Valuation lower than agreed price

RobertoMoir

adindas wrote: »

Unlike estate agent, Surveyor is lacking of good local knowledge regarding the property on particular region.

Also unlike the estate agent, the lender's surveyor has no reason or vested interest to inflate the price. I suspect this has rather more to do with their valuation being less than the estate agent's than anything else.

At best an acceptable value for the property might be found by splitting the difference between the valuations, but as the bank presumably won't fund the difference that still leaves the OP with a problem.

kingstreet

adindas wrote: »

This is the vast majority of the case (if not all) for valuation for the bank. It is always lower or the same (never be higher)

Reason is obvious : to cover their back. Lower valuation no risk, high valuation, high risk as the buyer might find the reason to sue them in the future. Why need to take more risk.

Try to use this to negotiate with the vendor. If the vendor does not budge think it whether you really want that house because you believe it is a good price then see whether you could get more money to cover deposit then the bank is not willing to pay.

Otherwise negotiate with lender ask whether they accept second time valuation from the surveyor of your choice. If they agree and go ahead. If will cost you for surveyor but they might get a better valuation.

Unlike estate agent, Surveyor is lacking of good local knowledge regarding the property on particular region.

The surveyor is contracted by the lender to ensure the price being paid is reasonable, relative to the amount of mortgage being requested and that the property provides adequate security for the mortgage.

It is not designed to assist the buyer in any way.

The buyer can sue neither the lender, nor the surveyor, as the contract to carry out a mortgage report & valuation is between lender and surveyor.

Surveyors use the RICS Red Book as their guide to valuing property and back this with comparable evidence - the sold prices of similar property in the area in recent months. Estate Agents "value" property based on their need to get property on the books, not at a figure which is necessarily realistic, or will actually be realised.

Let_Us_See

If the estate agent is convinced the property was undervalued,
and you still wish to proceed with the purchase, then ask them to provide actual purchase comparables for similar neighbourhood properties. This is the only way to challenge a surveyor's valuation, and at the end of the day even if you can produce suitable comparables, there is no guarantee the surveyor will change their mind.

However, if the estate agent fails to locate suitable comparables, then the property can be claimed to be overpriced, and justification for making a lower offer.

Good luck and negotiate HARD.

kingstreet

Prove what?

Are you seriously telling me a qualified professional who spends all day every day in a particular area is less able than an unqualified person whose only motivation is to put properties on the market?

I do not always agree with surveyors, but I would take a surveyor's opinion over an EA lister any day of the week.

RobertoMoir

adindas wrote: »

We will never be able to prove that Surveyor valuation is always lower (in most cases) than the offer price because they want to cover their back.

Simply repeating yourself doesn't add anything to your claim. A professional is much more likely to stick to giving values within the boundaries of their professional opinion regardless of external pressures because that's essential to maintaining their professional status. For a professional, its more cost effective to walk away from a client that keeps trying to pressure you into changing your opinion than it is to lose work because you're known to be dishonest.

adindas wrote: »

They might put their valuation the same price with offer price in some cases, but what is for sure is that, when the surveyor is working on behalf of the lender their valuation will never be higher than the offer price, unless of course they are very stupid.

The estate agent selling a property has less incentive to come in at at a lower end price because they want to get lots of sellers on their books and you don't do that by telling everyone you'll get them less money than that other estate agent up the street.

Even if both the EA and the surveyor use the same price 'range', the EA is more likely to advise their client to put it on at the higher end of that range, at least to start with, and/or agree if theie client insists on doing so no matter what.

adindas wrote: »

I have read in few instances where the seller appoint another independent surveyor because they want to prove the lender's surveyor valuation is wrong and this result a different valuation with the lender's surveyor. Keep in mind they are both professional surveyors. They are just working on different side.

There are doubtless plenty of instances (in fact I'm sure I remember some on this site) where people get another surveyor in and they give a similar valuation to the original one that was being disputed. People are less likely to crow about those occasions of course, because it shows them being wrong.

RoxieW

This happened to us. Our house sold for £140k - asking price - and was valued at £115k. The sale fell through. 3 months later sold again - was valued a by a different mortgage surveyor no problem.

Oh, we did try and contest the first valuation as it wasn't right, looking at direct Comparables (next door for a start) but it got us nowhere.

hazza74

Update.

I have spoken with the surveyor today who has told me why he valued it lower than the asking price, after our telephone conversation I came to the conclusion that the property is over valued by the estate agents. The surveyor was explaining that houses on the same street have sold for nearly 100k, one of the houses he was saying is bigger, with a kitchen extension, garage etc and on the market for 95k. The house he valued for us was going to be valued at 95k, but came to 100.

I put all of this information to the estate agents who say the surveyors valuation is ridiculous and out of touch with current house prices. The EA forwarded to me an email about comparable property prices within half a mile and were all valued between 105k -120k. But I said these are not even in the same street as the street where we want to buy our house prices are very low. We should have done our research before hand but because we are FTB we are not experienced and let our hearts rule our heads, we definitely know what to do for next time.

We have told the EA that 100k will have to be our offer and to tell the vendor to take it or leave it. I get the general feeling that the EA will not pass on the information I learned from the surveyors to the vendors, he was going on about the he will recommend to the vendors to put the house back on the market and they will definitely get nearer the value their expecting.

I wish we could speak with the vendors ourselves and negotiate.

Failing that at least the bank have agreed to lend us money so we will just keep looking.

If we do find somewhere else will we have to pay for a valuation for the bank?

kingstreet

kingstreet wrote: »

I do not always agree with surveyors, but I would take a surveyor's opinion over an EA lister any day of the week.

adindas, you appear to be interpreting what I said above as my assertion that surveyors are always right.

That is not the case. They can and do make mistakes. They can and do disagree with one another.

However, once again, their opinion is more valuable than an unqualified estate agent and when contracted by a lender they are merely confirming if the property price/condition makes it suitable security for the mortgage amount requested.

If you want market valuation you have to arrange for that yourself.

kingstreet

hazza74 wrote: »

If we do find somewhere else will we have to pay for a valuation for the bank?

Presumably you got a free valuation? Usually you only get one and you pay for the next one.

Ask lender.

Alias_Omega

hazza74 wrote: »

I wish we could speak with the vendors ourselves and negotiate.

Go round, knock on the door and chat with them about it.