Surveyor Valuation Less Than Asking Price

Purple_Carrot

tancred wrote: »

does the prospective buyer only have a small deposit? I would assume so if the lender is refusing to lend.

10% - £13,500

thelem

Purple_Carrot wrote: »

I believe the lender is refusing to lend. We're also led to believe that changing mortgage providers is not an option they're willing to consider - we've not been told why.

They probably trust the valuation they've been given, and don't want to pay over the odds. Or they may be lying in the hope of knocking a few grand off.

What is the recent interest like in the property? If this sale falls through, how long do you expect to need to wait for another offer?

Tancred

Purple_Carrot wrote: »

10% - £13,500

Ah, proves me point. I bet 10% deposit is the minimum allowed by the bank, so that even a 5% value drop impacts the allowable equity. Shame the buyer didn't have a 25% deposit!

moneyistooshorttomention

Tancred wrote: »

So, does this mean that the lender will refuse to lend? What are the implications? Can the buyer not negotiate with the lending institution? Maybe they can go for another lender?

If I were you I'd stick to my guns and ask the buyer to find another lender if the current one refuses to 'play ball'.

Me too.

Quick calculation later - a 10% deposit means £6,570 from each of them. I would be wondering whether they had more savings than that to one side that they could put towards making a higher percentage deposit than 10%. An extra approx £3,000 each would mean a 15% deposit and that very same surveyor should be a bit less "bothered"...

You're taking a huge hit as it is - so i would certainly argue for "sticking to your guns" on this one.

Purple_Carrot

moneyistooshorttomention wrote: »

Me too.

Quick calculation later - a 10% deposit means £6,570 from each of them. I would be wondering whether they had more savings than that to one side that they could put towards making a higher percentage deposit than 10%. An extra approx £3,000 each would mean a 15% deposit and that very same surveyor should be a bit less "bothered"...

You're taking a huge hit as it is - so i would certainly argue for "sticking to your guns" on this one.

We genuinely believe they're at their limit on this. We actually accepted an offer from these same buyers before Christmas, then only having a 5% deposit, they were planning on using a parent as a guarantor, a the parent got cold feet and pulled out, so that episode died.

We've been told that they now have a 10% deposit after getting said parent to re-mortgage their own home in order to raise the additional 5%. Sounds like they desperately want to buy it.

We've been to see an advisor today, and have done the sums on keeping the property on a buy-to-let basis, the sums seem to add up. I guess that's a whole new thread!

I will ask to see the survey report tomorrow though, you all have be doubting this!

Tancred

Purple_Carrot wrote: »

We've been told that they now have a 10% deposit after getting said parent to re-mortgage their own home in order to raise the additional 5%. Sounds like they desperately want to buy it.

It's encouraging - I hope it works out for you.

kBHX

As mentioned you've taken a massive hit on the property already. I wouldn't budge on the price any further in this situation.

phoebe1989seb

I totally feel your pain PC......we also bought our last house in 2007 and although at the time felt we'd got it for a good price, with the benefit of hindsight we realise we were comparing the prices with the new area - Essex - with the area we'd sold in - the South Coast - and by comparison we felt we'd got a bargain.

Fast forward to 2011 and having spent £40k on high-end restoration works we needed to sell quickly to move closer to ageing parents. Prices had fallen in our part of Essex and our house was a *niche-market* type period place not popular in that area, so we expected to take a hit. Our EA confirmed that the works carried out had made the house infinitely more saleable, but had added nothing to the value. As a result we achieved a quick sale but for 7% less than our purchase price - not taking into account the additional £40k spend - ouch!

Fortunately the surveyor valued the house at the purchase price we'd agreed with our buyers. In your case, as much as it hurts to take such a big financial hit, I guess if you really want to move you'll have to take it on the chin. Trouble is if that particular lender has under-valued it, will the next one (if you choose not to sell to these buyers) do the same.......or worse still will prices fall even further? Only you know if you can bear to stay in the property a few more years (doesn't sound like it though) and hope things improve.......

Does sound like your buyers are dead-set on buying your house, so hopefully you/they'll find a way round this setback!

GL with whatever you decide......

lessonlearned

Purple_Carrot wrote: »

We've been told that they now have a 10% deposit after getting said parent to re-mortgage their own home in order to raise the additional 5%. Sounds like they desperately want to buy it.

Low valuations from a surveyor are unfortunately quite common, especially in a slow market. In a rising market they seem to be a little more relaxed about "risk factors" because they know that if the borrower defaults they can repossess the property and get their money.

In a static or falling market this would not be so easy.

Another reason why a surveyor's valuation may be lower is that an EA's valuation can only ever be a "best guess" whereas the surveyor will be looking at the property in far more detail as to it's condition and perceived value.

However, the real problem at the moment is that Lenders are becoming increasingly loath to lend in the first place and are therefore imposing very strict lending conditions and criteria.

I have highlighted the bit about the 10% deposit in your post.

You may find that what the purchaser has done to get to that 10% ie - family help still won't be enough to satisfy the lender.

Some lenders are not at all happy when part of the deposit is "gifted". They take the view that a buyer should be committed enough to the purchase to supply their own deposit from their own savings and efforts.

They may look favourably on say a portion of the deposit over the 10% being a gift but they usually want to see at least 10% from the purchaser alone. So a 15% deposit made up of 10% purchasers own savings and then topped up with a 5% may be acceptable. However, when the deposit is only 10% they will want to see that the purchaser has put up these funds without outside help.

They certainly will refuse if they think that any part of the deposit made up from a loan, even if it is loaned by parents.

The days of easy lending are over, at least for the time being.

Given that you need to take such a hit on your price, BTL may well be the best forward for you. My sister has done this and it is working very well.

Sponge

Purple_Carrot wrote: »

We've had a steady stream of interest since being on the market and have previously had offers of £139,000, 137,500 and £135,000. Circumstances and stubbornness prevented us from selling at these prices previously.

Be stubborn for just a little while longer and wait for another offer in the same ball park from someone that might not suffer from/get such a low valuation?