Flat valued at a lower price than offer price!

NonothingFTB

Hi,

First post but have been a serial lurker on these boards for ages! I'm in the process of buying a flat, put in an offer and this was accepted. However, on valuation from the mortgage providers the flat was deemed to be worth less than the offer price. Now being a novice I have no idea as to what the implications of this are? So any advice would be gratefully received!

Swipe

To put it plainly, you are being ripped off. I suggest you revise your offer to an amount closer to the mortgage provider's valuation.

NonothingFTB

Thanks for the response. I was shocked to find that the estate agents had valued the flat significantly higher that it is actually worth!

cattie

You may not be being ripped off. There are some surveyors that unfortunately do under value & if you do a search on this board you will find a recent thread on this subject. I don't know how to do links otherwise I'd put one here for the post.

My last property was undervalued by the surveyor acting on behalf of my buyer's lender. Even my buyer was greatly shocked as she knew full well the property was well worth the agreed price. She offered to pay 50% of the shortfall from this valuation, which I agreed to as I didn't want to cause a delay in my sale & risk losing the new house I was buying.The property I was selling had been valued by 3 estate agents, so I was in no doubt of it's true market value & the fact that it sold within 2 weeks was a good indication of it's saleability & price.

That particular property has increased in value by around £55000-£60000 over 3 years, whereas the property I'm in now has only increased by about £30000 over the same period. Overvalued? I don't think so.

meanmachine_2

NonothingFTB wrote:

Hi,

First post but have been a serial lurker on these boards for ages! I'm in the process of buying a flat, put in an offer and this was accepted. However, on valuation from the mortgage providers the flat was deemed to be worth less than the offer price. Now being a novice I have no idea as to what the implications of this are? So any advice would be gratefully received!

I'd be celebrating. You use this to revise your offer.

Surveyors have been more conservative of late, what with annual inflation no longer guaranteed. But what are the reasons given for the lower valuation?

Happy_saver_4

If the down value is not due to constructional problems.The amount of the mortgage you require can effect the surveyors valuation.

For instance:- if you require a very high percentage mortgage the lender's surveyor has to be more conservative with his valuation. If the lender has to reposses, often in those circumstances the property has been badly treated, the forced sale value may well be less than the properties current value in good condition.

Although indemnity insurance is taken by the BS (paid for by the borrower) to cover these default circumstances, they do not like to use it as it scores a bad mark against them.

But also bear in mind that all property valuations are a 'matter of opinion'. If the vendor is not prepared to budge on the selling price it may be you are paying the current market value.

greenwich

It's very common for valuations to be 5-10% below the sale price. Surveyors want to be cautious because if they overvalue and things go wrong they could get sued by the bank. If they undervalue, they have nothing to lose. They will be more inclined to be cautious if they see the market not going up.

The other thing to remember is that valuation is an art not a science. There is no 'correct' valuation, only a range of reasonable valuations.

theGrinch

the value of a property is subjective and only stacks up at what someone is willing to pay for it.

can you let us know what the difference was? what kind of survey was it? did it highlight work required?

jezza1O1

I guess the key is why did they feel it was worth less - if its because he uncovered an unnoticed issue then I would suggest this would affect how much you want to pay - if not then nothing has really changed. Ultimately you only offered what you thought it was worth and were prepared to pay, so with no new information then that surely hasnt changed. As said above the whole thing is totally subjective - you could get 10 different valuations and get a range of results back....

MPwannasavemoney

Swipe wrote:

To put it plainly, you are being ripped off. I suggest you revise your offer to an amount closer to the mortgage provider's valuation.

Ripped off is not necessarily the right term. The sale price has nothing to do with anyone valuation as much as someone's own opinion as what it may sell for. An estate agent may come and say the price is £x and that doesn't stop the seller instructing the agent to put it on the market at a higher price.

And the meaning of all this is different in the varying market conditions over the past 2 years. In a rising market an reasonably small "undervaluation" for no logical reason (ie no structural problems etc) may be something you have to live with if you want the property as someone else may buy the property at the price you have already agreed and their surveyor may not necessarily "undervalue" it. In a falling or flat market the power should be with you the buyer to negotiate a lower price as after all no-one else is queueing up to buy the property.

As an example I have seen a neigbours house a year ago on the market initially at £560,000 and saw the price drop over the following months when it finally sold in July this year for £412,000. I don't think house prices have fallen that much - so how did the seller think they could command such a high price? It could be a greedy agent "over-valuing" the house - in which case who really got ripped off considering it didn't sell for such a long time?

lady123_2

as said above, the survey will usualy come back at a lower value, it happened to me when i bought my first flat, asking price was 200k but was valued at 180k, think the surveyer was just protecting the banks interest incase of default and resale, i still bought it as my seller wouldn't budge, and sold it no problem so if you think it's worth it then pay it, if you don't walk away.