mortgage valuation

sonastin

Valuing a property seems to be pretty much a black art. The stock phrase on this board is "its worth what someone is prepared to pay for it" but is there more to it than that?

I have put in an offer for a repossed property. It is right at the top of my budget and my offer is slightly more than the amount I would guess "market value" to be, but I have good reason for paying what I accept might be "over the odds".

Using zoopla, mouseprices, nationwide calculator etc brings up guesses of approx £190k. There aren't many properties in the area that are comparable to this one and nothing has sold since 2005 so using sold prices doesn't really help. There isn't even anything similar on the market within about 10 miles so I can't even use asking prices as a guideline.

There was a previous offer on the property of £210k, which I presume fell through for some reason because propertybee records an asking-price drop after this offer. There was an offer submitted just before I viewed it of £205k. Obviously my offer is higher than this to try to secure the property.

In order to get the right LTV for the mortgage product I want, I need the bank valuation to value it at at least £200k. Given that there are at least 3 of us who are prepared to pay more than that (or at least have offered to pay more than that), do you think it is likely that the surveyor will take that into account in his valuation or is he more likely to use the same reasoning as the web-based tools and come up with something lower?

I guess I'm just thinking out loud because no one really knows but the surveyor! But I could do with some reassurance or a reality check on this one - I'm nervous because a lower mortgage offer or a higher interest rate will put this house out of reach...

Cannon_Fodder

I don't think a surveyor should pay much attention to what people have offered. They are human and may be swayed, though, I guess.

But their obligation to the Lender means they have to be pretty sure they can justify the figure - or err on the side of caution, if difficult to justify.

Last sale from 2005 may be more of a guide than you think. Lots of areas hovering around that level. Or at least a figure that can be adjusted using Nationwide, Halifax or Land Registry. Don't trust zoopla or mouseprice myself - which may be irrational if based on one of the main sources of stats. Prefer the unadulterated data.


If the deal/rate is so crucial at this time, it might be a stretch too far come re-mortgage, when rates have risen and price drops have hurt LTV.

jockosjungle

Don't think a valuer will value it for more than your offer

R

sonastin

I don't want it valuing at more than I'm offering. But if "a property is worth what someone is prepared to pay for it" and so far 3 people (including me) have made offers above the amount I'm hoping it is valued at, surely that ought to be a sign that "people" are prepared to pay that amount not just "someone"?!

The most likely scenarios by the end of the fixed term are either I have a significant pay rise at work due to an expected promotion, or if this doesn't work out I'll be looking into renting out or selling up (with whatever loss of equity that might entail) to move to the other end of the country. If none of that happens and a remortgage is too much of a stretch, I guess eating will become an optional activity for a while!

neverdespairgirl

sonastin wrote: »

do you think it is likely that the surveyor will take that into account in his valuation or is he more likely to use the same reasoning as the web-based tools and come up with something lower?

Very unlikely. After all, they offered, but didn't buy!

It's most improbable that a valuation will be higher than what you actually pay.

clutton_2

""a higher interest rate will put this house out of reach""

this would not seem a sensible way forward if you are already now considering the limitations of how much you can not repay the mortgage....

when i bought my first property - everyone advised me to "borrow the maximum you can" - i was not happy with that .... so i didn't ... mortgage interest rates went from 9% to 16% within 2 years of my buying.... and yes "eating" was an issue.... i dont quite know how i managed to keep the property

Whilst i doubt rates will ever get that high again, interest rates are Bound to go up ....

Also buying a proprty always costs much more than folks take into account ... and billsa are always much more than you imagine they will be... and the amount of "stuff" - curtains and the like always cost you more than you think .... if you are on your financial limit now.. then think very carefully indeed

SimonMrGreenWard

They use a price index software to value your property. They have very little flexibility outside of that.

I've had some properties that have valued up and I've not thought there was any chance, and then I've had properties where I thought buyer was getting a great deal and they've been downvalued.

Buyers LTV and lender seems to be the biggest factor, not the actual property.

jockosjungle

Sorry I see what you are saying, you need a minimum value (i thought you meant a high valuation above your offer would give you a better LTV).

However if you can envisage a stage where you will find eating optional to pay, it is very unlikely you will get a remortgage at that stage, I'd also say if you're relying on a promotion or selling up and making what you paid for it (maybe not that likely) back then maybe this property is out your price range.