VERY Low Valuation! Help Please

farley_85

Hi Guys,

I'm new to the forum so any assistance would be really appreciated, especially as this matter is giving me a real headache!

I am in the process of applying for a mortgage through Nationwide and we have received the valuation report on the property we are trying to buy. The survey was carried out by a Countrywide surveyor, who's specific details I have managed to find.

The surveyor in question valued the house £75k lower than the sale price!! This is almost a 16% discrepancy which is enormous. I have read the valuation report which is very basic and I can see no reason for this low valuation, including structure, flooding, additional works required etc...... Granted it's a very basic survey but surely an undervalue of £75k should have been accounted for somewhere. I think the problem we may be having is that the property is a very large 1 bed (890 sq ft), 660 sq ft of which is an open plan kitchen / dining / living space. However, whilst i acknowledge number of bedrooms does have an effect on price (especially where estate agents are concerned) surely a surveyor should be looking at figures based on £/sq ft.

I am in the process of appealing to Nationwide and have found 7 comparable properties in the area (East London). The appeals form is very basic and makes no mention of areas so I have provided a full comparison in a separate document breaking all the comparable flats, and ours, down into £/sq ft. If I base my figures on the sale price, then the £/sq ft of our property is comparable. However, if I use his valuation (£75k less), our flat works out at almost £90 less / sq ft than all the other comparisons.

Additionally, there are 2 other flats that are very similar to ours that were put up for sale just after ours so i am waiting to get the valuation report on those. If those valuations come in £75k less then I guess there must be a problem with this development and I will have to pull out, but if these valuations come in near the sale price, I have to question the surveyor's decision right?!

Because the discrepancy between sale price and valuation is SO BIG someone is at fault. Personally i don't trust Nationwide to effectively sort this out as they are obviously in favour of a low valuation and the surveyor answers to them! Also Nationwide have been appalling throughout this process, constantly losing our documents and just generally providing a very poor service.

Having said that I have finally got through to a helpful chap at Nationwide so will call him later to go over the appeal (as well as the document I provided a 3 page break down of my concerns, area break downs of comparable properties and other general comments).

Countrywide wouldn't give me the surveyor's contact details but I have found them through the RICS. I would like to speak to him personally just to understand the incredibly low valuation. However, several estate agents have told me that he is very difficult to deal with (and in fact Keatons have black listed him). I appreciate that estate agents and surveyors (especially those employed by banks) have very different agendas but a discrepancy of nearly 16% seems unheard of. Therefore I am expecting a bit of a fight from the surveyor and the bank over this.

It seems quite a complex matter (especially for someone like me as a first time buyer with no experience of this process!!) so I would really appreciate people's advise on the matter and how they think I should proceed. I am happy to upload the appeal I sent to nationwide if anyone wants to look at it but will obviously have to blank out some of the specific details of the case.

I personally feel that there is quite a lot of evidence stacked against his valuation, especially since it is such a huge reduction compared with all the comparable properties. He also surveyed a friend's apartment in the last month which has now completed. Both properties are very similar (warehouse conversions, no outdoor space, 250m apart, ours is actually in better condition and has high ceilings throughout). Granted his is a 2 bed (one of which is an open mezzanine so not really a proper bedroom) and ours is a 1 bed but his is only 200 sq ft bigger yet this particular surveyor valued it at £140k more than ours! Again this seems crazy.

Anyway any advise you guys can offer will be VERY much appreciated.

Looking forward to hearing from you guys!

ps sorry for the essay!

Thanks,

Farley

dunstonh

The surveyor in question valued the house £75k lower than the sale price!! This is almost a 16% discrepancy which is enormous.

That isnt actually enormous. Estate agents frequently place the book price at 15% above what they feel it will sell for. So, a 16% lower price is not outside possible expectations if you havent knocked the vendor down. If its a new build, like it sounds, then that automatically loses money on purchase in most areas.

There is an appeals process and if you can show that the price is too low then they may move a bit. However, it is unlikely they will move the whole way.

In addition to this being an apartment (which is always bad news for valuations in a volatile or declining market) is it a new build? (new builds are traditionally overvalued and lose money the minute you move into them. Especially if there are builder incentives which have been factored into the price which wont exist on resale).

However, several estate agents have told me that he is very difficult to deal with (and in fact Keatons have black listed him). I appreciate that estate agents and surveyors (especially those employed by banks) have very different agendas but a discrepancy of nearly 16% seems unheard of. Therefore I am expecting a bit of a fight from the surveyor and the bank over this.

it should be noted that estate agents probably do not like him as he does reduce their income. A 16% difference is not unheard of. Especially on new builds and apartments (and if both you get the double whammy).

farley_85

It's not a new build but a converted warehouse flat.

Okay so 15% isn't unheard of....thanks for the advise.

However, I am concerned by inconsistencies in his own valuations which seem to undermine his stance on our property:

Both properties are very similar (warehouse conversions, no outdoor space, 250m apart, ours is actually in better condition and has high ceilings throughout). Granted his is a 2 bed (one of which is an open mezzanine so not really a proper bedroom) and ours is a 1 bed but his is only 200 sq ft bigger yet this particular surveyor valued it at £140k more than ours!

It's difficult to know at this stage I guess because he could have a perfectly good reason for valuing it so low. i think it's best I speak to him directly and try and get his side of the story.

Thanks!

ILW

In the UK, values do tend to be based on number of rooms rather than floor area.

farley_85

Really?!

That means a couple of stud walls, some plasterboard and a door is valued at £75k (assuming the sale price is correct, which I agree it probably is slightly inflated).

In my professional experience a surveyor should be looking at sq/ft and not no of beds (although again I appreciate it is probably factored in, but not to the tune of 16% of the sale price). If he has only considered number of beds whats stopping a 1 bed apartment at 1000 sq ft being valued the same as a 1 bed apartment at 500 sq ft

Thanks for the comment though. It's all very helpful and helps clear the fog in my mind.

farley_85

dunstonh....

I agree estate agents inflate prices (didn't realise it could be quite as much as 15%) but surely there is an argument to be made based on market value. If it will sell at that price, and all 3 flats in the block have been reserved (one was smaller than ours and went for more) surely that must contribute to the valuation otherwise the surveyor might as well walk in and just pick a number out of the air.

Also nationwide ask for comparisons so market value must play a factor, and market value is driven by what people are willing to afford.....

Thanks again

dunstonh

I agree estate agents inflate prices (didn't realise it could be quite as much as 15%) but surely there is an argument to be made based on market value.

Property doesnt have a price tag. A lender doesnt want to wait 18 months to eventually find a buyer. It wants to sell it within a month of repossessing. So, valuations will be based on selling it.

How much did you know the price down from published price?

Whilst it is not a new build, it is a new development conversion and is in effect a new apartment. Apartments are notorious for dropping in value straight away. Partly due to over supply and lack of demand, partly as a new build/conversion is attractive when new as everything in it is new but that isnt the case second hand. Also partly due to builders ramping the price up knowing they will either get knocked down or are included a bunch of "free" things in the price. Things that will not be there for the next buyer.

An apartment will typically be priced more conservatively than a house in a volatile or declining market. In a growth market, they will usually give you what you want as long as it is reasonable. All you can do is put your case to them as to why you think it is wrong. You will probably get a little movement but I fear it won't be as much as you want.

Of course, the valuer could be doing you a favour. You now have information to help you knock the price down.

farley_85

Thanks,

We didn't knock the price down, we paid asking at £475,000, and the valuation came in at £400,000. The other 2 flats in the block that are very similar have gone for over asking.

Also the property is in East London (Hackney) which is one of the fastest growing housing markets in London.

I just have to wait to get the surveyor's report in 7 working days. I know there is a chance he could be doing us a favour and the property is overvalued by the estate agent, but based on the information i have to hand and my own research i'm not so sure.

I'm very cyncical about the whole process. I'm not entirely sure the appeals process, which is overseen by people who only have an interest in keeping this valuation low, will be fairly and carefully considered. Also it's hardly in the surveyor's interest to completely backtrack too much as it could well damage his reputation.

You never know I might be proved wrong though.

Thanks again

demontfort

I don't know the specifics of the flat you're after but I reckon the valuer may be doing you a favour. I'd think very, very long and hard about shelling out £500k on a 1 bed flat in Hackney.

Yorkie1

Is it just a basic valuation?

If so, then be prepared for the surveyor to refuse to talk to you. You are not his client; NW is the client.

I agree that the number of rooms is a highly relevant factor.

quidsy

Half a mil for a 1 bed in hackney? You are being had. Anyone paying that much for a 1 bed flat in a !!!!!! part of east london (up & coming, regeneration, blah blah. I grew up there so know something about the area) should be rethinking based on this survey.

This valuer just did you a big favour. if you realyl want it, rethink your offer, go 100k lower then you have 25k to barter with