Valuation surprise

worriedfirsttimebuyer

Today my building society told me that the house we have an offer accepted on for £111,000 has been valued by them at £110,000.
First of all, I am surprised that the valuation price is lower as the original asking price was £118,000.

As I understand it, the BS will now only lend us 95% of 110k instead of 95% of 111k which is quite a bit of difference in terms of the quite tight budget we are on and the deposit we have.

When he accepted, the vendor said he would not be willing to lower the price any further.

We have not read the survey yet but the BS tells me that no urgent repairs are required.

Is it common for valuations to be lower than purchase prices?

What should we do?

a) Ask the vendor to drop the price to 110k even though he originally said he wouldn't? After all, that is what the house is worth...
b) Try to scrape together the extra money for the now higher deposit, making ourselves quite skint!?
c) Any other ideas??

ladywood

We recently had a similar situation (although our valuation came in more than 40K less than the asking price :eek: ) - we were told by our IFA (partner's brother) that BS's are regularly valuing under Estate Agent prices - not sure if it is a policy or if EA prices are inflated. The valuer will take into account market conditions, similar properties in the area (that is what did it for us - he looked at the area but not the fact the property was one of a kind - he did come up but not by far enough - in the end we didn't go ahead - and now are glad we didn't - he was right - it wasn't worth it).

You could ask for a revaluation but may not get very far. We did because we had a letter from the same firm valuing the property a few weeks earlier (for sale) 20K higher than he had (but still 20K less than the asking price). I think they looked at it again to avoid embarrassment.

I would go back to the seller and tell them that according the valuation it is only worth £110K - remind him that anyone needing a mortgage will need a valuation and therefore is likely to have the same outcome (may or may not be the case but worth a try!). I suppose it depends how much he needs the extra money - he may be flexible. If there is anything at all in the survey (may not be urgent repairs but may be things needing attention in the near future) play on those too. Hopefully he will drop the price.

If neither of these work you may be faced with the choice of borrowing extra or losing the house - depends on how much you want it and how much you have already put into it - for example it may actually be nearly as much to pull out and have to pay solicitors, surveys etc for another property.

Good luck - it is very frustrating!

silvercar

If you pull out, having already spent money on a mortgage application, survey etc, your going to lose more than £1,000.

Ask the vendor to drop by £500, show him the report if necessary.

If he won't and you want the house then save and scrape.

Ian_W

Valuations aren't a precise science and it's certainly not uncommon for the BS's surveyer to come in below the agreed price. I'd wait at this stage until you have a copy of the survey, there may be something in it that, whilst not urgent, is a reason for the value to be lower.
Your options are then fairly limited, a) and b) as far as I can see. Go thro' the EA on the first, let them have a copy of the valuation and see if the vendor will move. Don't threaten but you could imply you're stretched to the limit and the extra £950 could be a deal breaker. Sometimes it's possible for help through the chain [assuming there is one], sometimes an EA might put some of their commission on the line to keep a deal on track. Otherwise you have to seriously consider whether this is stretching too far. If it is then lower your sights for other props and walk away.
BTW had you agreed say £115K I wouldn't have been surprised with a valuation above 110 but below 115, some always seem to value low so there is no come-back on them from the lender.

inmypocketnottheirs

At the end of the day you are talking about £1000 on a purchase of £111,000 equal to 0.1%.

If you are prepared to lose the house for the sake of a grand then get your agent to contact the vendor and offer £110,000. If he won't take it then walk away. But as silvercar says you will lose your valuation fee and incur legal fees.

My advice, try and get the price reduced and if they wont budge proceed. If you were prepared to pay £110,000 why not £111,000? You have to live there and only you can decide if it is worth it.

Hope this helps!

davelewis

Hello


I recently sold a house and the first valuation for the buyer said it was £5k overpriced. It went to a second valuation who said - yes - it is worth the full asking price. Estate agent said surveyors are getting very twitchy in the current housing market - and frightened to stick thier neck out to say something is worth x when it may come to repossession - the building society will be holding them on their valuation.

Cheers

dave

worriedfirsttimebuyer

Thank you very much for all your quick and useful posts on this matter.
We love the house, definitely don't want to walk away, have already paid out £600 on survey and solicitors initial fee so don't want to lose that.

Is it worth us having a second valuation done? Who could we have it done by and how much would it cost?

I know it all seems small figures to some people but it is a lot to us - we are first time buyers with only a 3% deposit and there is no chain.

dellamirandola

But it's 0.9% of the asking price, not 0.1%.

suki1964

We had an independent valuation and it cost us £350. Most surveyors work on a sliding scale dependent on the value of the property

inmypocketnottheirs

dellamirandola wrote:

But it's 0.9% of the asking price, not 0.1%.

OK class, just seeing who is concentrating! :rolleyes:

david29dpo

would be interesting what would happen if the surveyors did NOT know the offer price BEFORE they value the house! i find this very odd. is it because they can do even less work? ours had not got a clue and missed a lot of things a child could have found but the valuation was smack on!!! very strange!!