Survey gives lower valuation than agreed price;

Limana68

If it was me I wouldn't pay more than the survey valuation came back with and I think you are mad if you go in higher than that.
Its tough at the moment, and talking from an experience I had, I am sure if it was the other way round they wouldn't either!

If they wont budge then walk away!

franklee

Seanymph wrote: »

I have got a local, trusted, recommended RCIS surveyor to do me a full building survey. In fact he lives several miles away and has for years. He was also in the property for about three hours - I spent one hour there with him - and the report is thorough and comprehensive.

It's not a 'valuation' report, or a 'homebuyers' report - in fact, I didn't expect a valuation it was a surprise. But I know he values property for the local council, and does reports for their grants too.......... he's a respected individual who works for himself.

Now you've written it down who including the sellers or indeed yourself could argue with that? If you pay anything over valuation you know you are overpaying. Give the vendors a look at the survey?

westernpromise

So the highest bid at auction was £175k, and at that point, the top bidders had to take the property because a winning auction bid is a binding contract.

They then had a better look at what they had bought and have found it needs at least £28k of work done to it (based on your estimate). That's just serious structural and remediation work, not decoration and sprucing up.

Until those works are complete, it remains uninhabitable.

It's thus going to cost them at least £200k to own this house in sound condition. Then they then have to do it up; say £10k. Then they have to sell it, which incurs transaction costs. If they want a profit back to reward the risk they've taken and the money they have tied up, they need to sell it for more still. We're getting very close to the price you estimate to be top money, i.e. £235k.

They have decided, instead, that a better bet is to accept a trivial hit of £3k to get this house off their hands. They then reinvest their £172k somewhere else, and hope that it buys them a house they can still sell on for the same target price of £235k, but which needs only cosmetic stuff done to it.

They may well be the kind of refurbisher who buys houses and spends no more than £2k "doing it up". Such developers may stretch to stripping the woodchip, repainting the walls, putting in a £300 B&Q bathroom suite and a £500 kitchen, and planting £30 of bulbs in the garden. They don't usually stretch to addressing serious structural issues. What they're looking for is scruffy-looking places that can be bought at bottom money, freshened up for bottom money and sold on a year later for top money.

This place needs £30k spent just to get it to the point where they'd normally start to spend their freshening-up budget. They don't want to buy in at £210k and sell up at £235k. They want to buy in at £175k and sell up at £235k. They've made a mistake, and now you've come along. Ideally they'd exit their problem at your expense. Fortunately you did what they didn't, and had it surveyed properly.

If you like the place, intend to live there and can afford it, by all means proceed - after 15 years or so, the difference between £172k and £200k starts to look trivial if the place is then worth £450k or whatever.

You do, however, have an excellent negotiating opportunity now. The way to phrase it is to say something like:

"Look, I bid £172k for this house subject to survey, on the basis that it would be found to be in generally good condition. That's my view of the value of a house like this in decent nick. I've now had a survey done which says it's not in decent nick, and in fact it needs about £28k spent on it. So broadly we agree. In proper fettle this house is worth £172k - but it's not in proper fettle. So, it's worth £172k less the cost of the works to get it there. So my new bid is £155k. which reflects the £25k to £30k I think is required to fix it. I'm being completely transaprent about where I'm getting my valuation from, so please flesh it out a bit for me - why would I still pay £172k for this house when after spending £28k on it, it'll still be a £172k house?"

Seanymph

I love this forum!

You will notice my first post was 5.07am, when I got up and couldn't sleep for worrying - and now, with support - I have no house to buy but I feel better!

I went back, explained, faxed a copy of the valuation sheet and offered to continue (the contracts arrived with my solicitor this morning) for the sum of £165k. Not the valuation, nor half way to the already agreed purchase price, but halfway between marketing price and valuation - so we both move 10k and meet in the middle. I thought that was fair.

The seller doesn't. He 'wants it put back on the market today' and 'hopes that someone will pay the asking price'. The EA 'has told him that he'll hit this problem again' but he won't budge.

So, he was mugged - he failed to do a survey and was mugged - and he is looking to mug someone else.

Well, he won't be mugging me. Unfortunately I'm about £1,000 out of pocket on surveys and searches/solicitors so far, but I'm pleased I did a full survey.

I'm also staring down the barrel of selling mine (4 weeks we think to completion) and I have nowhere to live.

Oh well, OH keeps reminding me we do have a big tent, and it's getting warmer.

This is so damned awful this process.

*would someone mind telling me I'm doing the right thing walking away and I shouldn't cave in and pay 17k more than the valuation?* Thankyou.

iB1

Seanymph wrote: »

I love this forum!
*would someone mind telling me I'm doing the right thing walking away and I shouldn't cave in and pay 17k more than the valuation?* Thankyou.

You're doing the right thing walking away and you shouldn't cave in and pay 17k more than the valuation! :money:

westernpromise

£1,000 hurts, but look at what it's saved you spending that.

Imagine the pain the sellers are going through. You're down £1,000 because you were smart enough to have it surveyed. They're down £20,000 because they weren't.

I don't feel a bit sorry for them! Twits!

If you complete and you're homeless, then you're looking at renting for a bit, but that may be no bad thing. Prices aren't going up, may go down, and if you find and complete on somewhere that needs work, you can have it done without having to live through it.