Why are so many sales falling through?

superfran_uk

We have offered 187 on a place listed at 200k. Our first offer was 180 and at the time no other people had gone in above stamp duty, but the vendors (a company) refused to budge or negotiate despite our best efforts. We mentioned to te EA that we were a bit worried about what the valuation will comes back as, he reassured us that it was too close to call.

To us personally, it is worth the money - it ticks all the boxes and is within our budget - but if it comes back lower I can't see the vendors budging even an ounce based on their previous behaviour and we certainly wouldn't be able to make up the difference...

Reading this has got m ever so worried. Is this common?? Finger crossed it will be fine!

poppysarah

Would you pay over a valuation?

treacle32_2

I don't understand the 'valuation' done by the banks (sorry if im being dim) Are they taking the peak prices then taking around 20% of that to form their valuation??? or are they going lower so they don't have to lend more?? I have never had a problem with any of my valuations, the figure only ever quoted has been the rebuild cost which is substantially lower.
Surely a house is worth what someone is prepared to pay for it?
If houses were worth what they cost to build including the land, and of course the quality of fixtures and fittings, they we would never have got in this mess, however i don't recall surveyors quoting lower valuations at the peak of house prices... does anyone??

FoxtonsRIP

treacle32 wrote: »

Surely a house is worth what someone is prepared to pay for it?

Only if it's your own money. If it's borrowed money then it's a different kettle of fish altogether. What happens if you don't pay it back; the bank ends up losing money especially as house prices fall further.

Sammy85_2

poppysarah wrote: »

Would you pay over a valuation?

That depends on what the house is worth to you. Afterall, the valuation is only the opinion of one person. Its no more or less valid than the opinion of any other person, the only difference is that it carrys weight with the banks.

Now if the banks based their valuations on an average of say, 3 then i might be more inclined to believe the figure produced, but with my recent experience i think some surveyors are way off the mark and are more concerned with protecting themselves than giving a true valuation.

treacle32_2

FoxtonsRIP wrote: »

Only if it's your own money. If it's borrowed money then it's a different kettle of fish altogether. What happens if you don't pay it back; the bank ends up losing money especially as house prices fall further.

I agree, but they were happy to lend ridiculous amounts of money to people who were high risk not so long ago, at least now people are more thouroughly vetted and require a deposit. Its unfair to a buyer and seller if a valuation is lower than the price agreed in my opinion,and IT IS only their OPINION after all!! it causes worry on both sides, particularly if you have already lowered your price according to the % drop in your area.

poppysarah

treacle32 wrote: »

I agree, but they were happy to lend ridiculous amounts of money to people who were high risk not so long ago,.

And how wrong they were.

Just because they did something in the past doesn't mean it's a blueprint for the future or that it was even a good idea at the time.

FoxtonsRIP

treacle32 wrote: »

I agree, but they were happy to lend ridiculous amounts of money to people who were high risk not so long ago, at least now people are more thouroughly vetted and require a deposit. Its unfair to a buyer and seller if a valuation is lower than the price agreed in my opinion,and IT IS only their OPINION after all!! it causes worry on both sides, particularly if you have already lowered your price according to the % drop in your area.

It's more than just their opinion, it's their business decision. You can't expect a bank to lend more than an asset is worth. They may have done in the past but those days are thankfully over.

zappahey

treacle32 wrote: »

I agree, but they were happy to lend ridiculous amounts of money to people who were high risk not so long ago,

That's because they saw the gains from HPI as a hedge against default.

The risk of losses from default would have been covered by the rise in house prices over a fairly short term so it looked like a one way bet.

That's no longer the case.

superfran_uk

poppysarah wrote: »

Would you pay over a valuation?

Couldn't afford to. If the mortgage company will only lend £x, then that's all we can pay.