House valuation less than offer price

Esquire76

Hi,

first time poster here, so apologies for errors!

I wonder if somebody could offer some sensible advice for me with regards to an apartment purchase. I recently put an offer in on an apartment I really liked, it was accepted but the valuation came back £7.5k less than what I offered.

The estate agent was shocked by this and through negotiation with the surveyor (armed with lots of recent sales information on the area) managed to get it revalued to £2k higher. Additionally the vendor also dropped the price by £3k after negotiating a discount on the new build they're intending to buy. This has reduced the deficit to £2.5k, which is much better.

I really like the apartment and I'd hate to lose it, some people keep telling me to hang on and only buy it at the valuation price, but I can't see the vendors dropping it any further as they're a young family and apparently need the deposit (they've already made a loss on the property as they bought it for substantially more five years ago).

Currently waiting to hear what the bank says with regards to the mortgage situation given the change in asking price/value...but any advice welcome. Would you take it given a £2.5k difference?

Thanks for reading this

Esquire76

DannyboyMidlands

I wouldn't pay a penny more than the valuation. I doubt the EA was genuinely shocked since this is a very common occurance and down to their initial over-valuation in order to win the vendors business.

kingstreet

I just hope it doesn't put you in a different LTV band, losing you the mortgage deal you wanted.

What was the agreed price and mortgage amount and new purchase price?

Esquire76

Originally, it was £152,500 and I had a deposit of £42,500 (so the loan was £110,000)

Now the vendors have said they'd take £149,500 (and the valuation said it was worth £147,000). Not sure whether to retain the original deposit or reduce it...

kingstreet

So the original loan to value was 72%.

The new LTV is £107k divided by £147k, also 72%, so no change in your band for the mortgage.

If you do reduce the deposit and the mortgage is more than £110,250 you would then go above 75% LTV and that could have consequences. Be careful.

Just a simple question of whether you're prepared to pay over the valuation?

HappyMJ

I wouldn't pay much over the valuation. If you do you'll be spending £2,500 on nothing the value is and always will be £147,000. As it is a flat it won't appreciate as much as houses in the same area would.

Esquire76

The estate agent still believes the valuation is far lower than similar property sales in the area, and from what I've seen online there is some truth to it. His recommendation to me was to come in and get another mortgage through his financial advisor...but whats to say the same thing will happen again? I'm not sure if the vendors would be willing to reduce it further, although I suppose there is no harm in asking...

I'll see what the bank says and then make a decision, a big factor in this is me wishing to just get on with it - its a real headache and £2.5k is a reasonable compromise given the original deficit. I've heard of some vendors splitting the difference and meeting halfway in cases of this type, so in fairness to them they have come down a little. All depends on the bank now I guess...

Marvel1

Borrowing an extra £2.5K is a lot in terms of paying back the mortgage repayments.

westlondonbuyer

Esquire76 wrote: »

The estate agent still believes the valuation is far lower than similar property sales in the area, and from what I've seen online there is some truth to it. His recommendation to me was to come in and get another mortgage through his financial advisor...

I wouldn't touch any EA's financial adviser with someone else's bargepole.

This is a well-known ruse by EAs and their associates, and inevitably in their interest rather than yours.

By all means instruct another -independent- surveyor to produce a second valuation if you want, although I can't help thinking that would be throwing good money after bad.

Your vendors have come down some way to meet your surveyor's valuation. You may have to supplement your mortgage with the shortfall if you want the deal to go through. You rarely get *everything* you want in any business deal.

Simply ask yourself whether the loss of the £2500 (and a great deal more in compound interest over the mortgage term) is worth it to you in terms of living somewhere you really like.

DannyboyMidlands

Every EA I ever speak to wants me to see their in house advisor. I always refuse.

Esquire76

Before the property was reduced and the house valuation was lower the bank were only prepared to loan me 75% of the valuation figure (which I'm guessing they'll probably do something similar again)...not sure how they calculated this (came to about £108,750). Presumably based on the loan to value...

You mention about this £2.5k and compound interest...this is assuming the bank agrees and pays the full £107k loan which takes the difference into account? I have a sneaky feeling they'll offer less again...