Valuation - Genuinely shocked

swanny78

So found a new build house, applied for mortgage with HTB. All accepted valuation instructed and completed on Tuesday. With it being a new build I assumed the valuation was just a formality and didn't dream for a moment there would be any issues.

Anyway called Natwest today for an update and Connells have valued the house at £325,000 and not the asking price of £350,000. A massive £25k difference. The broker suggested we challenge the valuation and the developer was genuinly shocked having recently sold a similar property for the full amount (this was bought by the church as a cash purchase tho).

We spoke to the site manager today who said he took the valuer round, she did not ask about construction type, look at building plans or anything, just walked around the house and left.

so a couple of questions to any experts out there.
1. How often does a new build valuation be out by this much, and is it worth challanging.
2. Does it sound as tho a proper valuation was done
3 as its HTB we have a 75% deposit, so will the new valuation put NatWest lending the original amount. Its still well under the valuation (I know its still a bad decision if they did as we would be purchasing a house potentially well over priced, not ideal with an equity loan twelcome.o lay off too)
4. Builders not willing to budge on price as they sold somewhere similar recently and if we pull out they are confident they can get a cash buyer. It will have to be a cash buyer I guess ad the property in unmortgageable with the price being what it is.

any comments or advice welcome to cheer up a seriously miffed and £1200 lighter first time buyer.

GwylimT

Virtually all new builds are hugely over priced, my brother bought a dreaded barratt home, tiny back garden, no front garden, parking space not wide enough to actually park in and open your car door, virtually all internal walls plasterboard and in the middle of an industrial estate. £30K more than a large three bed semi in a nicer area of town, with front and back gardens, private driveways and driveways inbetween the grass verges.

I live in a new build and our flat wasn't selling because it was so overpriced, we bought it for £150K and it had originally been marketed for £175K.

mrginge

Hardly a massive difference. What is it 7%?
Not really uncommon for a new build

swanny_78

mrginge wrote: »

Hardly a massive difference. What is it 7%?
Not really uncommon for a new build

I guess the question is will Natwest see it like that and still lend the 75% mortgage?

jacques_chirac

swanny_78 wrote: »

I guess the question is will Natwest see it like that and still lend the 75% mortgage?

If they do it will be 75% of £325,000, not the higher amount. They are not going to lend based on an inflated amount.

swanny_78

jacques_chirac wrote: »

If they do it will be 75% of £325,000, not the higher amount. They are not going to lend based on an inflated amount.

Yes that's my thought, and I'm not making up the difference and buying into negative equity. 2 options I see is builder decreases price and they made it clear that won't happen or we challenge the valuation as being incorrect and get it redone, again seems unlikely a re-evaluation will bridge the 25k gap, what could they have missed that would revalue it at £350k not much I am guessing.

There is a 3rd option I guess and that to pull out and cut my losses and accept the waste of the last 2 months (and £1200) of getting to this point.

mrginge

If you offered the asking price then you were always risking that this would happen.

swanny_78

mrginge wrote: »

If you offered the asking price then you were always risking that this would happen.

We didn't originally we tried to negotiate but they were not interested. Usually you get some incentives like stamp duty, or carpets, and flooring. But nothing, we liked the house could afford the mortgage so we went back with full asking price, just surprised that new a new house could be so overvalued. How can the builders expect to sell them unless people willing to cash buy ?

jacques_chirac

swanny_78 wrote: »

We didn't originally we tried to negotiate but they were not interested. Usually you get some incentives like stamp duty, or carpets, and flooring. But nothing, we liked the house could afford the mortgage so we went back with full asking price, just surprised that new a new house could be so overvalued. How can the builders expect to sell them unless people willing to cash buy ?

Honestly, I'd walk away. If they do come back and offer it you for £325,000, then offer them £310,000. Remember you are dealing with professional sales people - play them at their own game.

swanny_78

jacques_chirac wrote: »

Honestly, I'd walk away. If they do come back and offer it you for £325,000, then offer them £310,000. Remember you are dealing with professional sales people - play them at their own game.

I think that's the plan after we formally challenge the valuation, like you say play them at their own game.

ILW

swanny_78 wrote: »

Yes that's my thought, and I'm not making up the difference and buying into negative equity. 2 options I see is builder decreases price and they made it clear that won't happen or we challenge the valuation as being incorrect and get it redone, again seems unlikely a re-evaluation will bridge the 25k gap, what could they have missed that would revalue it at £350k not much I am guessing.

There is a 3rd option I guess and that to pull out and cut my losses and accept the waste of the last 2 months (and £1200) of getting to this point.

A new build will nearly always devalue as soon as moved into as it no longer carries the premium for being new. Valuation has to be based on resale.