Undervaluation by Abbey Bank/Santander!!

townmouse53

I have a shared ownership flat, which I bought brand new about 18 months ago. I put it on the market figuring to buy a larger non-shared-ownership flat. Three different estate agents through it for valuation, then I had a RICS valuation before listing at a price mid-way between all the valuations. Viewings were VERY brisk, sometimes two a day, and I got several offers before accepting one about 2-1/2 weeks later. That was last month and since then I found a flat to purchase and paid out-of-pocket for all sorts of fees for selling the shared ownership (for the legals, reports from the management company regarding service charges, etc.), as well as a valuation and mortgage fee for the place I'm buying - about £1.7k worth. The buyer's appraisal, through Abbey/Santander, took FOREVER to occur and just happened last week. The valuer was very friendly, had me (I'm disabled) help with his measurements, and as he left told me "not to worry about the valuation" or "lose sleep over it" as he left, so I didn't.

Yesterday I got a call from my mortgage advisor. Although flats in my building have been selling briskly at quite good prices, the Abbey/Santander appraiser valued MY flat at a HUGE amount less than what I paid for it, nevermind what I've agreed to sell it for. Another flat just like mine was valued by a different appraiser on the SAME day and theirs came in £56,000 HIGHER than mine!! (I checked the decor online, mine is nicer.) Now I'm told that (allegedly) Abbey/Santander will not allow my buyer to pay more than the valuation price for my flat - and the buyers want me to drop my price accordingly, meaning I would sell at a huge loss. I don't think my mortgage advisor or my estate agency are working to protect MY interests at all, does this seem right to you??

zappahey

townmouse53 wrote: »

Yesterday I got a call from my mortgage advisor. Although flats in my building have been selling briskly at quite good prices, the Abbey/Santander appraiser valued MY flat at a HUGE amount less than what I paid for it, nevermind what I've agreed to sell it for...


... I don't think my mortgage advisor or my estate agency are working to protect MY interests at all, does this seem right to you??

You haven't told us what your EA and mortgage advisor have or haven't done with respect to your interests.

The simple fact is that your buyers won't be able to buy at the agreed price. The choices are simple:

1. The buyers challenge the valuation to get it adjusted higher
2. The buyers add cash to reach the agreed price
3. The buyers look for another mortgage and hope to get a higher valuation.
4. You drop the price.
5. Some combination of the above.

If I was your buyer I would only be considering 4 or 5, with the emphasis heavily on 4.

Richard_Webster

I take it that your shared ownership lease allows you to sell on the open market without first offering it to those nominated by the Housing Association etc that has the remaining share.


If not you have to do this first anyway.

FireWyrm

You say viewings are brisk? It's as much your right NOT to sell your property as it is the buyer to ask for a reduction. Depending on how much under the asking price, I'd be inclined to say thanks and so-long to your potential buyer and try for someone else. Just because Abbey are playing games, doesnt mean someone else is or that you wont have an eager cash investor snap it up. It's your choice really. You can refuse the reduction and you'd be well within your rights....the bottom line is, the buyer doesnt have the money to buy it, simple as that.

kingstreet

Has he simply valued your share, what the purchaser and Abbey borrower is actually buying, when you're expecting a valuation of the whole property?

Please let us have the figures. Your share, total value etc.

Has the purchaser applied correctly?

Has the purchaser contacted the HA to ensure he/she is acceptable to them?

townmouse53

I'll try to answer questions, forgive me if I forget some of them :A
I own a 25% share valued by 4 different estate agencies as list up to £60,000 and expect offers up to 56,000. A separate RICS valuation required before listing showed in excess of £55,000. My lease said the property had to be listed by the housing association to for so many days but it did not give them exclusive rights to do so. Even so, I gave the housing association the first week of exclusive showings and accepted a first-time low-income buyer's offer. They were completely pre-vetted by the housing association, after mortgage pre-approval, to make sure of their approval for the "lease" part before formal application for their mortgage. In other words, they were completely approved all around, then made formal application for the mortgage.

I accepted a £54,000 offer. As it is housing association, I must pay the first £1,000 of their solicitors fees, plus all fees for the housing association and management company to provide the legals, acountings, etc. Right now I am out of pocket at least £1,700 for the buyers' expenses.

Abbey valued the property at £45,000 for my 25% share, or £180,000 for 100%. This is far below my purchase price as an empty shell 18 months ago, in the South East of England. A downvaluation of more than £10,000 between the Abbey and RICS valuations with less than 3 weeks between them. Also, house prices have been RISING in this area, not going down. Another flat (exactly the same as mine but not as nice inside) valued for another lender came in at £59,000 for 25% share, £236,000 for 100% share, on the exact same day.

The mortgage advisor said Abbey won't allow the buyers to pay more than the valuation price for the flat (£45,000) and claim the buyer is not allowed to add additional cash to meet the agreed sales price. They SAY I must sell for no more than £45,000, or I must either ask the buyers to apply for a mortgage somewhere else hoping the valuation turns out better (which they can refuse), or back out of the deal. I will take the house off the market before I sell it for £45,000, as I believe it was deliberately undervalued by Abbey and I don't believe my estate agency is telling the truth. If I back out of this deal I'll lose the flat I wanted and if I accept it I will walk away a £1,700 LOSS and won't be able to buy the flat I wanted. Obviously, I have no intention of selling at £45,000.

I think the estate agency and mortgage advisor should be pushing much harder for the Abbey appraiser to revise his valuation, especially by submitting comparable flats in our building and their sales prices, and advising me how to lodge a complaint about the appraiser's very obvious prejudicial downvaluing of my flat. I also think the estate agency should be releasing the name and company of the person who undervalued my flat so I can file this formal complaint, which they won't.

MacMickster

So a 25% share in another similar flat was valued at more than double the asking price for your 25% share. Really?

myhouse_2

MacMickster wrote: »

So a 25% share in another similar flat was valued at more than double the asking price for your 25% share. Really?

Where did "more than double" come from? From my quick reading, OP's Abbey valuation was 45k, other flat was 59k.
Anyway, the answer is easy. If other lenders are valuing it at 59k, then your buyer should go to them for the mortgage. It could be that Abbey have little money to give out, or that they think this property is a poor long term investment or one of many other reasons.
OP, assuming another lender comes to do a valuation, let us know how it works out. One problem you may have is that the buyer now has a very different figure in his head which might be difficult to dislodge. I know I'd be reluctant to pay a lot more than a valuation price.

shortchanged_2

Estate agent valuations are always going to be higher than a surveyors valuation. So for mortgage reasons unfortunately they will go by the surveyors valuation.

Almost everyone will over value their own house, and yes I have done it myself.

MacMickster

myhouse wrote: »

Where did "more than double" come from? From my quick reading, OP's Abbey valuation was 45k, other flat was 59k.
QUOTE]
The OP states that another flat was valued at £56K higher than her own.

madmish00

So a 25% share in another similar flat was valued at more than double the asking price for your 25% share. Really?

The OP states that another flat was valued at £56K higher than her own.

Yes the OP did state that another flat was valued at 56k more - for the full 100% share.

25% at 45k = 180k for 100%
25% at 59k = 236k for 100% = 56k higher

The OP did not state that the 25% share was valued at 56k more