Low Mortgage Valuation on New Home - Advice needed please

Toothpick_2

Hi,


My first post so bear with me!

I have just been reading through a helpful thread:


Tread 970691 - New Build - Mortgage Valuation lower than purchase price!!!


Although the above thread dates back a year I have found myself in a similar situation and I’m really hoping someone will be able to give me some advice.


I have placed a reservation fee of £1k on a new home which is due for completion in April-May. The home builders instructed "movewithus" to put a value on our flat for part exchange. Three local estate agents were instructed to provide valuations and expected sale prices for our flat. These included Hamptons, Campsie and another. We have previously had advice from Hamptons that we should market the property at £250k and from Campsie at £259k. "Movewithus" contacted me quickly and stated that an agent from Campsie would be visiting to carry out an appraisal, I asked when the other two estate agents would visit I was told that they had stated that there was no need. So the agent from Campsie visited and I awaited the part exchange offer from the builders.

Three days later on a Friday the sales office contacted me and said that they would offer £235k for our flat and would not reduce the price of their property which remained at £440k with no other incentives on the table. I was a little shocked by this and stated that I had expected to part exchange the flat for around 250k and be offered a deal in relation to stamp duty or flooring which seems to be the norm if they were not prepared to reduce the sale value of their property.

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Later that day I contacted the sales office again and was told that the lady from head office had said that there was £10k that they would be prepared to offer to sweeten the deal and this could take a number of forms, whether it be to aid in paying stamp duty or increasing the part exchange value on our flat. I stated that I thought that they were still £15k short on where I really needed them to be. So the sales agent said he would get back to me.

The following week I waited till Thursday and phoned back the sales office and was told that all the agents were all on a health and safety course but a message would be passed on. To my surprise I got a call back that day to say that they would offer £240k for our flat, pay the stamp duty and the floorings but that their property would remain at £440k. This sounded fair to me. So on the Saturday I visited the sales office and paid the reservation fee. I contacted Nationwide to proceed with sorting out the mortgage and paid the booking fee of £99, and the valuation fee of £525 to enable things to get moving.

And they did, the following Wednesday I had a call from the builders sales office to say that the surveyor for Nationwide had visited the site and that all was well. The Roman’s surveyor for the builders was pencilled in to have a look around our flat on the Friday just gone, which he did with no hitches, perfect who said that moving was stressful!

Then I received the phone call from my Mortgage Advisor at Nationwide, the valuation had come in £25k under the £440k asking price and that they would have to adjust the mortgage amount accordingly.

So I have potentially now got to find an additional £25k for things to proceed. I called the builders and informed them, the sales agent said that as it was Friday it was best to leave it until Monday morning when he would have a chat with head office to see what could be done.

I phoned the sales office again on Saturday and I believe the sales manager answered the phone, I asked her if there was any news, she said that she was not aware of the situation and would pass the message on. There are 4 of the same style of property on the site of which we were looking to purchase the last available one. I asked how much the other plots had sold for and was told data protection prevented her from divulging this information, even though I mentioned that in time this information would be freely available from the land registry. She also asked me who my IFA was which seemed a little strange.

I received a call back from the same sales manager later that day purely to tell me in a slightly patronising tone that the sales agent who spoke to me on Friday had already told me nothing would be done until Monday and that I should just wait.

My concern is that any reduction the builder makes on their property price they will look to mirror on our flats part exchange value, which I feel was not great to start with.

I could really do with some advice before Monday as to what I should expect or request.

One further potential complication is that we still have to wait to hear what the Roman’s surveyor made of our property, obviously if this was negative we would be further disadvantaged.

I am not sure how normal this situation is when buying a new home any help would be greatly appreciated,

Simon

lellow_lorry

I cannot advise on what will be the outcome, however I have a few colleagues that have part-ex like yourself in the last 6 months. Both were offered 15k and 20k below the valuation on their property. Builders tend to do this as to cover their possible costs and any write off if it sells for less. I guarantee that if your sale goes through your property will go on the market for 250-270k. As for not dropping the price on the purchase.....this may be down to the area being quite strong in sales at the moment, or as a part ex you are not in a strong bargaining position. However as with both colleagues the valuation came in well below. One was on for 560k but valued at 450k.The other was 395k valued at 350k That shows how much they came sometimes mark-up by. Anyway same thing...the issue put to their manager....who would get back to them. Both had to wait over a week for a response on this. in the end they "reluctantly" agreed to reduce the price. So you may get a similar response. Don't let them chip away at both ends. They have already offered less than its worth. If you had gone in there as a 1st time buyer and had offered 400k and I will sign today.....most builders would bite their arm off..
Good Luck....but above all don't let the builder patronise you or interfere with your finances with your advisor.

Fire_Fox

You are never going to get the best deal on a part-exchange, as it is a lot of hassle for the developer and they are unlikely to get the best price for your flat as they will want a quick sale. Since the property won't be completed until May why don't you put your declutter and scrub your flat, then put it on the market at a competitive price? How do you know what your flat is worth, have you looked at land registry sold prices for the block?

Toothpick_2

Thanks Lellow for your quick reply,

Feel a lot better knowing that this happens a lot, we are just concerned that this will be our family home and we don't want to feel like we have been taken for a ride.

If the builders have sold the other 3 plots recently then they must have seen the results of their valuations, they must have known that keeping the price at 440k would throw a spanner in the works when it can to getting a valuation. The sales agents attitude has been one of "well maybe the surveyor just got out of the bed on the wrong side that morning!"

Hi Fire Fox,

Thank you for your comments,

We are happy enough with the 240k part exchange although we don't think that there would be much for the builders to chip away at if they look to recover the cost of a reduction in their new builds price as a result of the low valuation. We have just gone of the valuations from local estate agents and we are waiting to see if Roman's surveyor confirms. The flat is decluttered and well-scrubbed we wouldn't live any other way, we are not quite ready to move hence the appeal of buying a new build that will be ready in April/May. Part exchange guarantees security and means we are not reliant on a other party and all the complications that could occur, twice the number of solicitors etc. We are also not keen on the idea of selling, moving into rented and then moving again, we are both other stretched at work without increasing the load by doubling the number of moves. The builder guarantees that we can stay in our flat until the property has been completed, which also protects us in the cause of slippage.

Toothpick_2

Wow, quick update, Builders got in touch today and dropped the value of the property by £10k from 440k to 430k without even waiting to see the reasons for the low valuation from our bank! But we are still £15k short. Really not sure what to do, does seem like the builders are trying to meet us half way. I told the sales agent that I would have to wait for the full valuation report to come through from Nationwide.

Fire_Fox

If the developers have dropped £10K that fast then they will drop further with a lot of pushing.

Toothpick_2

Cheers Fire Fox, I really hope so, just having a read of the valuation report.

Cannon_Fodder

Stand your ground for a while.