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FTB - Valuation Too Low for Lender - Help!

MissCellaneous
MissCellaneous Posts: 57 Forumite
edited 11 August 2009 pm31 5:39PM in Mortgages & endowments
Hi all,

We're in the process of trying to buy our current rental privately. We haggled until we agreed on a price. We had done research via estate agents - knowing that they always overvalue - plus automated valuations and previous sales in the area (though there's not much recent, we thought we were roughly on target). We also know what the house was bought for in 2004. We have a 10% deposit.

Now though, our lender has valued the property just under £7000 less than our offer and they don't want to lend to us on that basis. I've spoken to the seller but she's waiting for us to make the first move.

What are our options though?

Can we get the seller and the lender to meet us in the middle, or will the lender not negotiate at all?

Can we attempt to find a larger deposit, will they lend to us then?

Or do we need to try another lender - but won't they just take us through the same steps and come to the same conclusion, costing us more money for valuations (our last one was 'free' if we complete)?

I'd be really grateful for any advice that you can give, we really want this to be our home. :(
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Comments

  • Why do you want to pay more than a valuer thinks it is worth?

    The seller needs to be realistic and accept the reduced valuation. Amend your offer to reflect it, officially.

    If they decline to sell at that price, that is their prerogative.
  • Why do you want to pay more than a valuer thinks it is worth?

    The seller needs to be realistic and accept the reduced valuation. Amend your offer to reflect it, officially.

    If they decline to sell at that price, that is their prerogative.

    I'd read some articles like this one:

    http://news.bbc.co.uk/1/hi/programmes/moneybox/7983229.stm

    Which suggest that such a valuation done for a lender may in fact be an undervaluation. I suppose though, that if that's what the surveyor says, that's just how it is.

    The seller has said they can't go as low as the valuation, and I've now given them an offer that is only slightly above that, bearing in mind the we'd have to scrape together more deposit, so I'll see what they say tomorrow after having a think about that figure.
  • Also, I discussed this with a relative to get some advice, and they've said that if the lender have stated that they will lend us a certain amount and no more on this property based on that valuation, then if we need to buy it for a slightly higher price, then we can still do so if we increase our deposit for the lender to make up the difference.

    That is right, isn't it? :confused: If it isn't then we're screwed aren't we, unless the seller will sell at the valuation price - there are then no other options?
  • MissMoneypenny
    MissMoneypenny Posts: 5,324 Forumite
    edited 11 August 2009 pm31 10:48PM
    The seller has said they can't go as low as the valuation,

    Sellers always say that, no matter what we are selling:D

    Have a look on www.nethouseprices.com
    or
    www.ourproperty.co.uk

    to see what they paid for the property, to get an idea of how low they really can go.
    It will also show you what other houses in the area have been selling for (not the asking price).

    You can also go on the land registry site and download a copy of the deeds of the house for £4, which will show what they paid for the property and how many charges they have against the property.
    http://www.landregistry.gov.uk/wps/portal/Property_Search

    My friends downloaded the deeds of a property they wanted and found the owners were in a big financial mess, so they were able to make a really low offer for a quick sale.
    RENTING? Have you checked to see that your landlord has permission from their mortgage lender to rent the property? If not, you could be thrown out with very little notice.
    Read the sticky on the House Buying, Renting & Selling board.


  • dwsjarcmcd
    dwsjarcmcd Posts: 1,857 Forumite
    Part of the Furniture 1,000 Posts Combo Breaker
    Also, I discussed this with a relative to get some advice, and they've said that if the lender have stated that they will lend us a certain amount and no more on this property based on that valuation, then if we need to buy it for a slightly higher price, then we can still do so if we increase our deposit for the lender to make up the difference.

    That is right, isn't it? :confused: If it isn't then we're screwed aren't we, unless the seller will sell at the valuation price - there are then no other options?

    It is not correct, lenders always work on the lower of the valuation or the purchase price. Increasing your price will make no difference.

    What I don't understand is why you are reluctant to turn this to you 'advantage' (it's not really because it's only what the place is worth) and tell the vendor that your offer is reduced by £7k, end of story. Or are you happy to be down £7k the day you take ownership, which is what you appear to be saying?

    David
  • We know that she bought it in 2004 for the £4000 more than the lender's current valuation.

    dwsjarcmcd, I was under the impression that they have undervalued it. If I'm wrong I'm wrong, but it just doesn't seem right based on the information I'd gathered. We do really want the house though, and we don't want to be in NE immediately of course not, but that valuation just doesn't seem right.

    Are you saying point blank that we cannot do anything but buy the property at the exact price that the lender has valued it at?

    For example, were we to meet the seller halfway (as I've seen mentioned on other posts on this forum in the past) - can we not make up the difference out of our own pocket? If so, how would we do that? Would that go as a deposit, or just into the sale? You'll have to excuse me if I sound ignorant, I'm trying my best to find all the answers here but this is my first time and it is a maze despite all my efforts at research. :(
  • We know that she bought it in 2004 for the £4000 more than the lender's current valuation.

    dwsjarcmcd, I was under the impression that they have undervalued it. If I'm wrong I'm wrong, but it just doesn't seem right based on the information I'd gathered. We do really want the house though, and we don't want to be in NE immediately of course not, but that valuation just doesn't seem right.

    Are you saying point blank that we cannot do anything but buy the property at the exact price that the lender has valued it at?

    For example, were we to meet the seller halfway (as I've seen mentioned on other posts on this forum in the past) - can we not make up the difference out of our own pocket? If so, how would we do that? Would that go as a deposit, or just into the sale? You'll have to excuse me if I sound ignorant, I'm trying my best to find all the answers here but this is my first time and it is a maze despite all my efforts at research. :(

    Why would you want to pay more for a property than it's actually worth?
    "You were only supposed to blow the bl**dy doors off!!"
  • Because it is worth just that few grand more to us, and we think the surveryor has undervalued it? Is all this talk of low valuations blocking buyers nonsense, then?

    Can I buy the property for more than it's worth? How do I do that? If sellers and buyers have had to compromise on this in the past, why will no one help me to understand how I can do this now? I do understand the implications, and I am very grateful for the advice, I just want to understand my options.
  • skiTTish
    skiTTish Posts: 1,385 Forumite
    edited 12 August 2009 am31 8:52AM
    The news in the press as i understand it , about low valuations refers to people trying to remortgage to move ,the valuers that the seller instructs to value their property to see how much equity they have to free up for a new purchase have been accused of undervaluing thus giving the sellers less money to spend on a new property or having to make up the difference.

    Havent had experience of undervaluation by valuers instructed by the buyers building society ,infact us and everyone we know were asked the purchase price of the property and the valuation was bang on what we were asked.

    I can only think that if its been valued at less ,its only worth less,why not put in a lower offer ?
  • SandC
    SandC Posts: 3,929 Forumite
    Part of the Furniture 1,000 Posts
    If you want to buy the house for more than the valuation you may have to be sneaky about it. The house is sold for the valuation price but you give some cash to the vendor to make up their shortfall. Whether that's the £7k or not is up to you to negotiate.

    The vendor wants to make a profit (all she's making is her fees at the current price you agreed by the sounds of it). It's understandable she doesn't want to make a loss but that's just how things are at the moment.

    Lenders up until the past year were very lax indeed on lending money, because houses were going up in value so quick by so much I don't think they were paying very close attention to valuations. They were hedging their bets that prices would continue to rise and people would still be able to pay their mortgages. The other changes made are obviously that they have stopped lending ridiculous amounts of money to just about anyone who comes through the door. It had to stop somewhere and now they are being very cautious. They have to protect themselves - you might not be so fussed about negative equity but they certainly are - it's their asset after all and if you as a borrower were to go into arrears and facing repossession they want to be able to get their loan back.
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