House undervalued in survey

garyjovial

Hi,

A week and a half ago we had our survey and have only just received the results, and it was undervalued significantly (over 10% drop in value to our offer). There is nothing actually wrong with the property, they just do not believe it is worth what we offered, based on market conditions etc.

We love the place and do not want to lose it, though are obviously very concerned about this. The vendor bargained hard with us to get the price (as they had extended into the garden and clearly invested quite a lot), and had already turned down offers which were a few £k less than our offer. As we loved it, we managed to reach an agreement. We now do not know what to do, we do not believe the survey valuation is correct, based on our own experiences of looking at properties in the last 4 months, though obviously are still concerned that we are paying too much.

As the vendor bargained so hard, we are worried that if we reduce our offer, they will not accept, though if we stay at where we are, we will over pay.

The house is in N. London, where I don't think the property slump has affected properties as much.

Can anyone help us??

Thanks!

GJ

Fire_Fox

Either you need to find an extra 10% out of your own pocket, try another lender and see if they will value the place higher, or bargain with the vendor based on the valuation. The fact that others have offered lower than you suggests the house is not worth what you want to pay in the open market, what have other properties on the street sold for and when?

Cannon_Fodder

Almost throughout your post you state it had been "undervalued", as thought its an error, misjudgement, mistake etc.

Just towards the end you suddenly decide you are worried you might "overpay".

Something doesn't add up!


It is possible that the valuation was cautious, as valuers are protecting their lenders because they have a contractual duty to do so.

Or it is possible that the market is not quite so bouyant as other houses you have viewed imply, which is possible because unsold houses are not a reliable indicator of value.

Have you checked actual selling prices? try http://www.houseprices.co.uk/ Different parts of London have reacted differently, you can get your Borough picture here; http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/

[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=Enfield&ac=City Of Westminster&s=01 January 2008&e=01 October 2009&t=4[/IMG]
A different lender may use an alternative valuer, which might lead to a different value. But that's an extra set of fees...and no guarantee.

You need to convince the seller that they would get other buyers making the same offers at best - whether this is possible will depend on how long its been on the market, how keen they are to sell, etc etc.

marcg

When I worked for a residential developer and our buyers had down-valuations (ie deposit stage price was higher than completion stage valuation) we found them alternative valuers who "magically" confirmed our prices and, hey presto, problem went away.

You need to find a tame valuer - ask the EA if they have someone who can help.

Fire_Fox

marcg wrote: »

When I worked for a residential developer and our buyers had down-valuations (ie deposit stage price was higher than completion stage valuation) we found them alternative valuers who "magically" confirmed our prices and, hey presto, problem went away.

You need to find a tame valuer - ask the EA if they have someone who can help.

That sounds like it is bordering on mortgage fraud! :eek:

garyjovial

Thanks for your comments, we think that the survey value is lower than what a lot of people would pay for it.

As we have seen places priced at the surveyors lower price, and they are no where near as nice as this..

Does any one know how often this happens, as the EA is saying this is happening a lot atm (though he would say that!)? And who is now in the stronger position, us or the vendor?

Fire_Fox

If you read around the boards it appears to be fairly common, but of course people only post when there is a problem!! You need to look at the sold prices were in the area NOT the for sale prices - two very different animals. There is only limited value in the decor of a property as there is no guarantee another purchaser will like the same thing: compare size, location, facilities and condition (roof/ windows/ central heating/ electrics/ kitchen). If you cannot get a mortgage for the full value then you need to communicate this to the vendor, if they cannot afford to sell at the lower price you will have to walk away.

PasturesNew

garyjovial wrote: »

...we think that the survey value is lower than what a lot of people would pay for it...

Well, lower than others might also offer, until their valuation came through too.

garyjovial wrote: »

As we have seen places priced at the surveyors lower price, and they are no where near as nice as this..

What is nice to you isn't so nice to other people though. Others will prefer the others to the one you like most.

People buy houses for 1000 different reasons, not the same reasons you do.

garyjovial wrote: »

Does any one know how often this happens, as the EA is saying this is happening a lot atm (though he would say that!)? And who is now in the stronger position, us or the vendor?

You are now in the stronger position because you've not over-invested in a house that isn't worth what you spent on it.

You can walk away if you want, he's stuck with it.

Cannon_Fodder

When you say you have seen other properties at the same price - is that the asking price or sold price? It is not advisable to directly compare what you are prepared to pay on a property to the asking price of another property - you need to know the sold price.

The average differential between asking prices and sold prices is 5% according to RICS. It was 9% in the summer. It fluctuates with sentiment/prices. The NAEA have produced;



And, being an average, there are some properties still going for well over 10% below asking price...that Premier figure looks scary...

Until the transactions are complete, you could be comparing a "decent" property that has been well priced and you are prepared to pay very close to asking price for, with the "punt" asking price of a property that eventually sells for 5% or 10% less...

Low valuations are pretty common. Browse the forum, you will see quite a few, including some £10k+ success stories by those who re-negotiated. More commonplace on new builds, by on a variety or properties.

It should put you in the stronger position. Even in the boom, it was reasonable to go back to the vendor after survey, to re-negotiate. With so many buyers having difficulty getting their mortgage approved, vendors are keen to hang onto a decent buyer, even if there is a risk to the price. It may be that your vendor has the same conversation higher in the chain, giving him leeway that he didn't have when you first negotiated.

Are there no issues you can hang part of the price reduction onto?

Even so, it would not be MSE of me to say "don't re-nogetioate".

garyjovial

What I mean by "no where near as nice as this is", is not just cosmetic appearance.. I mean the rooms are bigger (prob by around 150 sq ft in total), appliances better (eg in kitchen), new central heating, good boiler and water pressure, better lease, no service charges, far more storage.. etc etc..

Also the price we offered was below the asking price, by around 2%.. Though as we have been looking for a long time, and loved it, we were willing to take this price.

I think taking in all of this, our plan will be to barter a lower price, or get proof from them that the place is worth what they want (i.e from sold prices), and if they are unwilling we might have to walk away..

Does this sound sensible?

Lord_Blue

It sounds as if you really like the place. From what I am reading, it doesn't seem that you can't get a mortgage, more that you are scared of 'overpaying'.

I'll probably get slated for this on a MSE forum, but there is no such thing as overpaying for things you really like. Please don't confuse a home with an investment. If you like the house and will be in it for some time, you will not waste a penny that you pay for it.

It seems like you have done the hard part and negotiated pretty much the best price you are going to get, so either be happy with that, move in and enjoy your home. Or forget it and move on. There should be no other debate.

By all means try and get more money off, but otherwise consider whether you are buying a home or an investment.