FTB New Build - Bank Survey Devaluation

Muharco

Hi,

I'm a first time buyer and have signed for a newbuild on a government shared equity scheme. Everything seemed to be going fine until we paid for the bank to do a valuation survey of the property.

This came back under the asking price.... by quite a bit! I phone the developer and told them this (they didn't sound that surprised) and said they would speak to head office.

Has anyone else had this problem? What usually happens in this situation?

When I spoke to the bank, they informed me that the valuation will go on a database, so other lenders (if someone applied) would come up with the same figure. If thats the case how will the developer ever shift the property without reducing the price?

I also spoke to the developers recommended IFA, they mentioned the developer could ask for us to apply with a different lender. Can they do this? Surely if 1 has said it ain't worth that much, then the other with say the same?

Highly confused!

Cannon_Fodder

Ask them to match the valuation or walk away.

Muharco

Thanks Cannon Fodder.

I just wonder what the chances are of this happening?

Cannon_Fodder

Ask them. If they say yes, great.

If they say no, your bank has saved you from being tied to a property that may take years to recover to the value the developers first indicated...

Not everyone can avoid negative equity with the market the way it has been for 2 years, or will be in the next 2 years, but to have guaranteed negative equity the minute you sign on the dotted line is avoidable.

lowtidesurf

How much is the shared Equity scheme? What percentages are we talking? What price is the property?

Muhasib

If you do decide to take the developers advice and try another lender ask them to pay the valuation fee, after all you've already paid for one and the developer will know already about other mortgage valuations on the same site and what they have done about the properties allocated for 'affordable' housing if they come up short, you won't be the only one for sure.

Can I ask which lender valued it below the offer price?

SouthCoast

If thats the case how will the developer ever shift the property without reducing the price?

The Bank of Mum and Dad.

AMILLIONDOLLARS

Negotiate. My daughter bought her shared ownership flat from the Housing Association. The valuation came in under their asking price. She negotiated a £15k reduction. The problem is that the building society/bank will ask you or the property developer to provide sold comparables of similar properties purchased at the asking price . If the developer can't provide these comparables the banks will never lend you the amount you need, you'll have to make up the difference yourself or walk away from the purchase. It pointless going to another lending institution on new builds you will not be able to avoid this situation.

Good luck

AMD

TEDDYRUKSPIN

Trust the bank survey if you can. New builds are way overvalued. The person usually just phones headoffice and they usually say yes. If you backdown and go for the other lenders, they usually will give you the same valuation of the property.

All new builds have lost value and all are usually overvalued by 20%. They always expect you to renegotiate the price.

Tell them that you like the property and that you would like them to consider to reduce the price to match the banks valuation. Otherwise you would have to go elsewhere and find a new build similar through another company.

Tell them that you do not want to go to another lender as you have paid alot of initial fees and they are now not willing to refund the difference. Which is usually true! Valuations are non-refundable and don't forget the arrangement fee which is non-refundable!

Good luck.

merlotsmum

Going through a bit of stress with down valuing on Homebuy Direct.

For those who are not aware there are only two mortgage companies we can go through, RBS & Halifax. When I applied late July 2009 I got the better mortgage quote from RBS but was told that they were down valuing. Advised to go for Halifax and surprise, surprise, so have they.

There are 3 of us in the same boat on this particular new build site so one of the other buyers has gone back to RBS and we await that outcome.

I have been assured that the builders will have to take the down value, for me it means waiting even longer! The M.D. of the building firm will go to his Board for approval, not much they can do I say but agree.

Good news for me, cheaper house . . . but very stressful and to be honest though I have been dealing with some lovely people (Time2Buy, Site Office and Mortgage Advisor), the administration/procedures for the Homebuy scheme are very poor and you have to keep on top of them all the time.

Good luck
Merlotsmum

merlotsmum

merlotsmum wrote: »

Going through a bit of stress with down valuing on Homebuy Direct.

For those who are not aware there are only two mortgage companies we can go through, RBS & Halifax. When I applied late July 2009 I got the better mortgage quote from RBS but was told that they were down valuing. Advised to go for Halifax and surprise, surprise, so have they.

There are 3 of us in the same boat on this particular new build site so one of the other buyers has gone back to RBS and we await that outcome.

I have been assured that the builders will have to take the down value, for me it means waiting even longer! The M.D. of the building firm will go to his Board for approval, not much they can do I say but agree.

Good news for me, cheaper house . . . but very stressful and to be honest though I have been dealing with some lovely people (Time2Buy, Site Office and Mortgage Advisor), the administration/procedures for the Homebuy scheme are very poor and you have to keep on top of them all the time.

Good luck
Merlotsmum

Just to update and wondering if anyone else has updates?

I am still waiting for RBS to come out an re-value the house and still waiting for any movement, feeling a bit fed up now and wondering if anyone has any positive stories?

Thanks
MM