If I don't agree with property valuation

hcb42

with a reasonable deposit, it wont really matter will it...(I mean it matters if it is overvalued and you lose money) but you will still be able to borrow what you need, although if it changes the LTV there may be an impact there if you are then ineligible for the rate...

I dont understand this second hand in a few years time thing though. It should be valued as it if exchanged hands again immediately. (So it is "second hand", new ones tend to be sold at a premium, but the value in a few years is irrelevant if you stop paying the mortgage tomorrow it would be repossessed shortly, not in a few years - so current value is important.

Apart from not agreeing with his comments, has it caused a specific issue?

Ms_Sophia

DVardysShadow wrote: »

No, I think it is a straight answer to your question. I have a strong feeling that you don't fully grasp the risks that a lender has and the possibility that they may not recover full value on a property in the event of a borrower default.

I do grasp it. With LTV at 60% I am borrowing £255k from ING on the property worth £425k. Even if the valuation comes at £380k it is still miles away from what I borrow - so there is no risk as such for ING to lose money with such a low LTV.
They would not have to recover the full value of the property in the event of a borrower default - they would only need to recover what is borrowed, i.e. £255k.

DVardysShadow

hcb42 wrote: »

I dont understand this second hand in a few years time thing though. It should be valued as it if exchanged hands again immediately. (So it is "second hand", new ones tend to be sold at a premium, but the value in a few years is irrelevant if you stop paying the mortgage tomorrow it would be repossessed shortly, not in a few years - so current value is important.

Well, that covers the immediate default. What about the defaulter who has 2 dogs and children, who does not decorate for 10 years, leaves minging carpets, a bathroom with mouldy grout, kitchen units with broken hinges, a kitchen with a sticky floor and a garden full of broken children's bicycles in grass which has not been cut for 2 years? It loks like this may be where the valuer was instructed to pitch his valuation.

Ms_Sophia

DVardysShadow wrote: »

Well, that covers the immediate default. What about the defaulter who has 2 dogs and children, who does not decorate for 10 years, leaves minging carpets, a bathroom with mouldy grout, kitchen units with broken hinges, a kitchen with a sticky floor and a garden full of broken children's bicycles in grass which has not been cut for 2 years? It loks like this may be where the valuer was instructed to pitch his valuation.

I'm not sure what exactly your point is. Do you see the issue being all about some specific instructions which the valuer got from this specific lender? to sum up what you've mentioned above that would be "to value the property 10-15% below its market value"?
or do you say that all valuers should value properties this way, i.e. taking into account that some potential 'bad' occupiers would damage a property so its value would drop?

hcb42

DVardysShadow wrote: »

Well, that covers the immediate default. What about the defaulter who has 2 dogs and children, who does not decorate for 10 years, leaves minging carpets, a bathroom with mouldy grout, kitchen units with broken hinges, a kitchen with a sticky floor and a garden full of broken children's bicycles in grass which has not been cut for 2 years? It loks like this may be where the valuer was instructed to pitch his valuation.

Since when have properties been valued that way!

DVardysShadow

Ms_Sophia wrote: »

I'm not sure what exactly your point is. Do you see the issue being all about some specific instructions which the valuer got from this specific lender? to sum up what you've mentioned above that would be "to value the property 10-15% below its market value"?
or do you say that all valuers should value properties this way, i.e. taking into account that some potential 'bad' occupiers would damage a property so its value would drop?

My point is that when you look at the property, you will see it as it is and value accordingly, but a prudent lender will see it as it could become and instruct the surveyor to value accordingly. Dependent upon the lender, the picture of what it could become may vary.

When it comes to how much you want to pay for it or how much you want to sell it for, you call the shots and you are right. When it comes to how much the lender will lend on it, he is the one at risk and he is entitled to take his own view and instruct the surveyor accordingly. You are not in a strong position to say that the lender's valuation is wrong, because the lender is working to different criteria.

If you have loads of equity, the risk is mainly with you, so the lender's valuation is barely relevant. But if you don't have equity, then the lender has to take more risk and quite rightly values according to some worst case assumptions of their choosing.

ILW

If you have 40% deposit, surely the valuation is not important.

holly_hobby

ILW wrote: »

If you have 40% deposit, surely the valuation is not important.

I agree .. this has become somewhat off topic - I admit in all my yrs of mges & valuations .. I have never had valuers down value because they have to take account that the purchaser or owner (in the case of a remortgage) will not maintain the property to an adequate standard.

In my opinion - this particular mindset of ING is relevant only to new builds - and shoud not be confused with every valuation on every property.

Nevertheless, as stated, any lender is entitled to have what ever criteria they want - and if you the consumer doesn't agree or like it, well they must use their perogative and go elsewhere ...

We need to work with what we have here, nor argue over the whys and wherefores (whether relevant, accurate or not).

My route to mediation is highlighted in my earlier thread (but now knowing the LTV I don't think you will need this) - I think you are more angry about the statements made from the valuer - which I quite understand, but at the end of the day what does it matter if your LTV means there shouldn't be a issue with the issue of your requested mortgage.

Focus on the positives ...

Hope this helps

Holly

Ms_Sophia

Holly, many thanks for your post & positivity

I still am not sure how the low valuation would not make an impact on our mortgage. We got a deposit which is equal to 40% of the agreed purchase price. ING could potentially give us 60% but of their valuation, not 60% of agreed purchase price. I.e. we are potentially £XX k short (if the valuation comes 10% below purchase price, then it'd be 45k short ). The product we applied for is for max. 60% LTV. So to qualify for this product we need to add 45k of cash to our deposit?
Or did you mean we should apply to another lender and with such deposit it would be easy to find one?

holly_hobby

Ok .. the product is based on a low'ish LTV.

From re-reading your post it appears that the valuation is not yet in (is this correct) ? (if so we don't yet know how the valuer has assessed the value for mortgage purposes, and how much it has been down valued by).

When the valuation comes in, you can approach the lender as per my original post. Get some compariables from recently sold identical or similar properties in the same area - to help support your case.

I understand your concern, but don't panic until it comes in .... when it does we will know exactly what the shortfall is, and can give relevant advice to the postition we then find ourselves in.

Don;t forget as prev mentioned - the survey can also be used as a bartering tool from your side - to get the pch price reduced or such like.

My advice is sit tight until it comes in, request a copy (if the lender will provide one -sometimes they won't)and then come back to pick our brains ...

Try and stay positive - the valuation may not be as bad as you think ... stranger things have happened ..

Hope this helps

Holly