House bank valuation much lower than offer price. Advice needed

missduckegg

Hi all,

Long time lurker making my first post here, so thank you all in advanced for any replies.

A few months back I got an offer accepted for a house at asking price. There was quite a lot of interest in the property but out of all the offers, mine was accepted. Absolutely loved it and was happy at this point to pay the asking price.

Bank valuation comes back 12% lower than the agreed purchase price. At this point I decided to get a structural building survey done, to get more grounds to negotiate on. The survey comes back with a few problems that must be addressed.

I went back to the estate agents to try to negotiate a lower price. After a few counter offers here and there, the ball is really in the vendor's court. They do not seem to want to budge even though we are offering a substantial amount more than the bank valuation price.

Vendors are considering letting the house if the sale does not go through, so they really have no reason to sell for a lower price. I suppose due to all the interest the property got, they would not have a problem finding another buyer either.

What do people usually do when the bank valuation comes back lower? Am I making a terrible investment considering the bank's low valuation and the bad survey results?

Is it better to just walk away in this case?

Thrugelmir

If the vendor has a concrete price in mind then there's little you can do. Other than play hard ball yourself. Ring the EA, say your offer is your top price, and ask what other properties they have for sale. Vendor will then have to make a decision.

mrginge

How much is the shortfall in valuation and how are you financing it?

If the above is not an issue then it really is down to your feelings on this particular house. Personally I would never consider paying above a valuation.

It is likely that any other buyer will get the same valuation so i wouldn't worry too much about that.

Perhaps worth looking at other houses of the same value as your valuation, to see what else that money could get you.

Richard_Watters

It's the old heart v. head dilemma again!

I'd ask myself:

Are there other houses I could buy?
How disappointed would I be if I didn't get it?
What will it cost to fix it and what is the valuation likely to be afterwards?

Only you can decide. I've been totally happy to walk away from investment properties if the price wasn't right (head). On my own house I paid asking price because it was the only house I wanted (heart).

missduckegg

mrginge wrote: »

How much is the shortfall in valuation and how are you financing it?

Its 20k, and we're paying out of our pockets for it so it means we have to save up a little while longer for our wedding/car/furniture/decor/appliances.

Richard Watters, I agree it is a head vs heart dilemma. There are always other houses to buy, but it has taken us just over a year to find a place we like so there will be disappointment.

20k is a lot of money to lose