Valuation lower than asking price - what to do?

Datcher

My brother and I are trying to purchase a new build one bed flat for our elderly parents. They are providing the deposit and mortgage payments and while we are ‘facilitating’ the purchase by obtaining the mortgage.

Initially we had agreed the following deal with the builders – Redrow:

The property price is £79,995
The builder has agreed to take £2000 off this price = £77,995
The builder pays 5% deposit of £3899.75
The price we pay for the property is £74095.25

The mortgage company have valued the property at £65,000.

I informed the sales person of this and she was ‘shocked – all other valuations have come in way other that’ – along with other theatrics and stock phrases.

Within the day they reduced the asking price to £70,000 without any deal i.e. the gifted 5% deposit. She also stated that ‘they will never go lower than this as there will be no profit in the sale’ or words to that effect and that they will pay for another survey.
I have replied stating that my mortgage company have a vested interest in the property and also my own financial wellbeing and that I believe that property to be valued correctly.

As I now feel that I/we are in the driving seat I would be grateful on any advice on how to execute the next stage. Also, as my parents want to pay the extra £5k for a better standard of living, I am having difficulty explaining that potentially they are throwing their money away which will leave us in a negative equity situation when the time comes to sell – any advice on this?

Many Thanks

Orpheo

Would you buy £65K from me, I'm only charging £70K?

pararct

Simply tell them funds are tight and your mortgage lender will only forward funds for what it thinks it is worth.

Is there much interest in these flats? Are they flying off the shelf?

The fact they reduced so quickly to £70,000 speaks wonders!!

Be prepared to walk away and make sure they know it.

The gulf between what you and they want is not insurmountable.

I suspect they will come on board but may mess you about a bit first.

myhouse_2

pararct wrote: »

I suspect they will come on board but may mess you about a bit first.

I think you can be sure about the first half of that statement. It's unlikely that the builders are genuinely surprised - they've probably seen similar valuations before on your plot or other areas.

poppysarah

What are the service charges - and who'll pay them?

Datcher

Many thanks for the replies.

The service charges are approx £70 per month inc. buildings insurance and will be paid by my parents. Why do you ask?

geoffky

get it reduced or bail out..do a search on here...plenty of threads about the valuer valueing the property correctly with people calling it undervalued and i sit here wondering why people want to pay more..it really baffles me..

Datcher

Thanks for that. I am quite prepared to do either of your suggestions -all I have asked for is help with the 'methods' associated with getting a reduction. Trust me, I a more than happy to walk away should I not get the right outcome