Valuation lower after contract exchanged.

holly_hobby

Best of luck chuck x

Holly x

amnblog

Isn't the issue that the property is 'worth' £20,000 less than the value at which contracts have been exchanged?

Hence our buyer may have been best advised to renegotiate, rather than bridging the lending gap.

bebewoo

They did try to renegotiate unsuccessfully. The seller really doesn't need to drop the price now as the purchaser is committed to buy.

bebewoo

The solicitor is partly at fault here too, as they should want to see the survey results with the valuation on it in black and white before going ahead all guns blazing to exchange.
They should assume that the purchaser does not know what they are doing, they are the professionals here.
Also whenever I have had a formal offer it always says what the valuation was on the same paperwork, if this was not on the offer then the solicitor should have twigged that it was not a formal offer.

Thrugelmir

bebewoo wrote: »

The solicitor is partly at fault here too, as they should want to see the survey results with the valuation on it in black and white before going ahead all guns blazing to exchange.

The client instructs their solicitor. Solicitor has no control over their client formally accepting the mortgage offer. In this regards they are reliant on being fully informed.

Less haste more speed I suspect. In an attempt to meet deadlines the whole matter has gone pear shaped.

Goldiegirl

I find it incredibly difficult to believe that a solicitor didn't realise that he didn't have a full mortgage offer in his hands, before proceeding.

This is bread and butter stuff to solicitors, and the ones I've dealt with when working for a lender are VERY cautious.

I'd like to hear the solicitors side of the story.

jaybeetoo

amnblog wrote: »

Hence our buyer may have been best advised to renegotiate, rather than bridging the lending gap.

Renegotiate the price after exchange of contracts? Are you serious?

2nd_mortgage

I have received a formal mortgage offer from FD (not DIP/AIP) which they have asked us to sign & return. This offer was received 2 days prior to valuation.
I called up the mortgage processing team & asked them what happens if the valuation is lower than the purchase price & he said that the underwriters will phone to discuss your offer.
I was quite surprised too as it seems ridiculous especially for FD who make you pass through so many hoops during the early application phase to send out a formal mortgage offer prior to valuation.
I am still waiting for the report (valuation done on Friday 2nd Aug) before I sign the offer & send it back.

holly_hobby

amnblog wrote: »

Isn't the issue that the property is 'worth' £20,000 less than the value at which contracts have been exchanged?

Hence our buyer may have been best advised to renegotiate, rather than bridging the lending gap.

Unfortunately Amn., our OPs sol exchanged contracts on the originally agreed pch price (apparently unaware that the property had been downvalued on survey). Accordingly, the OP is now legally committed to purchase at that amount (otherwise he could have just pulled out) - as noted earlier I asked our OP if the Vendor (knowing the issue) may be willing to re-neg on the pch price - our OP has said the Vendor has flatly refused, so there lies the issue.

This leaves him in rather a pickle if he can't raise the extra deposit or an alternative lender with an appropriate new survey (ie values up at agreed pch price), can't be located - given that he could forfeit his deposit if the vendor agrees for them to withdraw from the pch itself.

What an absolute b*lls up ...... Sol (depending on what FDs offer looks like or is worded) but def FD are really to blame here, but I can not believe FD are issuing "formal" offers (and I use the term formal loosely here), assuming the property will value up and otherwise solely based on the applicants status checks .... sheer utter, utter madness and a receipt for disaster ....

Unless the "offer"sent to our OPs solicitor clearly noted it was constructed and issued prior to survey, did not take account of the future surveys findings, and the noted mge amount offered subject to change based on the surveys findings, then how the hell would the solicitor know this was nothing more than in reality a DIP (agreement to lend on conducted status checks, but subject to survey) ... unless of course they had already gone through this on another FD case.

I did rather think our OP may have mis-described the timeline of events and what had been issued to them, but obv going by 2nd mortgages post, this is clearly FDs common admin procedure - which is prety mind blowing given the issues re contractual terms I touched on in an earlier post. (in fact if this were CCA regulated, it would certainly fail under the unfair relationship test).

Hi 2nd mortgage - my advice to you would be to not return the any signed offer, and under no circs go to exchange, until you know the results of your survey.

With regards survey, if a basic, the only "person" who is entitled to a copy is the lender, homebuyers or FS then the applicant also gets a copy of the findings - which again is possibly why this has gone so spectacularly pear shaped.

I really feel for our OP ... and hope that it can be sorted without too much hair pulling ...

Hope this helps

Holly x

Yorkie1

Back to the OP, I'm slightly concerned about the steps which might be planned to cover the gap - if a bridging loan is obtained, would this have to be declared to FD, and/or could FD pull the whole offer if they do a final credit check before completion?

Or, if the gap is by a family loan, would this also have to be declared?

I'm not trying to worry the OP but just trying to cover the relevant bases.