Under-valuded or over-priced?

NHB

Hi everyone, I need some advice.

I had an offer of £228k accepted on a house advertised at £240k after a couple of weeks negotiating. I did my research and felt this was a good deal in comparison with other houses in the area. An independent surveyor told me they thought I had an excellent deal.

The problem is that the lender's valuation came in at £210k - therefore reducing the amount I can borrow.

A) Are low valuations like this common at the moment due to the banks being extra cautious in the current economic climate?

Or should this valuation tell me that I am being ripped off?

Any help appreciated.
NHB

tek-monkey

Can you find the extra £18k? If not its all irrelevant!

What have other houses sold for in that street?

princessamy86

If it has been downvalued, you would be mad to pay the extra money. Downvaluations are more common than they were at the peak of the market, but just as realistic considering that it's still not clear whether or not the market will recover in the next few years. What was the surveyor's reasoning behind the downvaluation? Are there essential works which need doing?

morg_monster

Yes ask the surveyor why he downvalued the house. It's perfectly fine to ring the surveyor and talk to him about the report, after all we pay them so much money!

I think it varies in different parts of the country. We offered 250 on a house on the market for 259, I thought it was worth a bit less tbh but we loved the house and were determined to get it so matched an existing offer and we were accepted. I was worried about our survey, but we're in a part of the SE which seems to be going a bit house buying mad at the moment; it came back saying 250 was a "reasonable proposition", despite needing quite a bit of repair work and 17 condition 3 items (but nothing urgent and no "hidden defects")

NHB

tek-monkey wrote: »

Can you find the extra £18k? If not its all irrelevant!

What have other houses sold for in that street?

Nothing else has sold on the street for a while but the sold prices looked promising. Unfortunately in order to challenge a valuation you need comparables from sales in the last three months which we could not get.

If we cant raise the extra deposit we can still borrow at a higher percentage of value and get the property but I am reluctant to do this as it will up the interest about 1%.

_Andy_

Why would you even consider paying more than what a professional's told you it's worth?
You've paid the valuer to tell you how much it's worth in their opinion and now you dont want to believe it?

NHB

princessamy86 wrote: »

If it has been downvalued, you would be mad to pay the extra money. Downvaluations are more common than they were at the peak of the market, but just as realistic considering that it's still not clear whether or not the market will recover in the next few years. What was the surveyor's reasoning behind the downvaluation? Are there essential works which need doing?

I was worried someone would say that! I need to find out why they downvalued it as my surveyor said it needs no major work.

I may need to re-negotiate the price based on the valuation. I really want the house but obviously do not want to pay £18k more than I should.

princessamy86

NHB if you would like to PM me the postcode, I have access to rightmoveplus and can check it out for you if you would like? I have to say though, if the surveyor only thinks it is worth £210,000 I certainly wouldn't be paying a penny over that amount. This is a very good negotiating tool for you, as it is very likely that any other potential buyers (who aren't exactly 10 a penny at the moment), will have the same issue at survey stage. It might be that they are better off accepting the lower offer and moving on, as there might not be another buyer along for quite some time. I would go back to the agent and let them know it has been downvalued, and you would like to revise your offer due to the survey results. You don't have to show the agent the survey, although I would recommend you do as it just backs up your negotiations.

Realistically, if you push to find this extra £18k, you will have paid well over the odds for this house. If you plan to live there forever, there is nothing else on the market, and you love the house, this might be worth it to you. However, I think it's not the most sensible course of action!

Milliewilly

princessamy86 wrote: »

NHB if you would like to PM me the postcode, I have access to rightmoveplus and can check it out for you if you would like? I have to say though, if the surveyor only thinks it is worth £210,000 I certainly wouldn't be paying a penny over that amount. This is a very good negotiating tool for you, as it is very likely that any other potential buyers (who aren't exactly 10 a penny at the moment), will have the same issue at survey stage. It might be that they are better off accepting the lower offer and moving on, as there might not be another buyer along for quite some time. I would go back to the agent and let them know it has been downvalued, and you would like to revise your offer due to the survey results. You don't have to show the agent the survey, although I would recommend you do as it just backs up your negotiations.

Realistically, if you push to find this extra £18k, you will have paid well over the odds for this house. If you plan to live there forever, there is nothing else on the market, and you love the house, this might be worth it to you. However, I think it's not the most sensible course of action!

If NHB's independant Surveyor they refer to in the initial post seems to think the price was a good deal why should the valuation surveyor be correct ? - the simple reason is banks want to lend as little as possible or preferably not at all because they don't want mortgage business at the moment just savings.

I hate to admit it as a house owner myself trying to sell but it points to a dropping of prices next year when the Government's prop - up of the economy finishes. We read posts all the time about low valuations - the banks are hedging their bets for the future unless you have a 40% deposit so you can swallow the probable 20% drop - not the bank on an 80% ltv..

Fire_Fox

Renegotiate, renegotiate, renegotiate. Why would you care if it's worth more when the valuation is going to save you £18K??

princessamy86

If NHB's independant Surveyor they refer to in the initial post seems to think the price was a good deal why should the valuation surveyor be correct

It doesn't matter if he's correct or not, it's what the bank is willing to lend. Would you pay £18k more, just because the surveyor may have made a mistake? I wouldn't!