House undervalued in survey

Fire_Fox

garyjovial wrote: »

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?

Not all of the things you have mentioned would add significant value to most buyers - size and storage yes, appliances no, central heating yes, boiler and water pressure most people wouldn't check!! Longer lease depends how short we are talking about, service charge not necessarily (you will still have to pay maintenance and some people like having it done for them).

You haven't mentioned location which is the big one - both in terms of general desirability and school catchment areas. Therefore it's best to compare like-for-like, houses of the same size in the same street which have sold. Why would you ask the vendors for proof the property is worth what they are asking?? That's hardly an unbiased opinion, do your own research and then renegotiate from a confident position.

laughingcow81

Isn't this the whole problem though...that valuations are opinion?

At the end of the day the lender won't lend more than the valuation so it is up to the OP if they feel that paying over / negotiating is worth it.

Fire_Fox

laughingcow81 wrote: »

Isn't this the whole problem though...that valuations are opinion?

At the end of the day the lender won't lend more than the valuation so it is up to the OP if they feel that paying over / negotiating is worth it.

Absolutely, the opinion of a qualified professional based on his assessment of the property itself and (hopefully) the whole of the market in the area. I am not saying don't pay the agreed price, just do it with your eyes wide open.

farmerboy

laughingcow81 wrote: »

Isn't this the whole problem though...that valuations are opinion?

At the end of the day the lender won't lend more than the valuation so it is up to the OP if they feel that paying over / negotiating is worth it.

Thats what I was getting at. A different lender survey may come with a different result. For me you have to balance your opinion of what the house is worth with what they are saying. You obviously belive this house is worth that ammount, so why not try another lender. You can also speak to the vendor, to see if there is any movement there.

marcg

A valuation is only a valuer's opinion. It is also swayed by the pressure put on him by the mortgage companies looking to reduce their exposure to high LTV ratios (think: if they offer you 90% mortgage on a £100k house but then tell you the house is only worth £95k then 90% of that is really 85.5% of £100k).
Or, equally, the pressure put on them by developers (like my old employer) looking to maintain profit margins.

The house is worth what you are willing to pay for it - not what someone, no matter how professionally qualified, says it is worth.

zzzLazyDaisy

marcg wrote: »

The house is worth what you are willing to pay for it - not what someone, no matter how professionally qualified, says it is worth.

That's true, if you have money. But for many people it boils down to 'the house is worth what the lender is willing to lend on it' - and to that extent the surveyor's opinion really does matter.

CloudCuckooLand

If its a choice between believing developers' pricing and valuers'/lenders' opinion, I'd happily trust the latter.

marcg

CloudCuckooLand wrote: »

If its a choice between believing developers' pricing and valuers'/lenders' opinion, I'd happily trust the latter.

Both have vested interests in raising or lowering the value - see my earlier post. You might make a case for mis-selling against mortgage companies offering 90% LTV which are almost all subject to a 10 or 20% down-valuation. The same as the loan companies offering x% loans which you can never get.

Also, the current market being what it is - most sellers (those not in financial difficulties) will sell for the price they can afford to move at, or not at all. As a result, I would argue accepted prices are far less flexible than they would have been pre-recession. Yes, the difference between asking and accepted may be higher, but negotiation is so strong now that the final accepted price is pretty much the lowest the vendor can accept (in order to be able to move on). The net result of this is a mortgage company down-valuation means the buyer has to find a bigger deposit (=lower LTV) or lose the sale.

It's mortgage companies getting one over on us, basically.

Cannon_Fodder

marcg wrote: »

...mortgage companies looking to reduce their exposure to high LTV ratios (think: if they offer you 90% mortgage on a £100k house but then tell you the house is only worth £95k then 90% of that is really 85.5% of £100k).

marcg wrote: »

The net result of this is a mortgage company down-valuation means the buyer has to find a bigger deposit (=lower LTV) or lose the sale.

It's mortgage companies getting one over on us, basically.

Struggling to get my head round this viewpoint.

Take a house that I am happy to pay £100k for. I have deposit of £20k. 80% LTV. Valuer says its only worth £90k, lender agrees.

I go to vendor and say, 'revised offer of £90k'. They can say no, but the next buyer will probably have similar experience with valuers/lenders.

If they say yes, I get a £10k cheaper mortgage, and/or don't have to use as much of my deposit to stay within 80% LTV.

Vendor does the same up the chain, to make up for it, or because they get their own 'down-valuation'. Only the top of the chain really 'suffers'. But they are invariably on their Nth house, so have accumulated equity over the years, so can be more flexible on price.

I don't agree with the generalisation that everyone is selling at close to what they need to. Lots are still taking plenty of equity with them.

Helping buyers to not overpay for something, is getting one over on "us"..? Depends on who "us" is...

If you are FTB, or even mid-chain, then you are not part of the "Us" being 'gotten over'. So, most don't feel aggrieved at the lenders.


I would agree with cloudcuckooland, its the artificial prices of the developers that are more open to criticism. Similar properties price according to what they see in the market. If the developers all cut prices by 10% to reflect the new reality, especially in the saturated flats market, other sellers would see that happening in the market and price accordingly. If they don't like that price they don't have to sell, but it stops valuers/lenders having to re-balance the market one-by-one, and the market just operates as it should.

The stubborn, vested interests of the developers skews the market operation, imo.

As we don't want the Lenders to take any more taxpayers money, I think its a reasonable idea to let them run things in a profitable/stable fashion. If the top of each chain suffer, so be it. They should be the ones who can most afford it.

Fire_Fox

marcg wrote: »

A valuation is only a valuer's opinion. It is also swayed by the pressure put on him by the mortgage companies looking to reduce their exposure to high LTV ratios (think: if they offer you 90% mortgage on a £100k house but then tell you the house is only worth £95k then 90% of that is really 85.5% of £100k).
Or, equally, the pressure put on them by developers (like my old employer) looking to maintain profit margins.

The house is worth what you are willing to pay for it - not what someone, no matter how professionally qualified, says it is worth.

A house may be worth to you what you are willing and able to pay for it, but to the lender a house is worth what they believe they can get on the open market for it should they need to repossess.