How to value a property when buying-out a tennent in common

willo12

I am in a houseshare with a friend and he now wants to sell the property. I am looking into being able to buy him out. We have a agreement of trust to say that we both own 50:50 but my problem is knowing how to value the property? We could get in some estate agents, but I am worried that they will value it too high in order to try and get the best commission for themselves. The flat next door went on the market for £240k but sold for £200k, so I am worried about getting estate agents in - but that they don't refelct the market. Is the best way to get the true value to put it on the market and see what offers we get? How do independent evaluators work? Can they reflect the marketplace correctly?

xylophone

Presumably you'll be wanting a new mortgage to buy him out - the mortgagees may well want to send their own valuer round?
On the basis that your friend is selling half a house with what amounts to a sitting tenant, it could be argued that his share is worth a little less than it would be if you were both selling and splitting the proceeds?

willo12

I had not thought of that - but what is the best way to get it valued in the first place?

JQ.

xylophone wrote: »

Presumably you'll be wanting a new mortgage to buy him out - the mortgagees may well want to send their own valuer round?
On the basis that your friend is selling half a house with what amounts to a sitting tenant, it could be argued that his share is worth a little less than it would be if you were both selling and splitting the proceeds?

That would be totally unfair on the other party and it should not be valued on that basis. Otherwise they'll just insist the property is actually sold and the proceeds subdivided.

OP - to get the property valued you can contact the RICS and get a local Chartered Surveyor to value the property - shouldn't cost more than £200 for a letter stating the value. Or speak to a local EA and get them to recommend a local Surveyor.

Do not get an EA to value it, they are not qualified and not personally liable for the advice they give.

You may also want to consider the cost savings your co-owner is making. If you had to sell the property you would be liable for EA fees, so their net proceeds would be less. When you come to sell you will face those costs - therefore you might want to deduct 0.5 to 0.75% off the value provided by the Surveyor.

However, I agree with the poster above, when you make the mortgage application the Bank will send round a Chartered Surveyor to value the property, so if you've already had one done, you will have duplicated your costs. Get a rough idea of what it's worth from Rightmove and do a mortgage application on that basis. Make sure you fully explain the situation to both the Mortgage Co and the Surveyor, so they don't think the price you have put in the application is the actuall purchase price and then just agree to the sale based on the value provided by the Surveyor.

movilogo

Just say you are not prepared to buy out at this moment. This will make it very difficult to sell his part to a 3rd party. On desperation, he might agree to a lower price.

willo12

However, I agree with the poster above, when you make the mortgage application the Bank will send round a Chartered Surveyor to value the property, so if you've already had one done, you will have duplicated your costs. Get a rough idea of what it's worth from Rightmove and do a mortgage application on that basis.

When the bank sends a surveyor though, I think they just value the house to an amount they think it will cost to re-build the house if it was knocked down - i.e. the cost that the house is worth to build, not its market value?

JQ.

willo12 wrote: »

When the bank sends a surveyor though, I think they just value the house to an amount they think it will cost to re-build the house if it was knocked down - i.e. the cost that the house is worth to build, not its market value?

No they won't. They will tell you what the house will sell for if placed on the market - the Market Value.

kingstreet

Concurrent thread;-

https://forums.moneysavingexpert.com/discussion/3851587

princeofpounds

When the bank sends a surveyor though, I think they just value the house to an amount they think it will cost to re-build the house if it was knocked down - i.e. the cost that the house is worth to build, not its market value?

No, although they do also estimate rebuild values for insurance purposes.

casper_g

JQ. wrote: »

However, I agree with the poster above, when you make the mortgage application the Bank will send round a Chartered Surveyor to value the property, so if you've already had one done, you will have duplicated your costs. Get a rough idea of what it's worth from Rightmove and do a mortgage application on that basis.

In a normal transaction the bank's valuation surveyor won't value the property at more than the agreed purchase price. If the OP guesstimates a price that's too low, is it likely the surveyor will tend to undervalue by just rubber stamping the guess? If I were the OP I'd make sure the price I mentioned to the bank was on the low, rather than the high side!

getmore4less

valuations are only a guide. what matters is what you eventualy agree on.

start with how much you want to pay and how much they will accept.

Discuss till you agree

Look at recent selling prices