Valuation on New Build 12k Under

jamjar99 · 18 June 2011 at 10:44PM

Hi all,

I'm looking for some advice please!

We are buying a new build property. Original price £299,750, negotiated down to £277,750. However, we have just learned that HSBC's surveyor has valued the property 12k under at £265,000.

We are part exchanging our house (at 10k under our asking price) and have paid about £800 as deposit for extras, £500 reservation fee and probably a few hundred in solicitors fees so far.

Is there a standard procedure for this scenario? Stick to valuation and call their bluff, saying you'll withdraw? Or meet halfway? It is a forever house, but 12k is a lot of cash!

Thanks all,

Shaun

myhouse_2 · 19 June 2011 at 11:24AM

Chances are they'll have the same problem if they try to sell to someone else. Since the new value is only just over the stamp duty threshold, you should look to pay no more than 249,999 for it. 50k "reduction" from 300k seems quite normal in this market. Especially as the builder will have built plenty room for flexibility into their original price.

more_money_for_me · 19 June 2011 at 11:44AM

I always think it is difficult for anyone else to comment on, as they don't know what the property means to you. Certainly I walked away from a property that came back as yours has. The vendor wasn't prepared to budge (not new build) and I walked away. Funnily enough it is still for sale. I think with a developer you have a better chance of getting what you want as it is a purely business transaction with no emotion on their side at least. I would just take the position that you don't have the extra as the bank won't lend it. I personally don't think it is sensible to overpay in a falling market, as am sure you can use the 12k more usefully than the housebuilder can. Good luck with it.

jamjar99 · 19 June 2011 at 12:51PM

Thanks all for your comments.

Its sounds like 265k should be the most I should pay then. We were supposed to be exchanging contracts this week coming (and moving in late July/early August once the house has been finished).

I wonder if I should show the builders the valuation results to prove it is indeed 265k? They are Morris homes if anyone has dealt with then before? My solicitor has the report, but I have yet to receive my copy in the post so I havent seen the detail. She notified me of the valuation only yesterday via email.

It is a nice popular area, good catchment, next to a county park. The negotiation down to 277k was lengthy - started at 270k and ended up at 277k.

Best,

john_white · 19 June 2011 at 3:34PM

myhouse wrote: »

Chances are they'll have the same problem if they try to sell to someone else. Since the new value is only just over the stamp duty threshold, you should look to pay no more than 249,999 for it. 50k "reduction" from 300k seems quite normal in this market. Especially as the builder will have built plenty room for flexibility into their original price.

why not 250,000?

Just to confirm your tactic here, you have instructed a professional to value the poperty on behalf of one the largest banks in the world. They have valued the property at 265k, so you think its worth 249,999?

The developer walues it at 300k, the OP at 277k, a surveyor at 265k. Yet you think 249,999?

The surveyor has confirmed its worth more than 249,999.

somethingcorporate · 19 June 2011 at 3:38PM

The kicker here is stamp duty, why anyone would pay three times as much upfront stamp duty is beyond me!

£7.5k+ @ £265k
£2.5k @ £250k.

Barter them down, it's still very much a buyers market.

We put a £250k offer in on a place that was on at £300k over 6 months ago, it's now unsold and on at £260k, I bet rejecting our £250k so quickly back doesn't feel such a great idea now.

jamjar99 · 19 June 2011 at 3:40PM

So realistically then, 265k or somewhere between 265k and the current price of 277k? My initial feeling was to stick to 265k and sound very downbeat on the phone if they suggest it should be more and say 'ah well, we'll have to seriously consider withdrawing' and call their bluff.

The fact that we are part exchanging probably complicates things slightly I'm sure.

hcb42 · 19 June 2011 at 3:56PM

yep, just look at the total deal - seems like they gave you a decent offer. You've got to decide is it worth it in the long term, if you are planning to stay there then it's a home, so it might not be losing it for a few ££

I would take that approach though....£265K or explain you need to pull out first.

jamjar99 · 19 June 2011 at 4:09PM

Yes it is a forever house. The wife and I are mid 30's with a baby so its a house we can grow into before downsizing in 20+ years.

The niggle is the 13k gap. There has to be some kind of movement here surely, 13k is hardly splitting hairs.

hcb42 · 19 June 2011 at 4:12PM

well all you can do is ask. Everyone is going to have same problem no matter who they sell to. All I was referring to is if you have had a great offer, and they pulled the Part Ex, as they might be taking a loss on yours, then your position might not be any better off if you had to sell your own, as it were...

GDB2222 · 19 June 2011 at 10:40PM

To be frank, I don't think many transactions go through in the £250-270k band, because of the extra £5k stamp duty compared to £250k, as the stamp duty rate goes from 1% to 3%.