Valuation lower after contract exchanged.

holly_hobby

Hi Amn.

Apparently, from what I can understand ... FD issued what they state to be a formal offer pre survey (which in reality is really a DIP), however the OP is adamant its a formal offer on the assumption survey would be ok - which they duly signed and returned.

Survey was then conducted ... but didn't value up, it coming in 20k lower. FD rang the OP (whom works away), left a msg saying survey in or something to that nature, but apparently didn't raise the downvalue issue

It appears (I think! ) that no one recd a copy of the survey, between it being condcuted and the solicitor receiving a copy of the "prelim" signed offer from FD - which although issued a week after survey, apparently remained based on the orig application details, with the property indicating from reading that it had valued up on inspection .... ie - the offer Sol recd, had not be corrected and updated by FD, with the actual val fig which was some 20k less.

The sol, considered this to be the formal offer (as one would), asked the OP if they were happy with the offer, to which the OP thought she generally meant what they had agreed to buy the house , said yes, and everything rolled onto exchange.

What an absolute mess (if I've understood correctly the OPs comments) !!!!

Holly

amnblog

Sounds like three sets of fingers pointing in three directions and no-one covering themselves in glory.

moneysavingrock

amnblog wrote: »

Am I missing something here?

Did moneysavingrock give the solicitors the OK to exchange contracts before he/she as the borrower and purchaser had seen the valuation and the formal mortgage offer?

Yes and no. We had seen the mortgage offer which said either 90% of sale price or valuation. Due to the timelines and problems with communicating we did not see the valuation but believed it had been carried out OK. It seems incredible that we didn't check.

amnblog

How can a formal offer not quote the actual figure available to borrow.

moneysavingrock

Very succinctly put Holly, better than I've manged all day. And I've had to explain it a few times!!!

AMN I take me share of the blame to don't worry about that.

P.S Holly do you work in this sector?

moneysavingrock

amnblog wrote: »

How can a formal offer not quote the actual figure available to borrow.

That's what I'd like to know. Our solicitor has received loan papers referencing the original value. No correction for valuation.

holly_hobby

Yes - currently non-customer facing, working on the audit/compliance side of things (although I am a qualified Financial & Mortgage consultant).

My problem with this, as I've already said, is that you can not sign a formal offer if it doesn't contain all the relevant contractual terms, including the actual amount of finance agreed.

Formal offers, by their nature, can only be issued post survey. Moreover in this case, there should clearly have been a revised offer issued, clearly showing the amended terms ie reduced mge amount, which should have been issued to you and your conveyencer for perusal and signature.

Whats happened here, is that your conveyencer has proceeded to exchange, based on the offer that landed on their desk, if the figs were wrong, then thats FDs issue to remedy.

FD have got this badly wrong.

Holly

moneysavingrock

Complaint has been raised with FD. Have to wait and see how we get on with that.

Contemplating trying to source another mortgage but timeline is tight. From the paperwork I have I should be able to reject FD with no cost as fees free mortgage. Would this be right?

holly_hobby

You would need to check if it remains fee free if you volunarily pull out - as they may charge you the survey and admin fee (which you may be able to argue given the details of the b*lls up).

The problem is you've exchanged contracts (on the original pre survey pch price), and there is absolutely no gte that any further survey with an alternative lenders panel surveyor, would raise a higher or different sum ...... although of course it may value up ... chance to take ... but you strongly need to consider your situ if it doesn't !

I've no experience of FD panel surveyors, so can't advise who they use (but I think I've heard Morehouses is one), and if they are cautious (ie tend to downvalue) as Colley's are generally known to be (originally owned by Halifax, now part of Lloyds Banking Group).

Hope this helps

Holly

moneysavingrock

Yeah it's obviously a risk but worth a shot I think. Won't bin FD until I have something else lined up.

Thanks for all you help today.

Cheers

Gary x