A little suspicious

Rylston1

Just seeing if anyone can give any advice or has experienced a similar situation.

We bought our house in the peak of the market in 2007 for £272,00. It was in need of some work, we have installed a new high spec bathroom had the whole house replastered and decorated and carpeted throughout, a new side extension which includes a new kitchen and separate utility, installed a downstairs toilet and created a new reception room. Aware of the fact that house prices have dropped since 2007 we thought we might be in a position that the work will have paid for itself, meaning that the house might be worth what we paid plus the cost of the work.
We talked to our mortgage company who said that if the house was worth more than original purchase price then we would be able too move onto a lower %. We had three estate agents round for open market valuations which came in on a average on £325,000.
We paid the mortgage company for a valuation by Colleys, who valued the house at £250,000, which is exactly what we have outstanding on the mortgage, putting us at 100% borrowing.
The difference seems quite dramatic to me, can I challenge this?

go_cat

What have other similar houses sold for near you ?

kingstreet

I wouldn't give you ten bob for the estate agents' "pre-sale marketing appraisals" as they aren't qualified surveyors and don't follow the kind of methodology the surveyors' red book requires.

They will tell you what they think you want to hear to get your property on the books. What you actually sell for can be drastically different, and that doesn't affect them if you're paying a fixed fee.

A surveyor is required to obtain evidence of the sale of comparable properties to justify his valuation. You may have a complaint if he's failed to do this. I assume you paid the £108 fee for an internal inspection, not the £70 fee for a drive-by?

DannyboyMidlands

Rylston1 wrote: »

Aware of the fact that house prices have dropped since 2007 we thought we might be in a position that the work will have paid for itself, meaning that the house might be worth what we paid plus the cost of the work.

I don't understand this bit. Either house prices have dropped or they haven't.

If they have then surely the calc would be:

Value = 2007 price - fall since peak + cost of extension.

I don't think that general decoration, carpets or flashy bathrooms would add much value.

Rylston1

My cousin bought a house round the corner last month almost the same as ours but in need of total refurb for £300,000. I could check right moves sold prices to find out similar properties sale prices.
We paid £150 I think for an internal inspection.

Senior_Paper_Monitor

Kingstreet and Dannyboy and spot on - only the extension that you mention will return real value (the others will primarily help you sell it) in terms of a 'mortgage valuation' and be aware that the area will limit the extent of that if you have 'over improved'.

As metioned - 'comparables' are very much the anme of the game (having a repossession in the street - sold at low value) can be disasterous for the rest of the home owners !

Best unofficial guide as to what is happening in the area is the Land registry price index (available to the public) - see what that says.

My money is on Colleys.

Rylston1

DannyboyMidlands wrote: »

I don't understand this bit. Either house prices have dropped or they haven't.

If they have then surely the calc would be:

Value = 2007 price - fall since peak + cost of extension.

I don't think that general decoration, carpets or flashy bathrooms would add much value.

Sorry what I meant is we didn't expect to overall profit from the extension, we hoped it would help balance out the decress in the value of the property since 2007, does that make sense.

Rylston1

Senior_Paper_Monitor wrote: »

Kingstreet and Dannyboy and spot on - only the extension that you mention will return real value (the others will primarily help you sell it) in terms of a 'mortgage valuation' and be aware that the area will limit the extent of that if you have 'over improved'.

As metioned - 'comparables' are very much the anme of the game (having a repossession in the street - sold at low value) can be disasterous for the rest of the home owners !

Best unofficial guide as to what is happening in the area is the Land registry price index (available to the public) - see what that says.

My money is on Colleys.

There was a bank repossession on our road that sold for a crazy low price in the summer

WestonDave

That's your problem then - mortgage valuation will be looking at least in part at worst case scenario - i.e. what the lender will get back on repossession, so if there is a crazy low one, their fear will be that this is the best they will get on repossession.

kingstreet

Rylston1 wrote: »

My cousin bought a house round the corner last month almost the same as ours but in need of total refurb for £300,000.

That won't be on the Land Registry figures for perhaps another month or two, so it won't be available to the surveyor.

You can see what houses have fetched in your area on sites like;-

https://www.houseprices.co.uk and
https://www.ourproperty.co.uk

and you could put recent additions to the surveyor if he may not have been able to see them.

You'd need a valuation of £280k min to fall into the next band of Halifax product transfer rates.

kingstreet

The sale prices of repossessions are not published in the Land Registry figures. They are one of a long list of exclusions.