House Survey undervalues house by £20k What Now!

Bluefusion

Sorry for the long post, but I would appriciate if people could take the time to read this and advise where we go from here.

We have found a lovely 1920's house that needs total monderisation. The original owners have going into a nursing home and the family are selling the now vacant house.

The house was originally valued by the estate agents at 295k as it needs total modernisation, other houses down the road are selling for between £350-£375k.

After some negotiating we agreed a sale price of 290k. The house is in a bad state, and we could see that we would need to re-wire, re-pumb, rip out and replace a new kitchen and bathroom and then replaster each room and decorate etc - you get the idea. Well we had budgeted for this.

The house has just been surveyed via our mortgage homebuyers report and there is more work involved than we thought and he has put a value on the property at only £270k and said the property is a reasonable proposition for purchase.

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The report is quite detailed but here are the highlights:

1. Timber defect on exterior timbers that are rotted and need replacing.

2.The Damp Proof Course is the original slate and needs replacing.

3. Solid floor in the kitchen with no Damp proof course membrane and showing high levels of damp. This needs relifting and new DPM.

4.Defectlive/blocked/leaking guttering all round house, causing damp walls. Guttering needs replacing.

5. Signs of rainwater penetrating through the roof valley. Linings need to be repaired or replaced.

6. Condensation in house caused through not enough air bricks. Needs additional airbricks added for extra ventaliation.

7.Replumbing & Rewiring throughout (which we knew about)

8. Chimney needs repointing.

9. Garage outbuilding has leaking roof, and felt covering needs to be renewed.

10. Signs of woodworm understairs, although may be dead.

11. Asbestos lining in old kitchen larder.

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Now the problem is because he has valued the property from its agreed sale price of £290k to only £270, our mortgage lenders are saying that they will hold a retention of £20k back and lend us £20k less than originally planned.

Some of the things listed are minor and can easily be changed but the big issues for me are:

1. Solid floor in the kitchen with no Damp proof course membrane and showing high levels of damp. This needs relifting and new DPM.

2. The Damp Proof Course is the original slate and needs replacing.

3. Asbestos lining in old kitchen larder.

With all these faults we know that if the vendor is willing to drop the original asking price to allow for these problems to be corrected then we would have the perfect new family home.

We obviously need to try are renegotiate the price down as close to the £270k the survey is showing it is really worth to allow for all this work to be carried out, but whats the best way of doing this. Would the vendor really be willing to drop £20k!

Should I take the detailed report down to the estate agent and sit down with him showing all the problems that he could never have seen when he put the original £295k value on the house. Or do I talk to my solicitor?

From the vendors point of view I assume they would want to see quotes for carrying out this large amount of work, is that down to us to call and arrange contractors to go round there and quote or the vendor?

The trouble is the house is vacant, so if I have to arrange the contractors I imagine I need to get in a few quotes to compare, but then I need multiple contractors all round their quoting for all the things from Damp Proofing to Asbestor removal to roofing etc etc, The estate agent would have to set up home there to let them all in?

I know the other option is to walk away, and loose £600+ pounds and if we have to do this so be it, but I would really like to get thids house and get the work needed done, but I need the vendor to be realistic about a price drop, so your advice please!

dunstonh

The report has done its job. Without it you would have found out all this afterwards and instead of paying £600 for the survey, you would be £20k out of pocket.

In cases like this, you go back to the estate agent and tell them that the survey has highlighted a number of serious issues and valued it for mortgage purposes at 20k lower and you are lowering your offer to reflect that.

Then its just a game of poker from this point on. You have to balance how much you want the property against how willing they are to sell and possibly face others getting the same results on their survey and doing the same as you. If you really want the property and dont mind paying £295k plus a further £20k to put it right then you can go through with it. You may accept a half way figure. You may hold out and walk away from it if they dont lower. If there is a mortgage involved, the mortgage valuation is going to be lower which could impact on borrowing limits and also the terms of the mortgage if it takes you into a higher loan to valuation percentage.

Its totally your choice now. BTW, dont worry about the estate agent. That is what they are there for.

Bluefusion

Update, We have had a meeting with the Estate agent who looked over the report and agreed that 270k was a true value for the house now new faults had been found such as the damp course and asbestos.

HE is going to speak to the vendors to see if they are willing to drop the 20k inlight of the work that needs to be carried out, which any future survey will also show should they decide to try are resell to someone else.

So we shall see what happens.

lilyann1

Good on you.That's exactly right they will have trouble selling to anyone else knowing all the faults from your survey.
Let us know what happens.
Don't know if they'll drop the 20k but you never know til you ask.

Carter_2

It is always normal practice to expect a price drop upon a survey highlighting remedial work or does it depend on the amount etc?

I am waiting for the outcome of the survey on my property which is over 100 yrs old and not sure what to expect really (if anything).

Doozergirl

Bluefusion, I'm hopeful that you will find that your vendor's family will negotiate with you.

I hope you don't have to live in it with all that work to be done - lots of lovely dirt everywhere! We're about to do similar ourselves with two kids, though I expect we'll be looking for some short term rental accommodation in the near future. If I get my way.

Bluefusion

UPDATE: The estate agent has spoken to the vendors and they don't believe that all the "essential" work that the surveyor has flagged up will come to 20k, so they will not drop the price from 290k to the 270k the surveyor has said it is worth. They want to get quotes in for the work.

The essential work flagged by the surveyor is as follows:

1. Front gable has completely rotted and needs replacing.
(Vendors now have a quote for 2k for this work)

2. Original Damp proof Course needs replacing and the Kitchen concrete floor needs to be dug up and a Damp Proof Membrane laid.
(Vendors currently getting a specialist in to check & quote if necessary)

3. Roof Valley is leaking, plus a few loose ridge tiles and Garage roof needs to be relined and chimney repaired and repointed.
(Vendors currently getting a specialist in to check & quote if necessary)

4. Rainwater Fittings all need complete overall or replacement as they are leaking and causing damp walls.
(Vendors currently getting a specialist in to check & quote if necessary)

5. Signs of Wood Boring Beetles understairs.
(Vendors currently getting a specialist in to check & quote if necessary).

So at the moment we are waiting to see the quotes for the work needed as to see how near it is to the 20k estimated by our surveyor.

Debt_Free_Chick

Bluefusion wrote:

2. Original Damp proof Course needs replacing and the Kitchen concrete floor needs to be dug up and a Damp Proof Membrane laid.
(Vendors currently getting a specialist in to check & quote if necessary)

What kind of "specialist"?

A company selling chemical injected DPC will recommend ... that you need a chemical injected DPC! What you really need is a specialist surveyor - independent, not working for a company selling DPC - to tell you what's best. The original builders knew what they were doing - that's why they put in a DPC. Many mortgage valuers simply see the absence of a modern DPC and conclude that you need a new one - and this is often not necessary on an older property.

As an example, there are very many period properties with no modern DPC and no damp issues. And many listed buildings would not get permission to install modern DPC, but they're not falling down!

Of course, if they do get a DPC company in and they quote thousands, then negotiate a discount. THEN ... assuming you buy - get your own surveyor in (post completion) to tell you what to do .. don't automatically put a modern DPC into what is, essentially, a period property.

Regards

kelloggs36

You could agree that they get all the work done themselves, provide guarantees then go ahead, if not and they aren't willing to negotiate, I would consider pulling out.