Mortgage Provider has undervalued property

kittymac1

Hi all, i have had a quick look for other posts like this but can't find anything, so i apologise if i'm repeating.

My partner and i have been looking at buying my uncles house, he has had it valued by 2 estate agents and they have said it is worth £150k, we have agreed to buy it for £140k and applied for a mortgage in my name only as my partner owns another property which we are going to let out (full permission has been granted).

We decided on a family sale mortgage which allows us to use the difference between value and agreed sale price as a gifted deposit, this will allow us to use the money we have saved to do the property up as it is in a bit of a state (slight damp and roof damage and in need of full redecoration).

All was going ok until the mortgage provider did their valuation and have come back saying the property is only worth £130k so they will only lend us £117with the gifted 10% deposit. looking at other properties around the area that are for sale, they are being quite unfair with this valuation as it is a nice house with lots of potential, and is a far better buy for us than many other places around at a similar value.

Is there anything we can do to get them to check their valuation, they have looked at the land registry for similar sales, but there have only been 5 sales on the street in the last 5 years as the families that live around that area have been there for years.

Any advice will be gratefully received.

On a side note, time is pretty short as we vacate our property on Saturday to go away for 2 weeks before returning to live with my sister until we find somewhere to live, once the mortgage was agreed in principal we let our tiny 1 bedroom house out as we stupidly assumed that everything was going to plan.

Jimbo1976

Ignore what estate agents say as they are typically touting for your business so they will give you a figure above the real value of the property.

Look through the House buying, renting and selling forum and see some of the posts about how much below the asking price prospective buyers are offering.

Unless you can come up with evidence of local sales which support the £140,000 figure (which you have searched in vain for) then you cannot challenge the valuation.

Why don't you just explain this to the family member and offer £130,000 for the property?

kittymac1

Thanks,

I have looked for other properties online and although I know of 1 property which has sold in the last couple of weeks (it was on the market at £160k but I'm unsure of the final sale price) and it doesn't appear on any searches yet, I am drawing a blank.

I have told my uncle that it is out of our control and we can give him the £130k, but he doesn't believe the valuation and says he can't afford to sell it for that.

I am just looking to see if there is anything I have missed or anything else we can do before we walk away, as I mentioned it is a better property than others at similar prices.

kittymac1

I'm not sure if this is any use, but I have found 3 similar properties that have sold subject to contract for between £140 - £150k, in the surrounding area, is there anyway of finding out the prices that these are going through at? and would they be any use if I can?

paulmapp8306

Ultimately, the value of the house takes into account more than area and size. The whole state of the house is taken into acount, any extensions, modernisation etc.

If the mortgage valuation is £130k then thats what its worth. A sale to any other party would also give a sijmilar value. Your Uncle just has to accept the valuation - and if he cant sell for what its currently worth then he doesnt sell.

It does not matter what an EA says or what other houses sell for - the valuation by the mortgage provider is the only one that matters. Its one reason why offers are altered post valuation - and a reason why lenders insist on their own. They wont lend more than a property is worth (in their opinion).

Muscle750

They always do undervalue because they know that in reality the estate agent always markets a property above its true value, as that leaves enough room for a drop in the offer price plus if you default and the house is repoed then the lender will get all their money back if it goes to auction or tender, Estate agents are the biggest crooks out there one house we owned was repoed by the previous owners lender we had to put a bid in , we were advised of a offer price by the estate agents we did our homework offered a reasonable price, we won the bid and the house was ours we discovered after that the estate agent was trying to buy it under another name which is illegal when i went to get the keys he stood up and threw them across the table at me , they shut down within weeks after and they were quite a big company.
One other story my parents sold their bungelow the so called as my dad said "Nice man " from the estate agents valued it at £260k even thou it had been valued at £300k three weeks prior by another agent, anyway they advised them to market it at £249k under the 250 stamp duty ................which they did and it sold within 5 hours and the nice man from the estate agent bill was £7k for 5 hours !!!!!!!!!!!!!!

Annisele

It's possible that another surveyor/lender would value higher, but I think you're going to struggle to get a £150k valuation.

If estate agents say £150k, then what they generally mean is "market for £150k and plan to take a bit less". If that's what your estate agents meant, then I'd guess £140k is the absolute top end of what an unrelated third party might pay - which means that there's no gifted deposit of £10k.

dunstonh

Estate agents typically value around 15% higher than realistic value. So, that fits in more or less with what is happening here.

Jimbo1976

Sadly you cannot find "sold subject to contract" prices until the sale goes through and the price appears on the sold prices bit of the web sites.

If these properties you are referring to are being marketed at £140-£150,000 then they will be selling for £130,000ish.

kittymac1

Thank you everybody for your help, only time will tell what happens but I'm guessing we will be cutting our break short to come back and look for another house.

Thanks again

Trollfever

If your uncle is convinced that the property is worth £150k then he could always pay for an independant valuation.

http://www.rics.org/