House valuation less than offer price

RobertoMoir

Esquire76 wrote: »

The estate agent still believes the valuation is far lower than similar property sales in the area,

Estate agents lie.

and from what I've seen online there is some truth to it.

When you say "online" do you mean asking prices on rightmove? Because that isn't valid data because of the exact same problem you are having.

His recommendation to me was to come in and get another mortgage through his financial advisor...

Oh I just bet it was. Don't take financial advice from the estate agent that is trying to sell someone else's property to you. This is like asking the used car salesman if he thinks you really should buy the car he's trying to sell to you - what do you think the answer will be? At best their interests in the deal are not the same as yours.

There's often a gap between mortgage valuation and asking price. If you can't close that gap in a way that makes you comfortable (and switching mortgage providers to someone who agrees with the estate agent's over-valued property prices should make you feel very uncomfortable) then you should move on to the next thing on your list and not look back.

ukcarper

Valuing a house is not an exact science so I would say the whole thing depends on availability and price of the type of property you like in the area. If you think that you can find a property you like for less then it’s probably worth pulling out. But as other people have said £2.5k is not a lot of money in terms of house prices and although this might double with compound interest it will be decreased in real terms by inflation.

Saying that I would have said it is worth putting in a lower offer.

abankerbutnotafatcat

Where I work we obtain valuations on extensive portfolios of residential property £10m+) and large commerical properties which we rely upon for lending purposes. We are also seeing what we consider to be a market-wide move by professional valuers (surveyors) to err on the side of caution compared to a few years ago.

I have seen a very experienced surveyor squirm as he explained to me why he was now valuing a property for around half what he'd valued it for 4 years ago. Some of the reduction in valuation in that instance was market-led which is fair enough but a lot of it was his not being sufficiently robust in his original investigations and him/his firm now adopting a much more cautious stance. As a bank we are probably in a position to take legal action against his firm but it is unlikely that we will as we accept we could have been more vigorous in our credit analysis back then in the ever rising market than we were and no one made us lend at the crazily high LTV that left no room for market movements downwards. As ukcarper said, valuing is not an exact science, neither is banking.

Caveat_Mortgagor

DannyboyMidlands wrote: »

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.

I bet the EA was more shocked when someone offered so close to the asking price.

Bee_Butterfly

Hi,
I have been in the same situation very recently. Agreed a price of £162,500 to buy an apartment but the Abbey National surveyor undervalued it by £12.5k. Sent them details of comparable properties recently sold in the area in the hope they would come back and revalue it but they refused. Went back to the vendor and advised them of situation and asked if they would look at reducing the price because of the under valuationand - after a lot of to-ing and fro-ing they agreed to reduce it to £160k (still £10k more than the Abbey valuation). The estate agent suggested I try another lender who may value it higher (but I would have had to pay for the survey myself plus money to the Abbey for redeeming my current mortgage) so I asked the vendor reuduce the price again to cover this but they refused. This week I decided to walk away from the purchase. I have spent some money on legal fees but better to lose out on that now than heaps more down the line. In a falling market I would have been mad to go ahead. I am in the process of selling my current home completing in a couple of weeks time, so am still going ahead with that and have just put down a deposit to rent somewhere for six months and will keep an eye out for something else to buy. My gut instinct was telling me not to go ahead even though I really liked the apartment and I am a firm believer in if you are not sure DON'T DO IT!

bristol_pilot

Valuations often (usually?) come back lower than the offer, especially for flats and most especially for new build flats. This is regardless of whether the market is rising or falling. You do realise that properties are 'valued' mostly by noting the purchase price then knocking a bit off. If you are still within the LTV range of the mortgage and you are still happy with your offer, I wouldn't bother lowering my offer for the sake of only £2.5k. If you do so, the bank could re-value the property again (you may have to apply for the mortgage again) and will come up with a still lower figure. The valuer is basically just covering his rear end.

I would only drop my offer if, on reflection, you feel that you have offered too much. But the so-called valuation can be taken with a pinch of salt.

Occams_Razor_2

keystone wrote: »

Why should the surveyors valuation be more correct than the Estate Agents in the first instance? Truth is it isn't. You have already agreed a price which you are happy with so that is what it is worth to you. If you like the house and want the house and you can afford it you buy it. Despite liking it and want ing if you can't afford it you don't buy it - simples.

Don't forget the surveyor is primarily valuing it for the mortgage company - not for the buyer.

Cheers

um... because they are not economically incentivised to provide anything other than an unbiased opinion? whereas the estate agent... not to mention regulation...

try going to court, and putting an estate agent valuation up against a surveyor.

iheartbristol

Esquire76 wrote: »

His recommendation to me was to come in and get another mortgage through his financial advisor...

That old chestnut

RobertoMoir

Bee_Butterfly wrote: »

Hi,
I have been in the same situation very recently. Agreed a price of £162,500 to buy an apartment but the Abbey National surveyor undervalued it by £12.5k. Sent them details of comparable properties recently sold in the area in the hope they would come back and revalue it but they refused. Went back to the vendor and advised them of situation and asked if they would look at reducing the price because of the under valuation and - after a lot of to-ing and fro-ing they agreed to reduce it to £160k (still £10k more than the Abbey valuation).

I don't want to pick on you, especially as you made what I would say is the right decision by walking away in the end, but I just want to borrow your post to highlight something: its interesting that we always say that the surveyor "under-valued" the property, never that the estate agent "over-valued" it, even when we end up essentially agreeing with the surveyor.

saidan

we are in the same situation - we're buyers paying £8k over the survey price, but £2 under the EA price.

we tried and tried to negotiate a better deal for us, but our vendors simply said NO. we'll put the house back on the market before lowering anymore.

for us we are going ahead because
1. we love the house
2. houses in the area tend to go for over the survey price due to the location
3. we have already spent more than £1k - so feel financially invested in it
4. houses in this area hardly ever come up - and we want the location (damn those views!)
5. the other houses that have come up since ours are priced at £5k over what we are paying - and are slightly smaller.
6. i have a firm deadline to be in the house due to a planned operation
for all these reasons i decided paying £8k was worth it.
but it still feels yukky!

saidan