Under valuation of our house - not sure what to do!?

wannamovehouse

Hi there,

We had our house valued by 4 estate agents - the valuations ranged from £120k to £127k.

We put it on the market ourselves at £124,950, to avoid estate agent fees and lo and behold the first people who looked at it put in a full asking price offer.

They're extremely keen and are first time buyers who have had their mortgage approved 10% deposit etc etc.

They had their initial mortgage valuation survey done. The guy was in the house 10minutes MAXIMUM and left. The report came back and said it was worth £110k with £1k repairs.

I was shocked and not sure what to do. The buyers aren't trying to knock the price down, their trying to prove it is worth £125k and so we are sending them the estate agents valuations and also the valuation from when we bought (£115k 3 years ago).

They really want the house and this hasn't deterred them. I'm worried they're not going to be able to get the mortgage and where does that leave us as presumably most banks / surveyors would be the same.

Any advice on what we can do would be much appreciated and quickly!!!

carolt

The valuation at 110K sounds about right, if you bought 3 years ago for 115K.

We're now back at 2004-6 prices, depending which survey you use.

Unless you live in very unusual part of the country, prices certainly haven't risen c 10% in the last 3 years!

If the buyers want to buy at that price, it'll be their headache to find the missing cash. If they don't want to, you'll need to reduce your price.

payless

valuer will have looked at various factors including indexation ...

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the following is taken from Halifax index and of course makes certian assumptions that may not be the case with your property

An average house, in the West Midlands region valued at £115000 in 2006 Q2 would be worth £101826 in 2009 Q1.

A change of -11.5 percent.

wannamovehouse

I should have said that we have spent a lot of money on the house including creating off road parking, redecorating the whole house, a new kitchen and some other electrical work etc.

We only went off what the estate agents say. Others in the road which are a lot smaller than ours have gone for £120k which we could perhaps cope with but £110k?!

Cissi

I'm sorry to hear that you're in this predicament - it does seem harsh, when you managed to find a buyer prepared to pay full asking price. But reality is harsh, and the truth is that unless they're cash buyers, they don't get to decide the value of the house they're buying, their mortgage provider does. I'm afraid that by sending in the valuation from 3 years ago you may just have put the last nail in the coffin. Prices have fallen quite substantially since then, so you're unlikely to find a valuer who will agree that it's worth more today.

As for the EA valuations, they consistently seem to overvalue properties in order to get the deal. Don't forget that most deals at the moment are closing at around 12% below asking price, so the EA was probably expecting offers around that level - coincidentally exactly £110k. Unfortunately it sounds as if the valuation is pretty much spot on. Sorry

Cissi

I obviously took too long to type my reply - hadn't seen the others, snap!

If you've made substantial improvements to the house then you may have a case (although I doubt they'll agree to adding as much as £15k). Then this is what you should base your arguments on, not the previous valuation. I've no idea what your chances are though.

carolt

Also, remember that improvements rarely add as much value to the property as they cost - that was masked in a rising market, as prices rose anyway. In a falling market, the simple fact is that your taste in interior decor, kitchens etc, may not be universal.

silvercar

a) valuers are being cautious

b) the fact that it is a private sale will make a valuer even more careful.

Good luck with showing the comparables. What is the £1000 work that needs doing? Could you offer to do the work?

I can't comment on the exact fall in prices as I don'tknow what part of the country you are in.

Julfulbub

Wannamove, I'm in exactly the same situation as you. We agreed selling price at £143500 and surveyor came in said no problems here, this is defintely top end of the market and valued us at £125000. We paid £128000 for in 5 years ago when it was basically a shell. We have gone through the whole house, new kitchen, bathroom, external doors, new floors, period features, replastered virtually the whole house and block paved the front.

Our buyer is going to contest the valuation and is considering moving to another lender if she has no joy. She has viewed a volume of properties and feels ours is a very fair price to what she has seen out there. No guarantees that moving lender will help at the end of the day though, the chain may still collapse. Its so frustrating but unfortunately out of our control. Very frustrating for buyers involved too.

I looked at nethouse prices and checked out what similar houses in our postcode area had sole for over last 6 months. The figure came back at £147000. Our EA said valuers use a tool like the Nationwide house price index and just go by what it says the price should be over comparative periods, this index does not take into account condition of the house or improvements carried out. This is frustrating if like me your house is over 100 years old as you would imagine this to be very relevant.

The house next door to us sole in Jan 2008 for £147000 and the surveyor who came to us probably used this as a benchmark when valuing. However that house was rental accomodation before the sale and very grotty with no double glazing or central heating - this isn't taken into account in the comparison though.

Fire_Fox

carolt wrote: »

Also, remember that improvements rarely add as much value to the property as they cost - that was masked in a rising market, as prices rose anyway. In a falling market, the simple fact is that your taste in interior decor, kitchens etc, may not be universal.

What Carolt said.: I wouldn't want double glazed windows on a Victorian property, unless custom-made wooden copies. Many improvements make a house easier to sell, they don't necessarily make it more valuable.

ciano125

I dont mean to sound harsh but it doesnt matter what you think its worth, what your buyer thinks its worth, or what the estate agent thinks its worth. It only matters what the lender thinks its worth.

Lets say your buyer decides to go with another lender to try and get round it. It will show up on their credit history that they had a full search done by (lets say) The Halifax. This will make the new lender think "Why didnt they take out that loan? Were they declined, in which case we might decline them as well, or was it something else??" They aren't stupid (actually that's debateable) but I think its unlikely this would work.

The bottom line is, if they have to repo the house, they want to make sure they can get back the money that they've lent on it.