Survey results back... House is overvalued!!!

icklejulez

Thanks for all your advice, I spoke to FIL this morning and he's told me I shouldnt be offering more than the 3k over the market value we agreed to originally(which is now 135k). He sells 1000's of properties each year(director for large chain) in the NW of england and has said that in this area his houses have hardly rose in value over the past 2 years. So we would be silly to be hoping that prices will rise. I have however put my offer forward to the EA 10mins ago and they didnt sound surprised. Depends I suppose whether they are to risk losing a sale, we can always go in at 140k at a later date.

PosterBoy77

Alan_M wrote:

This is something I find a little bizarre about valuations.

In a free market economy any commodity is worth what someone is willing to pay for it at that moment in time (see 3G mobile licences, tech stocks in the 90's etc).

I realise the surveys are designed as much to stop fraud as anything else, but really that's to stop someone telling the mortgage company the house is worth £300,000 when it's actually worth £150,000.

The difference between £135K and £143K is no more than sentiment, not factual value - as in reality you are willing to pay £143K.

Discuss.......:)

It is a free market and people can pay whatever they like. However most people are not actually able to pay much at all - they need a mortgage in order to borrow the money to purchase the property they want to buy.

The valuation is there to protect the mortgage lender to ensure that the borrower is not spending more than what they think it is worth. If they need to reposess then they need to be able to sell the house again.

If a buyer can pay cash, they can pay anything they like and it is not going to cause a problem.

Many buyers get caught up in the excitement of buying a house and may pay more than it is worth to ensure they get it. However this does not mean that it could be sold again for the same price. Just look at some new build flats - many are now being sold for less than what they cost new two years ago.

It is always easier to spend other people's money than your own!

Generali

Alan_M wrote:

This is something I find a little bizarre about valuations.

In a free market economy any commodity is worth what someone is willing to pay for it at that moment in time (see 3G mobile licences, tech stocks in the 90's etc).

I realise the surveys are designed as much to stop fraud as anything else, but really that's to stop someone telling the mortgage company the house is worth £300,000 when it's actually worth £150,000.

The difference between £135K and £143K is no more than sentiment, not factual value - as in reality you are willing to pay £143K.

Discuss.......:)

Just as something is worth what someone else is prepared to pay for it (recent London Art Sales being a case in point). For the purposes of security against a loan, something is worth what someone else is prepared to lend against it.

icklejulez

Exactly, if prices dont rise we dont want to be forced into staying in the property at the end of our 2 yr fixed rate. We'd have EA and solicitors fees to pay for as well as stamp duty on the next home. Thats without these new HIPs. Anyway its already done and offer of 138k being put forward at 1:15 by EA. I doubt Ill hear back today as vendor usually discusses everything with his wife.

Thanks for all your views, mine were mixed thats why I needed advice. They are all right in one way or another...

icklejulez

The vendor does not think movement that was found in the house should be considered a problem as it was there when they bought the house and has never been a problem since(3 years). Also the damp that was found they say is localised and not a big problem however for this they are prepared to reduce our offer by 1k.

As for the price they feel we are paying 7k over the market value for the quality of fixtures and fittings. ie basic single oven, plants in garden, coving and 2k fireplace.

So they think we should still be paying 142k or the house goes back on the market in 24 hours...

RHemmings

Alan_M wrote:

This is something I find a little bizarre about valuations.

In a free market economy any commodity is worth what someone is willing to pay for it at that moment in time (see 3G mobile licences, tech stocks in the 90's etc).

I realise the surveys are designed as much to stop fraud as anything else, but really that's to stop someone telling the mortgage company the house is worth £300,000 when it's actually worth £150,000.

The difference between £135K and £143K is no more than sentiment, not factual value - as in reality you are willing to pay £143K.

Discuss.......:)

Just because person A is prepared to pay £143K for the house, that doesn't mean that other people would be prepared to pay that much. If the bank has to repossess the house from person A, then the bank of course has to sell to someone else. And they'd want the house to easily sell (so be at a fair value) at a price sufficient to reclaim their money. That could easily explain how a house could be worth £135K when someone wants to buy it for £143K.

Doozergirl

I think there's still some negotiating room Icklejules.

Do you think you can find a similar house for £135k (plus the fees you have already paid)? Surveyors do get it wrong sometimes. It's you that needs to be confident of the price.

Or are you prepared to sit it out and rent now? The fact that you are having to move out very soon is going to impact on the extra costs you incur. Not £8k, admittedly.

I'd get out there and start viewing again and really try to weigh up what you think the house is worth.

PS. Bit of a faux pas if the vendors really did say they thought you were paying £8k over market value! Market value is market value, including the price of the basic single oven!

icklejulez

That was exactly my point, the surveyor assessed the value of the house based on its condition and the fittings. Without them it may only be worth 132k or similar. The house has a few flawes (i) a very small 3rd bed 4'11'' x 7ft and a small bathroom without room for a bath. Dont get me wrong the bathroom, shower and fittings are all perfect but they are faults to the property IMO. I knwo I could live with these faults because of the size of the living accomodation and size of 1st and 2nd bedroom but some people may not. Ive explained the situation to my FIL and he has said we should all think about it overnight so any more views to help me would be appreciated. I thought about making that 140k offer as a final one. I wouldnt like to lose the house but neither would I pay £350 for a pair of tesco shoes because they were the last on the shelf IYSWIM. It is not a house I am planning on living in forever as the location is only good for the place I currently work at. Its in Stockport and (no offence to anyone) would never bring my kids up in the areas we can afford! Will this property purchase ever be over!

marty1888

Im with the Vendor on this one.

You agreed to buy the house at £143k and outbid a 2nd interested party who offered the asking price of just under £140k.
Now you want to pick holes in a property you "love".
If i was the vendor I would tell you to put up or pull out. (I'd settle for £140k though!)

Sorry if that sounds harsh but at the moment your dallying is costing the vendor and yourself time and money.

Catmeister

Hi Icklejulez,

what a nightmare! My sister bought a property that was valued at under the asking because she loved it and was convinced they would never move out, so value didn't really matter, and they had 50%+ deposit. However if you're only planning on living in the house for a few years, I would be massively cautious about buying a property 7k over the value - how will you feel if when you come to sell you don't make it all back, at no fault of the market in general? Doozergirl's made a good point - how much would it cost you to pull out of the sale now? If I were you, I would definitely view other property in the area, and see if there's anything else that grabs your fancy. I think you're right in that FTB usually have a small deposit, so would have trouble getting a mortgage for the house - this does place you in a good position, and after all your offer of 138k is only 2k under the original asking price - I think the vendors have got greedy - perhaps understandably considering the bidding war.

Do you think the valuation could be wrong? Maybe worth offering the vendor to pay for another valuation and see what that comes back at?