Valuation downgrade

theminutehewalks

We are in the process of buying a house we really like. We agreed £310k but the bank has just valued it at 300k for the mortgage. On top of that, we need to spend £40k doing conversions and modernisations (which we will borrow from our family) and the damp report has diagnosed about £5k of damp and dry rot work.

We reckon the house will be worth about 400k when finished.

We need to get back to the vendor a re-negotiate a sale price to our best advantage without losing the purchase.

Any advice please...?!!!

Many thanks

poppysarah

Why do you reckon it'll be worth 400k when you've done 40k of work?

Gromitt

If you think the vendor will accept a lower offer why did you offer so much in the first place? If they rejected 300K before, they are unlikely to accept it now just because your bank says its only worth that much.

Catblue

You seem to be saying that it is a bargain but it is overpriced.

It is up to the vendors as to whether they accept any other offer.

On the one hand, the bank has valued it at 300K and therefore they may struggle to get another buyer to buy it at 310K.

On the other hand, if 40K's worth of work really will add 100K to the "value" of the house then they may decide to do the 40K's worth of work themselves and then sell at 400K. They'd be daft not to. Even if they didn't want to do the work themselves then they should easily be able to sell as is for 310K to another buyer if the house really is the money-making machine that you say it is.

ognum

You know what the house is worth to you If in fact putting in £45K of work makes it worth £400K why would the owner reduce I suggest you explain all the things that need doing as well as your bank valuation to the vendor and wait for a response If he really wants to sell he will reduce a bit If he needs every penny he may not you just need to start the process

bris

Don't you think you are over valuing it a little. If you think it will be worth 400k after 45k worth of work, don't you think the valuer would pick up on that. Even if you are close to being right the valuation should have came in at 310k without even a thought, in fact the valuer may even have valued it at considerably more.
You should check you figures before jumping in and gettting burnt. For some reason we all want to buy as cheap as we can by telling the vendor it's not worth what they are asking, but on the other hand over value it once it's ours.

theminutehewalks

Thank you all for the advice!

The house is in a bad state of decor etc and other houses on the same street with the loft ext we are planning to add go for about £400k.

The house is being sold by trustees so I don't think they are interested in investing on it...

ognum

theminutehewalks wrote: »

Thank you all for the advice!

The house is in a bad state of decor etc and other houses on the same street with the loft ext we are planning to add go for about £400k.

The house is being sold by trustees so I don't think they are interested in investing on it...

That may well be true but they ase also not desparate to sell and duty bound to get the best price

You seem to have convinced yourself that you are doing the right thing so open the negotiations to reduce the price Good luck!

brit1234

theminutehewalks wrote: »

Thank you all for the advice!

The house is in a bad state of decor etc and other houses on the same street with the loft ext we are planning to add go for about £400k.

The house is being sold by trustees so I don't think they are interested in investing on it...

There have been many reports that doing a house up in a falling market is unlikely to recover the costs of the work. nJust watch Homes under the hammer when the show properties from 2011. The sellers are oftern upset with the valuation and is by generous estate agents and not the stricter bank surveyors.

I doubt very much you will get £400k, maybe £25k if lucky after the work.

I might be wrong, you magnolia walls, oatmeal carpet and vase with twigs could make all the difference to the price.;)

DVardysShadow

theminutehewalks wrote: »

We agreed £310k but the bank has just valued it at 300k for the mortgage. On top of that, we need to spend £40k doing conversions and modernisations (which we will borrow from our family) and the damp report has diagnosed about £5k of damp and dry rot work.

We reckon the house will be worth about 400k when finished.

theminutehewalks wrote: »

The house is in a bad state of decor etc and other houses on the same street with the loft ext we are planning to add go for about £400k.

Hmm

1] As everyone else is saying, £45000 of work on a property which will be worth £400000, suggests that right now the property is worth about £340000 at least

2] A valuation of £300000 against an agreed price of £310000 is not bad. If you have the financial clout to see this through, this should be water off a duck's back. It should not be a show stopper - if it is actually preventing you getting a mortgage, then this project is too big for you

3] Reality check. When you say that other houses go for £400000, is that really the price they sell for or is it just the asking prices you see from the agents? Because if they are asking £400000, most likely they are going for 10% less, ie £360000. If you allow £45000 for the works, a fair price for present condition would be £315000, which is not so far out from the agreed price. So to me, this does not look a great bargain - if you allow another £10000 for unforeseen expenditure, the lenders valuation looks correct.

theminutehewalks

Thank you again for all the advice.

Does it make a difference that we are buying the house as a long-term family house rather than to make money (we are not planning to sell it....)? We like the area, schools, house etc... We had our house on the market for one year and have now managed to sell it so we will need to move in any case.

Thanks