House undervalued in survey

farmerboy

Fire_Fox wrote: »

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.

This is the problem though, repossessions regularly sell for well under the market value of the area, because the lender wants the money back fast, so in reality are not a true valuation.

farmerboy

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.

Fully agree and have the following to back it up.

Friens recently sold his house at the second offering. The first one was a 1st time buyer who agreed a price with my friend, when the survey came back they said it was worth £8k less than the agreed price. The FTB tried to renegotiate, but my friend stood fast so the FTB backed out. The second offer was from someone who had sold their own house, they offered the same as the FTB, but when their survey came back it agreed with the price offered so the sale proceeded. My friend questioned this with his solicitor and was told it was probably to do with the LTV as the second buyer had a larger deposit so a lower loan.

Thats how screwed the system is

Milliewilly

Well said.

My sister bought a house in April this year for £375K (was a repo on at offers over £350K). There were several other bidders.

Next door is exactly the same (development of 2 houses) this sold for £550K in 2007.

The Natwest valued my sisters house at £200K. You cannot even buy the plot of land its sitting on for that (nearly an acre). She paid an independant LOCAL surveyor for another survey and they valued it at £375K. The Natwest then agreed to lend. So has my sister got her valuation fee back as the Nat West valuer didn't know what he was doing? No. Has she paid too much? Definately not.

marcg

All of which is proving the point that mortgage surveyor's word isn't law.

My point is that, in view of the whole toxic-assets issue, mortgage companies are looking to reduce their exposure to risk. Hence, if they can lend you a lower proportion of the real value of the property AND keep your business, they will. Whether or not you get the vendor to accept the lower valuation is your business, not theirs. In fact, the very fact that YOU were willing to pay the original price (before downvaluation) gives them some comfort that the property is actually worth the full amount and that they are actually getting the security of greater equity to protect their loan.

Emy1501

marcg wrote: »

All of which is proving the point that mortgage surveyor's word isn't law.

My point is that, in view of the whole toxic-assets issue, mortgage companies are looking to reduce their exposure to risk. Hence, if they can lend you a lower proportion of the real value of the property AND keep your business, they will. Whether or not you get the vendor to accept the lower valuation is your business, not theirs. In fact, the very fact that YOU were willing to pay the original price (before downvaluation) gives them some comfort that the property is actually worth the full amount and that they are actually getting the security of greater equity to protect their loan.

Of course a surveyors word is not law. Its a simple opinion. As has been said before many at time, if a seller is not happy with a valuation that they are liberty to tell the buyer pay the agreed prices or the property is going back on the market. The buyer is also at liberty to get another lender to lend at the value they wish to buy at. Of course if a buyer is unhappy with the service of the surveyor then they can of course sue the bank for their fee back if they believe the surveyor has been negligent with their valuation.

Its all pretty simple really.

GDB2222

I don't think it's possible to value a house exactly, so take any surveyor's opinion with a small pinch of salt. OTOH paying 10% over valuation is very worrying. Also, the tiny 2% negotiated off the asking price is an indication that the OP is probably over-paying. Nobody puts their house on the market at the price they really expect to get. They all add a bit knowing they will be knocked down, and normally that's a lot more than 2%. So, that's two indications that the offer that the OP has made is too high.

Personally, I would go back with a reduced offer, but the OP seems to be saying that he likes the house so much he doesn't mind over-paying a bit. If he has the money, that's his choice. If he needs finance, it's the bank's choice.