers involved - the valuer also values them all at the same differing asking prices for identical properties)

Basically, as long as the valuer is prepared to accept the value of the property equals or exceeds the asking price, he will always cap it at the agreed asking price as the buyer won't have any reason to question it either
The valuation is only used by the lender for lending purposes and will always take the lower of the official valuation or actual agreed sale price for that calculation.

On the other hand, a valuer who always undervalues the property compared to the agreed sale price would cause the lender a lot of trouble by so many deals falling through - the lender wants to lend you the money, it's how they make money. No lender wants to reject a deal if they can help it - but they need to sure the investment is a wise one. A valuer will soon lose his work with a lender who never lent any money because of his low valuations.

So in conclusion, the valuer agrees that the property you are buying is at least equal to what you have negotiated to pay

guppy

muggz wrote: »

Should i call the valuer? his details are on the report. I dont know what the best course of action is.

Further to my earlier post, I don't see any harm in calling the valuer. Mistakes are sometimes made.

If he says the valuation is correct though, I wouldn't argue. While the bank is the client, you are entitled to rely on the survey, and the surveyor does have a duty of care to you too.

muggz

gfplux wrote: »

Hello muggz,
What ever makes you think that because the owner is a developer he does not have borrowings.
I imagine he is like most business's at the moment. he will owe some one some money. he will be well aware (in fact more than you) how good or bad (BAD) the market is. He wants to sell.
You have just been handed a piece of paper that cost you £400 that can save you £20000.

Thats a good point. The estate agent said there was no mortgage on the property but i think around 50-60k has been spent doing it (based on a similiar quote i got for the same work on a property a few roads away). Never thought abouts loans etc as ive been told this is a husband and wife partnership. When i put my original offer in of 5k less they just refused and said asking price or we'll rent it, cheers bye.

I left it a few days, viewed a few more properties of the same type and price and decided to offer asking price.

bluejake

muggz wrote: »

Thats a good point. The estate agent said there was no mortgage on the property but i think around 50-60k has been spent doing it (based on a similiar quote i got for the same work on a property a few roads away). Never thought abouts loans etc as ive been told this is a husband and wife partnership. When i put my original offer in of 5k less they just refused and said asking price or we'll rent it, cheers bye.

I left it a few days, viewed a few more properties of the same type and price and decided to offer asking price.

It sounds to me like they really need asking price. I mean really need asking price. Amateur property developing is easy when you have rapid house price inflation. Not so good when prices are falling - maybe your seller is now going to find this out.

By the way. To pay 20k over the value of this property you have got be !!!!!!. !!!!!!, really. You're 20k down on day one and what do you think is going to happen in the next year or two.

Don't be a sucker.

muggz

Quick question about showing the estate agent the valuation, what could be the problems with doing this?

If they ask for proof, it could help me get money off the price if i show it?

In the terms it doesnt mention not showing it.

Microstar_2

muggz wrote: »

Quick question about showing the estate agent the valuation, what could be the problems with doing this?

If they ask for proof, it could help me get money off the price if i show it?

In the terms it doesnt mention not showing it.

I wouldn't not show it and remember that its actually for the benefit of your lender, not you. If you are desperate to show it then speak with your lender first!

I suspect your 'developer' has mistimed things and they are financially committed at the asking price. This does not mean it is what the property is 'worth'.
If they refuse to sell and want to rent it out then consider going into it as their tenant. Then buy it off them in a year's time - you'll probably save more than £20k, even allowing for rent paid.

muggz

Microstar wrote: »

I wouldn't not show it and remember that its actually for the benefit of your lender, not you. If you are desperate to show it then speak with your lender first!

I suspect your 'developer' has mistimed things and they are financially committed at the asking price. This does not mean it is what the property is 'worth'.
If they refuse to sell and want to rent it out then consider going into it as their tenant. Then buy it off them in a year's time - you'll probably save more than £20k, even allowing for rent paid.

Thats what I was thinking, then i get first refusal.

guppy

muggz wrote: »

Quick question about showing the estate agent the valuation, what could be the problems with doing this?

If they ask for proof, it could help me get money off the price if i show it?

In the terms it doesnt mention not showing it.

I don't see any problems with showing it to anyone. But only the client (the bank) and you, have any comeback against the valuer if they rely on it. That isn't really relevant here though