Mortgage Retention Advice Please

BessieandBertie

Hello - I would be grateful for any advice forum members could give me.

I am currently considering buying a house - starting by putting in a very low offer which not surprisingly has been rejected.

The estate agent has sent me a copy of a survey a potential buyer had done following which they pulled out of the sale. I'm hardly surprised! They offered 98,500 on the property but the valuer valued the property of 93,500 with a 5,000 retention on the mortgage. The work required was a damp course and checking the wall ties. The seller then accepted a reduced offer of 96,500 but this is when the seller appears to have pulled out of the sale.

My question is, if I were to have a (hopefully considerably) lower offer accepted than 93,500 (although it does seem that the seller has fairly unreasonable expectations about the house's worth) will there still be a retention on my mortgage?

Any advice very welcome.

Thank you.

warwicktiger

Probably yes, after all the building still needs the work doing to make it worth at least what you intend to borrow.

kingstreet

If the next surveyor agrees with the last one, you will be required to obtain the same additional information, which, if it bears out the surveyor's initial opinion, will result in a retention being held.

In my experience, damp often results from other causes, such as faulty rainwater goods, soil bridging damp course etc, rather than rising damp which is quite rare.

Surveyors are GPs who suspect a particular issue. It's only when they see the report from the consultant do they actually make a decision on the cause. If the reports don't amount to much essential remedial work, the suggested retention would be lifted.

If you do proceed with this, ensure you get an independent surveyor, not an employee of a firm which has an interest in installing a damp course. You'll often find one is recommended, even if it isn't needed.

http://www.independentdampsurveyors.co.uk/

Sheep

We recently had a survey done on the property and the surveyor said there was a big damp issue and wouldnt proceed until there was a full damp and timper report. The D/T surveyor came out and said there was no issues at all and he said surveyors are doing this all the time to cover their own back. He said there were a few things that he would change with only a £350 costing. Sent this to the lenders surveyor and he accepted this straight away with no retention. For the sake of £165 i would get a D/T report and i'dbe suprised if there was more than £1000 worth of work. This way if you do have a new surveyor round you could give him a copy of the report.

BessieandBertie

Thanks everyone for your really helpful advice.

The original buyer got a D/T survey but from a builder who wanted to put a damp course into the house! I'll definitely follow the advice and get an independent D/T survey done. (Personally I absolutely hate damp courses - don't work and look really ugly so would like to avoid if at all possible - my solution would be to open up the chimney breasts again to improve the air flow and looks much nicer also).

Also love the analogy of a GP/Consultant as I work in a Hospital so that really made sense to me.

I don't know though - they have you everyway. I've fought to get a deposit, spent a year trying to find a house I would consider buying and now I have to contend with a mortgage retention! They really do have you every which way. No wonder the market is in such a terrible state!

Dave_Ham

Brilliant information provided already, getting the report in advance of the valution is visionary - most people try and save the money and take a punt and costs them more in the long run..

Word of caution that the "seller" has pulled out previously for an offer in the same region - why is yours going to be any different?

And finally big hats off to the Estate Agent, who has actually had the foresight and integrity to show you the report in advance and not let you incur cost uninformed with fingers crossed.

Sure he/she will have their knuckles rapped for the morality of what they have done in the team meeting this morning..

BessieandBertie

Thanks Dave

Should have mentioned about the price. The house has been on the market (for 2 years!) at 100,000. The person who had the original survey done offered 98,500 but this was reduced to 96,500 when the valuation came back with a 5,000 retention. (Their D/T survey from the firm who - oh what a surprise! - could do the work - priced the cost of the work at 2,250). I think I would have pulled out in this situation too.

Anyway that was apparently the final straw for the seller with this particular estate agent so they moved agents to the one I am now dealing with who are marketing the property at 90000. I have offered 83,000 - the offer I'm not surprised they rejected. My next step would be an offer of 86,000 - the price the owner paid for the property in 2009 - since when my understanding is there has been no movement in the market - up a bit down a bit but basically the same according to Zoopla. My absolute last offer would be 88,000 and not a penny more, after which I will walk away from the property if that is unsuccessful - does this sound sensible?

kingstreet

When the last surveyor went out, did he give values now, in present condition and after essential repairs?

The "now" value was £93,500 you say? What about the "after?"

Regardless of how much you agree, if the essentials are applicable after reports are done, you'll still face a retention. Buying for a lower price won't remove the retention as there will still be issues affecting the lender's security.

BessieandBertie

Thanks King Street

The surveyor said that once the essential repairs had been done the value would be 98,500 but that really makes me smell a rat - exactly the price the buyer had offered?? If it was worth so near the 100000 then asking price how come it has been on the market for two years? Zoopla says it is currently worth 85,000.

kingstreet

My opinion of Zoopla is unprintable here...

The surveyor is trying to link the value after the repairs with what he believes will be the cost of the repairs. A mortgage report and valuation is the surveyor's opinion on whether (or not) the property is suitable security for the mortgage and that the purchase price is reasonable, given the amount being borrowed on it.

It isn't an open market valuation, so there will always be a link between purchase price, retention/essentials and post-repair value.

£93,500 now, £5,000 essentials and £98,500 after repair is wholly reasonable if the purchase price is £98,500. It is designed to tell the purchaser he is paying the right price if the work is carried out to improve the security.

Normally, the purchaser would ask the vendor to get the work done prior to purchase, and the purchase can than proceed at the higher price - the retention then becomes redundant.

BessieandBertie

Thanks again King Street and everyone - my way forward is now clear.

90,000 does actually now seem like a great bargain! So I have two options - offer 86000/88000 and get an independent timber and damp survey before I get my bank to do a valuation or offer 88000/90000 but the owner has to get the work done for me. Might tell the estate agent these are my two proposals as they have been so decent with me and leave it with them.

Will come to this forum next time I have a money dilemma - it's been brilliant!