Help - Property undervalued?

wyldbanana

Hi,

My partner and I are currently going through the process of buying our first home. We have found a new-build property and are buying through the Home-Buy direct scheme. We have recently had the mortgage valuation done and it has come back at £25.000 less than the developers asking price. When we placed our reservation fee down we negociated an incentment package which included legal fees and mortgate valuation fees.

We have advised the developer of the valuation survey and they have said that they will need to see a copy of the survey and will get back to us to see if they are able to reduce the property value, but stated that we we lose our incentives.

We are now unsure what to do?

Do we try to retain our incentives? what choice/s does the developer have and would they be able to sell the property at their asking price even though the property is overvalued?

Any help would be appreciated.

Gorgeous_George

Give them a copy of the valuation and await their offer.

Then decide how much you would ideally pay. Between their offer and your preferred price is a grey area. Negotiation (haggling) decides the final price.

GG

rrwfotr

What you worried about, to be honest the survey most probably done you a favor, there is no point getting yourself into negative equity. If the developer says no to the incentive package then tell them ok and walk away, they most probably try it on, but at the end of the day do you really want to buy somewhere overpriced and then not be able to sell it on.

Dinah93

You can't borrow more than the bank as reccomended by the survey is willing to lend, so if the developers don't reduce the price, they won't sell the flat. It's unlikely another valuer would come back with it as being higher, so they'd be daft to do this (doesn't mean they won't though!). You title should read 'help - property overvalued!' and you'd be a lot more accurate. The bank has done you a favour by stopping you paying more for a property than it is currently worth.

plane_boy2000

They have done you a favour - the developer will have to drop the price if they want to sell it to you.

This happened to our friends - house they were buying (new) was 550K, but valuation was 500. Surveyor said it was to close to the stamp duty bracket to justify the extra 50K. After a bit of debate the builder agreed to drop it to 499,995 to keep the sale plus they kept the incentives that they had agreed on.

Its a buyers market so make the most of it.

pizzagirl

The developer has over-valued, the surveyor has valued correctly. This invariably happens with new builds.

PasturesNew

New builds ... not worth the paper they're built with.

The valuer is correct. The builder is optimistically trying to scr3w you for any/every penny they can (it's their business).

Become emotionally detached, let them have a copy of the valuation ... and sit back. Don't appear eager or keen. If they call you, delay calling them back.

If you don't get it, call it a lucky escape.

wyldbanana

Thanks for the great advice, here's an update....

We have passed the valuation onto the developer and they have stated that they will lower the price of the property, but due to this they will not honour our original incentives (which included legal fees....). The incentives they have offered us are a fraction of what was originally agreed and this does not include our legal fees!

This now leaves us in a bit of a predicament, as we would struggle to cover the costs of moving. We had money saved to move but due to the mortgage fees we have had to pay and the developers sudden change of heart regarding our incentives we are not sure where this leaves us?

We are not sure whether to persist in trying to recoup these incentives or to proceed and struggle??

We have been advised by the sales 'negotiator' to contact the CEO of the organisation to ask (beg) for our incentives??

Would it be worth doing this??

Again, any help would be much appreciated.....

lincroft1710

However the developer phrases it, he wants £xxx for his house and he either gets this by you paying previously agreed price and having benefit of incentives, or by you paying new lower price and having less incentives.

Contact CEO, the worst he can do is say no to your request.

NEVER, NEVER struggle, you don't know what is round corner which could make it even harder to keep up payments.

There are other houses out there, so don't be too despondent if you don't get this one.

keith969

wyldbanana wrote: »

We have been advised by the sales 'negotiator' to contact the CEO of the organisation to ask (beg) for our incentives??

Would it be worth doing this??

Again, any help would be much appreciated.....

No. The sales negotiator is perfectly capable of asking their boss if they can give an extra discount. Tell them politely that you want the original incentives and the house at the valuation price, and that they should get back to you if they can offer that, and in the meantime you will be looking at other properties. If they don't want to sell to you at fair market value then walk away.

Poppy9

How much are the incentives worth? The mortgage fee is usually added to the mortgage etc.

You need to total up the value of the incentives against how much you lose if you walk away.