If I don't agree with property valuation

kaych

When we applied for the mortgage from HSBC on our new built, the valuer basically wrote in the report that this flat is worth £xxx, but is unlikely that the flat can be sold at this price in resale... and our valuation was based on that anyway. but we did get further discount after that, so the valuation helped us saved a bit more.

Thrugelmir

Ms_Sophia wrote: »

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.

A lender however does not weigh up their mortgage book on an individual basis. Neither by property or by individual. All the lender is concerned with is having adequate security for the money advanced across their entire mortgage book. Depending on the interest rates on offer and the strictness of underwriting criteria then surveyors will be instructed accordingly. On the balance of probabilty property is more likely to fall than rise in the medium term. So caution on behalf of lenders isn't too surprising.

In real life property does get trashed. Neither are all properties maintained properly in the longer term. Kitchens and bathrooms don't get replaced.

With new builds its always been an accepted fact that prices are marked up in order that the developer makes a profit. Also that the property includes the cost of fitting out. Which once the property is sold has relatively little value, i.e. white appliances.

Ms_Sophia

All properties we've seen so far have their prices based on what condition those properties are. I.e. what kitchens/bathrooms, fixtures & fittings are there, what appliances etc. Why are you talking about some 'trashed' properties?

My understanding is that a property is being valued on its current condition whether it's new build or not. Or are you saying that when any property is being valued the finishing of the property, whether it's newly refurbished, with high finish etc. - this is not taken into account? simply because somebody might 'trash' it and it then will lose its value?

Trollfever

You can pay for a second opinion:

http://www.rics.org/

opinions4u

While a lender can guide a valuer on how to interpret certain things, a mortgage valuation is estblishing how much the lender would be able to sell a property for in vacant possession.

While there can be differences by locality (and the OP does refer to an apparently desirable area of London) a new property tends to appreciate at a slower rate than a second hand property in a normal market. In a tough market the new property is likely to fall at a faster rate than a similar second hand property. It makes sense for this to be reflected in a mortgage valuation. At time that will naff off both developer and buyer - but the lender does have a rather substantial interest in what the numbers are.

Typically the valuer should assume that the condition of the property is ok, unless there is currently evidence to the contrary. But a typical brand new kitchen in a new flat will rarely provide anything significant value differential to an existing kitchen in a more established flat.

In other words, buying a flat in the current market provides a lender with greater risks than in a rising market. Reflecting this in a "true" value (as opposed to developer's asking price) is not unreasonable.

Thrugelmir

Ms_Sophia wrote: »

Why are you talking about some 'trashed' properties?

This was merely extending my point that a lender has a totally different view of the transaction to you. Mortgage lending is low profit margin. So the lender's aim is to maximise profit on the money lent. The fact that its a property is someways irrelevant. In maximising profit the lender will be factoring in their current view of the property market along with any other factors. Which might be influenced by their target market for example. Lenders will weight their mortgage books by type of property, location down to post code or even block in the case of a flat. To give their mortgage book a diverse risk analysis.

Ms_Sophia

Thanks for the lecture...

It still boils down to a simple point - the common sense is that a valuation is expected to be done on the current market value of a property, or on the 'resell value'. it does not mean that what this valuer appears to be doing is right - i.e. value the property not taking into account the condition of it and quality of finish etc, and valuing it as a second-hand property which is according to this valuer means that he will value it as "20 years old and in bad condition".

hcb42

well that sounds odd and should be questioned..never heard that before ever. EVen on these boards, and that is amazing in itself.

But, does it cause you an issue?