FTB - Valuation Too Low for Lender - Help!

olias

To the OP. I understand what you are saying, even if others don't:rolleyes:. What I have heard others do, is to gather all the information you have to support your valuation, and present this to the lender with a request that their valuer reconsiders on the basis of the information you have supplied.

I Know that lenders valuations are being deliberately cautious in order to mitigate any potential loss by the lender should they have to repossess in the future. I have spoken to my bank recently re mortgages and the manager herself stated that they are valuing properties on the basis of what they expect the property to sell at, should they have to repossess. This usually means at least 10% under market value!

Olias

MissCellaneous

The articles I have read such as the BBC one quoted above suggest buyers are being affected too, but yes, I've seen a lot about remortgaging as you've said too. I've spoken to Britannia now, and they've said they are happy to lend us that set amount and we can basically buy the property for whatever we like as long as they have proof of the 10% deposit on their valuation PLUS the difference between the valuation and the purchase price, so we're ok to buy it - if the seller will go low enough for us to consider it.

MissCellaneous

SandC, I'd considered a solution like that, but thought that would be a total no-no - do you think it's doable? How does that work legally? I don't think we can go the whole 7k, we just couldn't do it. We're hoping they can at least meet us half way.

MissCellaneous

olias, thank you, you've made me feel at least a little bit saner!

dwsjarcmcd

MissCellaneous wrote: »

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.

Of course you can meet the seller halfway out of your own resources, there is no issue with that, what I am saying is that the Brittania will only lend on the lower of the valuation or PP. As an illustration, if the apartment you are buying costs £180k but the valuation is £170k and you are borrowing 90% from your lender then the sums look like;

Purchase Price £180,000
Valuation £170,000
90% of lower figure = £153,000
Deposit = £27,000

If the valuation had come in at £180k, your 10% deposit would be £18k, so the answer depends on whether you have the extra funds.

The problem with using the data you have acquired is most of it is historical or put another way, out of date. The valuer will use the current market on which to base their valuation. It is possible to challenge valuations but it's not easy but the data you have may be out of date very quickly.

Good luck

David

Soot2006

Just keep in mind that your remortgage might also be difficult if you buy over value, as you might find yourself excluded from the best deals at a time when there is no guessing where interest rates will be.

SandC

MissCellaneous wrote: »

SandC, I'd considered a solution like that, but thought that would be a total no-no - do you think it's doable? How does that work legally? I don't think we can go the whole 7k, we just couldn't do it. We're hoping they can at least meet us half way.

I think things like that are usually by private agreement and on a trust basis - it's a bit like the vendor paying stamp duty.

MissCellaneous

Thanks all. SandC, I will talk to my partner and consider that as a tool then if it will get the seller to go lower for us, thank you.

Also, thank you Soot2006, I do realise this, and I'm trying to weigh that up, I don't want to be foolish.

Thanks for the calculations and info David, you've confirmed my own idea of the figures (though it took me all of last night to get my head around it, I'm very tired today!). I don't think we have enough solid info to officially constest the valuation. There just haven't been enough similar recent sales. Don't get me wrong, we came up with our offer based on as many different methods of valuing the place as we could (short of actually having a valuation done before we offered), but I still don't think it would be enough.

The seller is just requesting a copy of the valuation report now before we carry on, so we'll have to wait until that has been received.

MissCellaneous

Just to update this for anyone it may help (or anyone that's interested!), we have agreed with the seller that we are splitting the difference between the valuation and the originally agreed purchase price (so that's a price of around 3.5k less). The lenders just need proof of the 10% deposit (10% of their valuation), plus proof of the funds for the difference between the valuation and new purchase price.

So - we've had to find more funds upfront, but we're better off in the long run in terms of our LTV etc. I still think the house was undervalued by the surveyors, and after doing the sums thoroughly and thinking about it a lot beforehand, I'm happy with the result. That is - as long as we complete, of course!