HELP PLEASE! Property undervalued...

FTBann

Hi....

I put an offer in for a property 3 weeks ago, and the BS just sent someone over this week for a basic valuation. They contacted my mortgage broker today and the lady from the BS said the valuation was 'quite bad': they had it valued at 170, and 175k after work on the property was complete.

the problem is i've offered 179k (asking was 182.5), and i'm putting in an 18k deposit. the valuer has said there was damp, rotten floorboards, and that the roof was sagging etc etc. there is stuff to do on the property but it is mainly cosmetic....it has been completely rewired and plastered and had a brand new kitchen and bathroom put in. it's a victorian terraced property and still has the original kitchen and hall tiles as well as fireplaces, and is massive compared to other more expensive properties in the area. the valuer said that a structural report would be needed......

luckily, in anticipation of any problems i'd already got a structural report 2 weeks ago, and the structural engineer said that there was no damp, and that the only problem was that the roof would need re-inforcing with timber as the original slate had been replaced with heavier concrete tiles and that it could potentially sag. he did say that this wasn't urgent and that it would cost about 1000 quid to sort out. other comments were just that cosmetic improvements needed to be made (like painting the walls and repacing some floorboards that had been taken up to repair the plumbing). i faxed over the report to the BS this afternoon.

now, my question is...what happens if they refuse to budge on the valuation? i can't really increase the deposit amount as my spare cash is for fees and doing the rest of the property, so i'm a bit worried...

1) does it mean that they will refuse to lend me the money?

2) will they insist that the work be carried before they lend me the money? (something i'm not keen on, as we both want to complete asap).

3) or would they ask that the purchase price be reduced in line with work that needs doing on it?

basically i like the house and feel like i'm paying a fair price...i was the first to view, and in the area similar houses get snapped up within a week of coming onto the market, and smaller houses sell for just as much if not more.


sorry for the longwinded essay, but any comments and advice would greatly be appreciated!

thanks

ann

meanmachine_2

It's valued at 170K, and yet you insist on paying 179K for it?

You sound crazy.

Offers are made, subject to a survey. Now, following that survey, you offer less. Just make the vendor aware of the reasons behind this revised offer.

Seems like you should be doing cartwheels to me.

Kaminari_2

I don't know if they will listen but i'm sure they are not the only lender out there. If they don't pull through you could always try other lenders.

Jorgan_2

I agree with meanmachine (for once). Go back to the seller, show them the mortgage valuation & the work they say is required and tell them you want to renegotiate the price. Don't be afraid to show them the report, it will list all the issues the surveyor has found. Down valuations aren't that uncommon where structual work is required.

nrsql

>> the valuer has said there was damp, rotten floorboards, and that the roof was sagging etc etc.

>> i'd already got a structural report 2 weeks ago, and the structural engineer said that there was no damp, and that the only problem was that the roof would need re-inforcing with timber as the original slate had been replaced with heavier concrete tiles and that it could potentially sag.

A bit odd?
Maybe the BS valuer had seen the property previously and was going on that but didn't realise the problems had been fixed.
Or maybe the sagging has happened since your survey?

I would question both surveys and see if you can find what's happened. If the BS one is correct you might want to pull out anyway.

Doozergirl

You can use the valuation report to renegotiate the price and this is to your advantage, of course, but it may be the case that your vendors need your full price in order to move.

If you really believe you are getting the house at a sensible price then you can (with the help of your mortgage advisor) ask them to revise the valuation. Your structural report will certainly help by eliminating some of the perceived problems. You can also provide evidence of houses being sold at higher prices; rightmove.co.uk includes SSTC properties as well those still for sale and there are many websites where you can search for actual sold prices of properties that you know have sold. You can also ask your own and your vendors estate agents to help by providing the details of propertes that they have sold at higher prices.

I've managed to get a property upvalued by writing an email using comments from the valuers report as bullet points and replying to each.

Doozergirl

nrsql wrote:

>>I would question both surveys and see if you can find what's happened. If the BS one is correct you might want to pull out anyway.

A valuation generally takes less than half an hour and as a result the valuer will make assumptions and very much err on the side of caution. His responisibility is to the the lender and in cases where the loan value is quite high, they can be over cautious.

A structural engineeer can potentially put himself in hot water if he gets things wrong. I assume that part of the high price you pay is for his insurance backing. I would certainly take the word of a structural engineer as reassurance.

FTBann

thanks for all your replies...

meanmachine, i'm not mad...the property is undervalued, similar properties in the area sell for 220k. the changes that i need to make are just cosmetic, the other the 1000 pound reinforcement of the roof which i believe wouldn't justify a 9k reduction in the price. the offer price is subject to survey and it has been surveyed by a structural engineer who felt that there were no major probs.

besides, if i show the vendors and the EA the reports who are they going to believe? a superficial valuation survey which shows up a multitude of problems or an indepth structural report which only highlights one problem?

nrsql you're right, that's why i'm confused because the reports appear to contain such conflicting information. same with doozergirl, i'm sure the valuer just had a very cursory glance and opted for the safety net option of requesting a structural engineer's report which i'd had the foresight of already doing.

they didn't use a local valuer....places like this in the area go VERY quickly and i don't want to lose the property as i feel i'm paying a fair price.

i did think of getting my mortgage broker to tell them that i'd move mortgage lenders, but i'd opted for a rate just before the IR's were increased!

i sopke to the BS nad they said that because they'd only up to 170k, that i'd now be subject to a HLC, which i think is pretty cheeky! my bank would lend me 5 times my salary at 100% with no HLC. but the rates aren't as good. grrrr.

thanks

MortgageMamma

A basic mortgage valuation involves a surveyor walking around the inside and outside of a property and assessing the general state of repair for mortgage purposes. This will also include structural problems. During this inspection the surveyor will not move any heavy items of furniture or pull up carpets, in effect, he reports on defects that are visible. He will usually do his report on the exterior of the property from the ground.

However, a structural report, the surveyor will move things, look at floorboards, the attic, go on ladders outside the property, look at pipework and plumbing. briefly inspect wiring and quality of fittings. It is a much more indepth report than a valuation and thats what you are paying for. The roof is obviously a valid concern for both surveyors but if the structural surveyors says there isn't a damp problem you can be pretty sure there isn;t one.

Send the structural report to the lender along with proof of what other similar properties have sold for. you can use rightmove.co.uk as already mentioned or www.ourproperty.co.uk which will give you details of sale prices on that postcode within the last 5 or 6 years.

Normally to appeal a down valuation as lender will need proof of three sales of properties similar to your intended having sold for much more than what you are purchasing for. But I think the structural report you have arranged should do the trick.

Who is your lender BTW?

Doozergirl

A lot of banks would have accounted for a rise in the base rate before it actually happened. I wouldn't let it put you off looking elsewhere, especially if your BS are threatening a HLC.

Fact is, you should be using a whole of market, independent mortgage advisor - we're talking interest repayments in excess of £300,000 here, not small change in anyone's pocket! They are the people that will be able to find you the best mortgage rate available. Some of the main high street lenders seem to be the most inflexible with their valuations and lending criteria.

FTBann

thanks again for your help, really appreciate it....

i did use a whole of market mortgage broker and i've found they've been excellent.BS is portman, rate 4.69 with 599 booking fee. same rate has now got 999 booking fee.

i think they're being a little silly, because i'd be quite safe to lend to...i'm putting in quite a large deposit and when i checked my credit rating it was 999! plus, i would be eligible for a professional mortgage and my salary is guaranteed to increase year on year.

still, if they don't budge i may have to threaten to take my business elsewhere....but where?!