Surveyors & Lendors Deliberately Under Valuing Property

ukcarper

I have to laugh we are constantly told a house is worth what someone is prepared to pay for it but now that doesn’t seem to be the case.

ukcarper

pete80 wrote: »

This undervaluing of house by surveyors on behalf of the lender has happened before in weak markets and the valuers will also give full valuations in a strong housing market.

They are instructed by the lender to do this not because of the LTV rates but to save the lender's skin if there is any chance of the market falling further. This will either force the vendor to drop their price or the buyer to put down a larger deposit. Either way if the house is repossessed, the lender is better protected against a loss. This explanation was given to me by a surveyor friend when we were talking about both the present correction and the last one back in the 90's.

I think your right but shouldn’t they be honest and just insist on a larger deposit

ManAtHome

ukcarper wrote: »

but shouldn’t they be honest and just insist on a larger deposit

I think there's a tiny snag in your cunning plan...

HAMISH_MCTAVISH

pete80 wrote: »

This undervaluing of house by surveyors on behalf of the lender has happened before in weak markets and the valuers will also give full valuations in a strong housing market.

They are instructed by the lender to do this not because of the LTV rates but to save the lender's skin if there is any chance of the market falling further. This will either force the vendor to drop their price or the buyer to put down a larger deposit. Either way if the house is repossessed, the lender is better protected against a loss. This explanation was given to me by a surveyor friend when we were talking about both the present correction and the last one back in the 90's.

Nice explanation.

Unfortunately it in no way addresses the example given in the original article, which was about a valuation for remortgage, not sale.

sleepyj

HAMISH_MCTAVISH wrote: »

Nice explanation.

Unfortunately it in no way addresses the example given in the original article, which was about a valuation for remortgage, not sale.

That's just simply a margin call

Those dang banks :rotfl:

sleepyj

So people were perfectly fine with banks allowing stupid valuations to go through leaving them with a huge amount of negative equity, but when it comes to giving a prudent valuation they are up in arms? Could not make it up.

As for someone getting a re-valuation, that's just ridiculous. As far as the bank is concerned - their money, their rules, if you don't like it go elsewhere. Since when did banks ever do anything else?

HAMISH_MCTAVISH

sleepyj wrote: »

That's just simply a margin call

Those dang banks :rotfl:

:rotfl:

No it's not.

It's just moving people into higher rate and margin mortgage products by pressuring surveyors to put in lower valuations, thus ensuring people don't meet the LTV criteria for the better rate deals.

It's fraudulent, exploitative behaviour.

mewbie_2

Not sure I understand this. The banks caused all the problems by lending too much money? Now they are causing problems by not lending enough? Must be tricky to get it just right.

sleepyj

HAMISH_MCTAVISH wrote: »

:rotfl:

No it's not.

It's just moving people into higher rate and margin mortgage products by pressuring surveyors to put in lower valuations, thus ensuring people don't meet the LTV criteria for the better rate deals.

It's fraudulent, exploitative behaviour.

Hamish, how can it be fraudulent if the bank is under no obligation to offer anyone a better rate deal?

ad9898_3

HAMISH_MCTAVISH wrote: »

It's fraudulent

Well banks, mortgage advisers, surveyors and many homeowners would know all about that wouldn't they after the last 10 years.:D

Just an anecdote, I've always thought the term homeowner to be a slightly spurious term when used in the context of people who have mortgages. They don't own their own home, the bank does, along with the deeds.