Mortgage company valuation 15k less than our accepted offer - what now?

Oranjeboom

Hi All,

This must happen quite a few times...

An offer of 245 was accepted by our vendors. The place needs some work doing to it (nothing structural) so originally we had offered 220 and told the vendors not to bother doing any work to finish the house off.

They of course wanted the full asking price and this ended up with us going to 245 (after numerous weeks of upping our offer) with the condition that they finished the work off to our liking.

Now the mortgage valuation says it's only worth 230. I understand that not all of the work has been completed yet, but am pretty peeved that the valuation is only 230 (especially with the EA insisting it was worth more than 230:mad:. The mortgage company is still willing to give us our small mortgage, but of course we don't want to buy a house that's not worth the $$$.

We also had a full survey undertaken, and that report should arrive this week but speaking to the surveyor he noted that there remains work to be done.

Vendors have been dragging their feet with sorting out things their side (deeds, paper work for solicitors and finishing off the work on the house) and now with this valuation we are really tempted to walk away despite forking out on survey, mortgage fee, sol's fees etc. But this wasted money will be less than the value that we would lose if proceeding with the sale at 245.:(

How have people dealt with this scenario before? Have you been able to renegotiate your original offer with the vendor or just walked away?

We're in a good $$ position as we need a small mortgage and don't have a chain. Had we required a bigger mortgage I assume the lender would simply refuse to lend the money to us as the property is not worth the vendors price.

OB

Tancred

oranjeboom wrote: »

Now the mortgage valuation says it's only worth 230. I understand that not all of the work has been completed yet, but am pretty peeved that the valuation is only 230 (especially with the EA insisting it was worth more than 230:mad:. The mortgage company is still willing to give us our small mortgage, but of course we don't want to buy a house that's not worth the $$$.

Not worth the money? Says who? The surveyor? If you paid the price then it's damn well worth the price. The surveyor is acting on behalf of the lending institution, so he will invariably undervalue the property - this is how they work now. It's just a devious way that banks have of increasing the LTV after agreeing the mortgage. You can try to renegotiate the price with the vendor, but it's unlikely they would agree unless the reduction can be passed all the way along the chain.

martinsurrey

Tancred wrote: »

Not worth the money? Says who? The surveyor? If you paid the price then it's damn well worth the price.

But the OP is only paying a PART of the price, as they need a mortgage.

If I was on fire I would pay £1,000 for a bottle of water, that doesn’t make the bottle of water worth £1,000 to the person who pays my bill!

Tancred wrote: »

The surveyor is acting on behalf of the lending institution, so he will invariably undervalue the property

... Quite definitely not true. Thousands of mortgages go through every month without a down valuation,

Tancred wrote: »

- this is how they work now. It's just a devious way that banks have of increasing the LTV after agreeing the mortgage. You can try to renegotiate the price with the vendor, but it's unlikely they would agree unless the reduction can be passed all the way along the chain.

Here we go with a "a down valuation happened to me so it must just be the way it works" Tancred special *sigh*.

I’m sick of Popcorn!

mr-bob_2

Renegotiate.

Anyone else who comes to buy the property will be in the same boat. And those with a low deposit and a mortgage won't be able to buy it as the mortgage company won't lend them the money. So that limits the market at their asking price, which in itself brings it down.

So, either lower your offer or walk away, unless you really love the house.

mrginge

Tancred is on his one man campaign to prop up overvalued houses again...

I suggest you pay the 245 just to shut him up.

jmt

Tancred wrote: »

Not worth the money? Says who? The surveyor? If you paid the price then it's damn well worth the price. The surveyor is acting on behalf of the lending institution, so he will invariably undervalue the property - this is how they work now. It's just a devious way that banks have of increasing the LTV after agreeing the mortgage. You can try to renegotiate the price with the vendor, but it's unlikely they would agree unless the reduction can be passed all the way along the chain.

Yes they are working for the lending institution, but this is simply not true. I have just got a mortgage and when I met the valuer he asked me how much I needed the property valued at. I told him the figure and he said he was happy. Some vendors are still looking for 2007 values and not being realistic. I would not pay more for a property than the RICS valuation. Only a buyer who does not require finance can pay whatever they want for a property. I truly believe that EA will tell a vendor what they want to hear with regards to sale price to get the business. I was watching Homes under the Hammer this morning and one EA said asking price of £255,000 to achieve near £250,000 stamp duty whereas the other advised an asking price of £275,000 but would only achieve £250,000 - the vendor hears the price £275,000 and this is now what he expects!

Oranjeboom

jmt wrote: »

Yes they are working for the lending institution, but this is simply not true. I have just got a mortgage and when I met the valuer he asked me how much I needed the property valued at. I told him the figure and he said he was happy. Some vendors are still looking for 2007 values and not being realistic. I would not pay more for a property than the RICS valuation. Only a buyer who does not require finance can pay whatever they want for a property. I truly believe that EA will tell a vendor what they want to hear with regards to sale price to get the business. I was watching Homes under the Hammer this morning and one EA said asking price of £255,000 to achieve near £250,000 stamp duty whereas the other advised an asking price of £275,000 but would only achieve £250,000 - the vendor hears the price £275,000 and this is now what he expects!

completely agree with you there! EAs are feeding their clients with unrealistic targets...and this is why we are now in the position we are in, partly. EA told vendor to hold out for a higher offer even though we made it clear we thought it was valued much lower than that. They then agreed outstanding work would be done etc etc to make it worth our while in offering the asking price. Of course we should have walked away at the time with a lower offering price so this is partly our fault.

But yes, those EAs on 'HUTH' see that TV program as a good deal for promoting their EA business - especially when they're offering the highest valuations!!

suebfg

It depends if you think the surveyor might be right. We had one house downvalued and we ended up pulling out of the transaction as with hindsight, we felt the surveyor was right. On a second occasion, a a house was not downvalued by the surveyor but we ended up pulling out because a similar house sold on the same street for considerably less just before we were due to complete.

RoxieW

Our property was recently Downvalued from £140k to £115k - so, by a huge percentage! Of course we then would only expect our buyer to pay £115k - you can't in fairness expect someone to pay over the mortgage valuation, unfortunately for us.

By the by as she has still pulled out anyway. We won't be re-marketing at £140 though - what's the point for the same thing to happen again?

Tancred, sorry you are deluded if you think someone is going to pay over the mortgage valuation. OP - I would imagine they'd be expecting you to renegotiate now.

jmt

mrginge wrote: »

Tancred is on his one man campaign to prop up overvalued houses again...
I suggest you pay the 245 just to shut him up.

Has Tancred sold his house as I'm sure I commented on one thread and it has gone and his house is no longer on Rightmove.

The_Pixi

This happened to me the other month, we saw a property that was on for £250K reduced from £269K. It was a property bought at auction and then done up, so we would have had a blank canvas to start from.

On viewing I felt it was a bit small and that the fixtures and finish was simple and cheap.

I thought the drop to £250K was because they were getting no interest at £269K, with that floor space and finish. I did a bit of Googling and could only see similar property on the same street going for £209K - £215K so I offered £220K with a view of going as far as £228K given I really valued the clean white canvas.

£220 was instantly dismissed and the Estate agent said they had already rejected £230, and really kept going on that it was worth it, being first time buyers got a little panicky and ended up offering £250K (This is at the lower end of our budget anyway so were happy to go for it)

This was promptly accepted and then demolished at valuation as he came in at £225K bang in the middle of where I initially thought. The estate agent tried every trick sending comparable to the broker, trying to convince us it was worth £250K and that there were a queue of eager buyers.

Further research uncovered they bought at auction at £198K and then the picture was clear, the road value was around £205K - £225K depending on size and finish, they over spent at auction resulting in a less than top spec finish and I think unrealistic value.

I walked away, and It still hasn't sold, the estate agent even sent a crowing e-mail to say they have now accepted an offer for full asking :T good luck with that I thought, soon as the valuation hits I doubt it will get further.

The agent was quite rude, so I'm looking forward to moving into my first home soon and sending her a lovely response