Arrgh vent about selling my flat! Possibly a warning too.

vyle

Firstly, I can see where the mortgage company is coming from, but this is so frustrating and I didn't even know it was possible:

I'm selling my flat, and the estate agent valued it at 200k. Before it even hit the market, they found a buyer who wanted to pay the asking price for a quick buy.

IDEAL!

She was going to buy a flat nearby at 185, but this one, due to the size and shape of rooms meant that it was unique, and she loved it.

The only snag came yesterday (after I've had my mortgage for my new house agreed, which was within my budget and left me a fair chunk of money to pay for all the necessary bits and pieces that crop up) as she got notification that her mortgage provider had valued my flat at 183k, based on similar sales in the area, so they wouldn't give her a mortgage for it. She can afford to pay for the mortgage, but even if she upped her deposit they refuse because they won't provide a mortgage for a property sold more than 5% over value!

That means I'm suddenly 17k adrift in my budget when I'd left 8K as a safety net. I think I'll survive, but if I pull out, I've still lost my mortgage valuation and all the legal fees up until this point. The most annoying thing is that throughout the process, I made it clear that I wouldn't sell for under 190k, and now I'm stuck with a big hole and the weirdest thing is that even the buyer was arguing FOR paying the extra, because she agreed to a price and didn't want to !!!! us over.

It's bizarre.

the warning part is for those of you who may not be aware:

If you put a house on the market and it sells for that price, it doesn't mean that anybody can actually buy it.

gb12345

It sucks, but the problem is that the 200k is just the Estate Agent's opinion of what he thinks he can sell it for based on the selling prices in the area and it is in his interest to put it at the higher end of the range to maximise his commission.

The lender on the other hand will be more conservative and look at the lower end of the range.

If might be worth looking on Zoopla or Rightmove to get an idea of the prices in your postcode based on previous sales.

SuperHan

AFAIK, you can pay the mortgage lender for a second valuation with another valuer that they use if you contest the valuation price. We were warned this may happen with our apartment - we have bought a 3 bed apartment in a bespoke, eco friendly building (the only of its kind) in a fairly poor area. Although our apartment was 190k, there are 3 bed houses across the road selling for sub 100k, and valuers often look at this and undervalue apartments in our building. We were lucky and our valuer understood the concept and valued at the full amount, but the vendor told us that should the opposite happen, they would pay the lender for a second valuation which would hopefully come in closer to the mark. Maybe you could offer to pay for this for the buyer? She could ask if it's something the mortgage lender is willing to consider? It'll still need to be by their valuers, but as valuation is fairly subjective, just getting someone different out might make the difference!

vyle

SuperHan wrote: »

AFAIK, you can pay the mortgage lender for a second valuation with another valuer that they use if you contest the valuation price. We were warned this may happen with our apartment - we have bought a 3 bed apartment in a bespoke, eco friendly building (the only of its kind) in a fairly poor area. Although our apartment was 190k, there are 3 bed houses across the road selling for sub 100k, and valuers often look at this and undervalue apartments in our building. We were lucky and our valuer understood the concept and valued at the full amount, but the vendor told us that should the opposite happen, they would pay the lender for a second valuation which would hopefully come in closer to the mark. Maybe you could offer to pay for this for the buyer? She could ask if it's something the mortgage lender is willing to consider? It'll still need to be by their valuers, but as valuation is fairly subjective, just getting someone different out might make the difference!

Ooh thanks for that. Do you know how much it costs?

Robin_TBW

If the buyer could get the extra deposit cash together could you just take that as a purchase for a piece of furniture and not count it toward the mortgage? Say, sell her a coffee table for £15k in a separate transaction? haha

Valli

Robin_TBW wrote: »

If the buyer could get the extra deposit cash together could you just take that as a purchase for a piece of furniture and not count it toward the mortgage? Say, sell her a coffee table for £15k in a separate transaction? haha

But the buyer cannot get a mortgage at all; not even a lower mortgage than she originally applied for because the mortgage company have decided the flat is over valued.

vyle wrote: »

she got notification that her mortgage provider had valued my flat at 183k, based on similar sales in the area, so they wouldn't give her a mortgage for it. She can afford to pay for the mortgage, but even if she upped her deposit they refuse because they won't provide a mortgage for a property sold more than 5% over value!

gb12345

Valli wrote: »

But the buyer cannot get a mortgage at all; not even a lower mortgage than she originally applied for because the mortgage company have decided the flat is over valued.

What Robin is saying is that the seller reduces the price of the flat by 15k, so that the lender will give a mortgage on it and then she separately sells the buyer an item for 15k.

Valli

gb12345 wrote: »

What Robin is saying is that the seller reduces the price of the flat by 15k, so that the lender will give a mortgage on it and then she separately sells the buyer an item for 15k.

I know that - but, at the moment the mortgage has been refused; they haven't stated a maximum that they will lend on this flat thus giving the buyer an option to go back to the vendor and re-negotiate. They have turned her down full stop.

gb12345

Valli wrote: »

I know that - but, at the moment the mortgage has been refused; they haven't stated a maximum that they will lend on this flat thus giving the buyer an option to go back to the vendor and re-negotiate. They have turned her down full stop.

They have turned her down based on a purchase price of 200k, which they say is too high.

If the buyer makes a reduced offer of say 183k, then (assuming the buyer is OK for a mortgage of that level) they should agree to the mortgage as the property is being purchased at the price they valued it at.

vyle

Valli wrote: »

I know that - but, at the moment the mortgage has been refused; they haven't stated a maximum that they will lend on this flat thus giving the buyer an option to go back to the vendor and re-negotiate. They have turned her down full stop.

Sorry, I worded that badly. They will give her a mortgage for the lower value if we agree to accept that valuation, which we have.

My flatmate (who is going to become my tenant in the new place) will cover the increased mortgage cost for us.

Valli

I suppose this is indicative of the number of lenders who had their fingers burned when negative equity cause problems for so many.. Shame for you though.