Undervalued House & Arrangement Fees

JamesClayts

We're trying to buy the house that we've been renting since 2011. Due to our tenancy, ease of sale and avoiding estate agents, a discounted sale price has been agreed of £305K. This was a bargain for us and we expected to have to pay more than £320K. We've got the 10% deposit together and a mortgage agreed with HSBC. We paid the £999 arrangement for it and a further £260 for the valuation. To our amazement, the valuation (form a 3rd party) came back as £275K and now HSBC won't lend to us for this property and won't let us have our arrangement fee back.

I understand that valuation companies often use minimum sale valuations, but not a single property on the same development as ours as sold for less than £275K since 2002, and ours is one of the biggest! The comparative properties they used against ours were not really comparable (one was a dilapidated building). The valuation company believe that they have followed the RICS guidelines, but I can't see how that is possible. We've sent a letter of complaint along with a 9 page document justifying a revaluation, but we don't think they are going to even consider it.

We'd be willing to go with another lender, but I'm not willing to let that £999 arrangement fee go when HSBC have added no value whatsoever in earning it. In hindsight we should have agreed with HSBC that this was refundable, but not for 1 second did we think the valuation would come back so low. Same size houses in the area have sold for as much as £380K in recent years and detached house prices are going up in my area! What options do we have?

I appreciate that there have been a few historical threads about this matter, but I've never found anything conclusive about solutions, so would appreciate anybody's help.

Thanks
James

_Andy_

Let me get this straight - you want to pay MORE for the house than what it's worth? Why?

kingstreet

In any appeal, you would need to provide evidence of three comparable properties in the vicinity which have recently sold for the same, or more, than the one you intend to purchase.

These must be "sold" prices from the Land Registry figures, not estate agency marketing prices.

On the mortgage issue HSBC is not saying it won't lend to you. It is saying it will not lend as much on that property. If you find another property or get this one for less month, your mortgage will be able to proceed, so you are not entitled to a refund of the product fee, unless the key facts illustration you should have received at the outset provides for that.

TBH it's one of the reasons we always use the "add to loan" option for high product fees. You can change to pay upfront later, once the case has been offered, if you really want to...

Okydoky25

Have you advised the sellers/ your landlord of the valuation to see if they will accept it?

JamesClayts

Yes, as strange as it sounds, we are trying to increase the value. The seller won't go any less than £305K as they know (as we do) that it is worth a lot more

JamesClayts

Thanks Kingstreet - we have provided them with 3 other comparable properties that have sold for a lot more than our asking price. We'll have to wait and see their response.

We understand HSBC's position about lending to us, but if the seller won't go any lower and we have our heart set on that house, then we don't have a lot of options without losing the arrangement fee. It just doesn't seem right that the inaccurate valuation of one person can affect things so much without anyone willing to listen to us.