lower new build valuation annoyance

brightsprite

:mad:

Had put an offer on a new build home which was ten thousand below the purchase price with 5% developer deposit and free carpets. Offer accepted.

We were going for a 85% mortgage with nationwide, which was best for us in terms of rates etc.

The house is ready in August, all raring to go until we get a call to say that the valuer has valued the property at £11,000 less.

Fantastic some would say, we certainly not prepared to pay over the odds for the property. But developer wont budge. They say that we should find another lender and they will pay the valuation - as if it's that easy. We are certainly not prepared to pay more in interest rates per month.

They say that they know what the house is worth and that they are confident that they can sell it for much more. They have said we can't have any of our reservation fee back as they have sent some legal docs off to our solicitor (far enough as it was a reservation) but that they have been willing to look at options if we find another lender and that we haven't been to their financial advisor who ensures them that it is just an issue with nationwide.

They have said technically we are getting the house for the price it has been valued because the £11,000 less is the 5% that they are putting in. They are not willing to take the hit on the valuation then give us the 5% on top. But we can't find that 5% as part of our deposit.

So we have let the house go, am miffed at the developer that they believe in this day an age that their house it worth more than it actually is.

We don't have a chain so can move in straight away, we have chosen the kitchen and fittings.

Do you think we will get a call from them in a few days/weeks changing their mind?

I know nationwide have valued it on the resale value but surely developers need to understand that this is becoming more common and stop inflating the prices.

tux900

brightsprite wrote: »

Do you think we will get a call from them in a few days/weeks changing their mind?

Impossible to say. But what I can say is that whilst I am sure you are gutted, and maybe even considered it to be the house of your dreams, this happens time and time again and all too often ends up with you finding another, better, house so it turns out to be a blessing in disguise!

I know nationwide have valued it on the resale value but surely developers need to understand that this is becoming more common and stop inflating the prices.

Absolutely, and don't allow them to suck you in to playing their games - their actions on such a grand scale can influence the whole housing market.

Mathew

Kyrae

We bought a new build and when our own house was getting surveyed the surveyor, who worked for Nationwide, warned us that Nationwide tend to give very low estimations of new builds compared to other banks. So might be worth trying another bank, or the house might genuinely be over priced and worth less than it is and then the builders need to drop their price, or you need to decide whether you're happy to pay extra to have a brand new house.

On our new build, the house was valued at 10k less than we were paying but it didnt effect our mortgage offer as we were putting down a large deposit, so we went ahead anyway. According to land registry the price we paid was the same as others on the estate paid for identical houses, and second hand houses were selling at 10k less matching the valuation price of ours at second hand value. In the end, paying 10k extra to have a brand new house isn't too bad, you get the kitchen and bathrooms etc decorated exactly the way you want them to be, saving you money if you bought a second hand house and had to redecorate. In the end it's your decision though, and might be worth keeping on hassling the new build company into giving you some more money off, though in the end if they think someone else is willing to pay the full price then you might lose the house unfortunately

brightsprite

Thanks for your comments. I too believe that something better must be around the corner. I think nationwide are just covering their back because of the market, but I suppose that we have been put off by their valuation and the arrogant attitude of the developer. While they have currently reserved many of the properties left in this phase, these have not exchanged so it will be interesting to see if it happens again.

I am just wary that if we look for another new build in the future the same might happen!

DVardysShadow

brightsprite wrote: »

They have said technically we are getting the house for the price it has been valued because the £11,000 less is the 5% that they are putting in. They are not willing to take the hit on the valuation then give us the 5% on top. But we can't find that 5% as part of our deposit.

So, stripping this of the smoke and mirrors:

Developer sells you a house for £220,000 and gives you 5% deposit. You get it for £209,000. Lender comes along and does not value it at £220,000 but at £209,000. You are surprised.

I am not surprised. There is nothing special about you which gets you a 5% 'vendor gifted deposit'. I could get the same offer - anyone could - or I could get it for a straight £209,000. So the lender's valuation is correct.

Evilm

brightsprite wrote: »

Thanks for your comments. I too believe that something better must be around the corner. I think nationwide are just covering their back because of the market, but I suppose that we have been put off by their valuation and the arrogant attitude of the developer. While they have currently reserved many of the properties left in this phase, these have not exchanged so it will be interesting to see if it happens again.

I am just wary that if we look for another new build in the future the same might happen!

Nationwide have been known to use underhanded tactics before... when we bought their valuation agents were refusing to give a value if there was even a single fault on an extended property. We had a couple of cracks from extensions in the 80's and even though they were agreed to be non structural they would not value. This was at the height of the crisis so it seemed like they were protecting their cashflow.

We ended up going with Halifax whose agents were much better and easy going.

Good luck.

Fire_Fox

brightsprite wrote: »

Thanks for your comments. I too believe that something better must be around the corner. I think nationwide are just covering their back because of the market, but I suppose that we have been put off by their valuation and the arrogant attitude of the developer. While they have currently reserved many of the properties left in this phase, these have not exchanged so it will be interesting to see if it happens again.

I am just wary that if we look for another new build in the future the same might happen!

What terms was the reservation fee on, do you have this in writing? What does your conveyancing solicitor say about the fee? Have you pulled out? If not maybe put everything on hold, wait for the developer to put out then ask for your reservation fee back.

Richard_Webster

They have said technically we are getting the house for the price it has been valued because the £11,000 less is the 5% that they are putting in. They are not willing to take the hit on the valuation then give us the 5% on top. But we can't find that 5% as part of our deposit.

So why didn't you find a lender that would lend 90% to you?

These gifted deposits are a complete con and builders should stop trying to pull wool over buyers' eyes by offering them. If they are prepared to knock 5% off then the place is worth 5% less, pure and simple and why on earth should it be any different? They wouldn't be offering this if they didn't need to do so. They would happily sell for less to a cash purchaser. Put it down to experience and buy a better value second hand house.