Conflict in value between valuation survey and full structural survey

debsirn

Hello,


I am FTB. I had an offer accepted on a house two weeks ago. Since that time, I've had the mortgage valuation survey and full structure survey carried out.

From the valuation survey, it come up the same as offered price with following comments
“This property is considered to be reasonable proposition for purchase at a price of £239000 provided that you are prepared to accept the cost of various repairs/ improvements required.

The general condition of the property appears consistent with its age and type of construction.

The condition of the roof coverings suggests an increasing and costly maintenance liability and replacement should be considered
Repairs are required for chimney stacks
The rainwater goods are defective and require repair or renew
Repair are required to external joinery.


However, the surveyor who carry out full structural survey think that the property was found to be in a fairly poor state of repair and is going to need a lot of money spent on it to reinstate it back into good condition. He also comments that £239,000 is a lot of money for this property, bearing in mind the cost of repairs and upgrading that is required.

Here is the list of issues he found with the property
1) Roof tiles in poor condition, will need to be replaced in the short term.
2) The pebbledash render coat has evidence of severe cracking everywhere and will need to be removed to see if damage has been caused to the structural wall.
3) Isolated areas of insect infestation found in roof space.
4) Some of the rainwater gutters and downpipes are broken and corroded.
5) The rear chimney stack has cracked joints and needs to be repaired.
6) The timber casement windows have not been properly maintained and have rotted where exposed due to paint failures and will need replacement.
7) The concrete paths around the property have broken up and need to be replaced.
8) Manholes entry into the foul sewer, not found in rear garden.

The asking price for the property is £249500. The offer is accepted at £239000. I found from nethouseprice that the vendor bought it from auction in Mar this year at £182000. The estate agent told me that he had refitted new kitchen, done some re-wiring and put new boiler in.
The vendor can possibly make nice profit from this property in only 3 months.

Are the problems listed inthe full structure survey very expensive to get it right?
During viewing, I am aware of issue 6-8 hence negotiate 10K off the asking price to sort them. I am not aware of issue 1-5. Can I negotiate the vendor to sort them or get price reduction for them.

What should I do next?

Many thanks
Debsirn

Colincbayley

As a property developer and professional landlord, at that price I would walk away. ( no make that run away, fast! )

LisaLou1982

Its a difficult one to know what to do. If the first survey has valued it up, then the mortgage company are obviously willing to lend on it. Particularly since they dont see anything so bad that they want to put a retention on it. Effectively though, both reports have said the same thing - the 2nd one has just gone into more detail.

Insect infestation in the loft is an easy one to fix and is very common, especially at this time of year as its been very warm. This is more than likely going to be flies, although could also be a wasps nest.

Re the other stuff, without looking at the house, i wouldnt be able to give you an idea of how much it would costs.

The best thing to do would be to get a roofer out to give you an idea of how much a new roof would cost. He can give you an idea of costs of repairing the chimney stack at the same time. Guttering/facias etc arent too expensive to change.

Did the structural surveyor give you an idea of how much he thought the property was worth in its current condition?

At the end of it all, it all depends on whether youre willing to do the work thats required.

princeofpounds

surveys are just educated opinions. They can and will differ from time to time. Plus the structural survey might have come up with a few issues the original one missed which the surveyor mentally deducted from their estimated value.

It sounds like you might be overpaying a bit, based on the auction value and the structural survey, but probably not too much as the bank is perfectly prepared to lend at that value.

If you like the house, well you can't always get a total bargain, if you are happy with the price (bearing in mind the cost of works) then it's not a big problem.

There are a couple of things that would concern me in that list, but surveys often sounds worse than reality so ask for clarification if you haven't don so.

pararct

Colincbayley wrote: »

As a property developer and professional landlord, at that price I would walk away. ( no make that run away, fast! )

This is good advice.

£57,000 is the difference between purchase and sale. Ok the seller may have bagged a bargain at auction but it does not cost no where this amount of money to install a kitchen and a rewire.

Given the known facts (improvements) it is very possible this property is a repo and had been bought up cheap by a speculator.

Whilst the bank valuation is in line with the offer price can it really have improved in value by approx 25% in three Months?

Even if it was undersold (from real market value) and is a repo this indicates sharp practice as the original owner will be chased for the difference between whatever the mortgage was and the sale price.

Jowo_2

I understand why a shoddy refurb would deter a potential buyer but don't understand the obsession between the purchase price, cost of refurb and sale price (i.e. complete hang up about the potential profit being made.

Ultimately any property is only worth what a buyer wants to pay for it.

pararct wrote: »

£57,000 is the difference between purchase and sale. Ok the seller may have bagged a bargain at auction but it does not cost no where this amount of money to install a kitchen and a rewire.

Sounds like basic capitalism to me - selling for greater than cost. I wasn't aware that many property investors do it as a charity service.

pararct wrote: »

Whilst the bank valuation is in line with the offer price can it really have improved in value by approx 25% in three Months?

It's not the time spent between previous purchase and getting it to market, is it, that determines its rise in value?! Few buyers these days, even those from conventional sellers rather than a property investor, get very far by saying 'but you only paid x for it x time ago therefore it's not worth it'.

The quality of the refurb is a factor in adding value to it, plus how it compares to others of a similar size and standard in the locale. A seller doesn't have to 'discount' it because they've turned it round quickly for sale...

I reckon that it's probably not worth an investors time buying a property and selling it on for less than 20% anyhow. You may have costed the new kitchen and rewire as being significantly less than 57k but you have amnesia when it comes to someone's time for the 3 month period, expenses associated with the purchase and sale, etc. Very lopsided.

pararct wrote: »

Even if it was undersold (from real market value) and is a repo this indicates sharp practice as the original owner will be chased for the difference between whatever the mortgage was and the sale price.

Diddums. This is between the previous purchaser and their lender and is of no concern to the current and prospective owners. Lots of us buy properties that are put up for sale following the financial problems, relationship breakdowns and deaths of the owners.

debsirn wrote: »

The vendor can possibly make nice profit from this property in only 3 months.

If it seems so easy, join 'em.

My advice is to get quotes for the work outlined and re-negotiate the price you are offering.

Trollfever

The vendor can possibly make nice profit from this property in only 3 months.

If you need a mortgage you may find difficulty in finding a lender who will lend until it has been owned for six months by the vendor.

debsirn

Many thanks for all useful advice.

I plan to arrange roofer to give me quote for issue with roof tile and chimney stack. I have no idea who to contact to get quote for severe cracks on pebbledash render coat? Any suggestion? Is it expensive to sort out? Does it need to remove the coat to check the structure wall? Will the vendor allow me to do so?

As for the quote, would you trust the quote from trademan arranged by EA?

If EA ask what is the valuation of the property as a result of survey do I need to disclose it to him? Can I just vaguely say it is below accepted offer?

Regarding to value of the property, I am more lean on the result from the full structure survey as obviously detail of the survey and he is local surveyor.

During viewing I am aware of issue about windows, but not roof, chimney stack, rainwater gutter, downpipe, pebble dash coat and etc. I made it clear that my offer is subject to survey and contract. Do you think it is fair to negotiate for reduction in price with the vendor to cover all these unexpected cost?

tyllwyd

debsirn wrote: »

I plan to arrange roofer to give me quote for issue with roof tile and chimney stack. I have no idea who to contact to get quote for severe cracks on pebbledash render coat? Any suggestion? Is it expensive to sort out? Does it need to remove the coat to check the structure wall? Will the vendor allow me to do so?

We had our house repebbledashed, and it was done by the same firm who replastered for us. But they just put a new coat on top of the existing pebbledashing. If you need to take it off, I'd imagine it is a case of someone going up on scaffolding and chipping off the old layer by hand - which isn't going to be cheap. If the surveyor can't see if there is damage to the wall underneath, I don't suppose you can see it without taking off the pebbledashing. Does the surveyor think that the cracking is due to wall ties failing? Because if so you can get specialist companies to look inside the cavity to check them, which isn't so difficult to do.

Its going to be a few thousand to remove & replace pebbledashing - you might be able to get a better estimate from one of the other boards (In my home (inc DIY) moneysavig). If there is a fundamental problem behind it that needs sorting, then obviously it depends on what the problem is!

poppysarah

"some rewiring"?

If you're keen get a hugely indepth survey done with full costings and be prepared to offer 195k or less.

If he's only owned it for less than 6 months you are going to struggle to get a mortgage.

Ask why he's selling it - cos he's run out of money and needs to sell or cos he's discovered it's a nightmare and needs a ton of work doing.

debsirn

Speak to the vendor and he (as expected) would not give permisssion to remove pebberdashng to check if damaged caused to the structural wall.

Where can I find wall specialist to check this? Unlike roof, I can not find wall specialist in the local yellow pages? Am I looking at the right place?