home buyers report

nat38

we are in the process of buying a house and have received the HBR back. how is it possible that the valuation came back at exactly the purchase value? I would have thought their valuation was independent of the valuation for the lender?

G_M

Often happens.

Basically the point of the valuation is to reassure the mortgage lender that the property is worth enough to justify (and secure) the loan.

So rather than come up with a precise figure (which is always open to debate) the valuer just says "yes, this property is OK for the loan requested - value £XK" where X is the purchase price.

Sometimes the valuation is lower than the purchase price in which case the mortgage application would be turned down, or reduced, but it is almost never higher as this serves no purpose.

nat38

thanks, I hadn't realised that the valuation could not be higher.
is that the case even if the purchase price has been considerably reduced?

G_M

nat38 wrote: »

thanks, I hadn't realised that the valuation could not be higher.
is that the case even if the purchase price has been considerably reduced?

I did not say it could not be higher. I said it was "almost never higher".

The purchase price cannot be reduced. The purchase price is the price you pay, and by definition if you pay it, it cannot be reduced!

The original asking price, and any subsequent price negotiations, are completely irrelevant.