House Valued Less Than Asking - Can Estate Agents Claim Fee?

jackieblack

sashy78 wrote: »

Hi Freecall, the sale agreed was for £112k and the valuation has come back at £100k.

sashy78 wrote: »

Hi Thrugelmir, not that we are aware of, it's just the bank that aren't prepared to lend that amount to the buyers.

The bank won't lend the buyers more than a certain % of the valuation, but your second statement implies the possibility of other reasons (eg income?) for the buyers to be unable to borrow as much as they would need to, which is an entirely seperate matter/problem.

googler

sashy78 wrote: »

Hi Thrugelmir, not that we are aware of, it's just the bank that aren't prepared to lend that amount to the buyers.

In which case, unless there's something very compelling about the house which will lead to a future buyer putting an extra £9k into it over and above their minimum deposit on the mortgage, he'll never sell at £119k (assuming the bank's surveyor's valuation to be £100k)

(Perhaps he might if there's sudden, significant growth in the market in his area...........)

If one bank refuses to lend, and the next bank calls in the same surveyor for their valuation, it'll still value at £100k. How many surveyors are there in your father's town or locale?

sashy78

Hi googler, I'm not sure how many surveyors are about, but if it is the case of him only being able to get £100k, he's better off staying put.


I just want to make sure that if he lets the buyer pull out of the sale, he can't be charged the fee under the 'ready, willing and able' clause? The buyer's had had their agreement in principle for the amount of money, but it's the results of the survey as to why they won't release the money.


Once they pull out, he could give notice on his contract with the estate agent, and not be out of pocket.


Thanks s

DRP

i think the stuff about the valuation and surveyor are irrelevant.


The purchaser is unwilling or unable to buy at the agreed price. Essentially they *are* pulling out of the purchase. End of story.

I would be sending a letter to the agent with words to this effect and also giving my notice to them.

googler

DRP wrote: »

i think the stuff about the valuation and surveyor are irrelevant.

Maybe not to the issue of the fee, but significantly relevant to the seller who wants to sell for £119k, but is unwilling or unable to sell at the level at which the local surveyors value his house.....

sashy78

Hi guys, just to update you, I took the bullet and phoned another Estate Agent, and it's a really really grey area.


If the buyer pulls out because Dad doesn't budge on price, when he's been valued at £100k, the Estate Agent could see it that Dad isn't being a willing seller and therefore in breach of his contract, or they could take the view that the buyer has pulled out, because they are no longer 'ready, willing and able'.


If he'd gone with the estate agent I phoned it would have be 'no sale no fee' - isn't hindsight great!


So I've sat down with Dad and we've gone through everything, and all scenarios, he really needs to move for his health, he needs a bungalow now, and if his house is only worth what it's been valued at, then we're going to have to do some figure juggling, it's going to be tricky, but it's daft for him to loose a buyer at this stage.


Thanks for all your replies xx

DRP

googler wrote: »

Maybe not to the issue of the fee, but significantly relevant to the seller who wants to sell for £119k, but is unwilling or unable to sell at the level at which the local surveyors value his house.....

yes , definitely.

Is it correct that when a buyer has a lower LTV then the valuation is a lot more flexible? I read this on the mse forum.

ie. perhaps in this case a 95% mortgage is being sought. If the buyer was applying for a 60% mortgage then perhaps the 'value' ofthe property for mortgage purposes might be expected to rise?

Freecall

As always it will depend on the precise wording of the contract but my view is that the agent is on very shaky ground.

They accepted the job to sell the house at £119k (and from what you say, indicated that you should expect £112k). They had a full opportunity to consider the value of the house and as professionals should have been in a 'state of knowledge' about the market and selling houses which was greater than yours.

Achieving a sale at around this figure is therefore an implied term in the contract and finding someone at only £100k means that they have not completed their contractual obligations.

If this were not the case then at what point would the figure become unacceptable? £80k? ... £40k?

I would make it clear to the agent that you are perfectly happy to pay what is due to them when they find a buyer at around about the original valuation they agreed with you when you appointed them.

Freecall

BTW - I think that the reason for the sale not going ahead (LTV etc) is irrelevant. The agent has simply failed to do their job whatever the reason behind it as they should have taken all these things into consideration at the time of appointment.

N1AK

sashy78 wrote: »

If the buyer pulls out because Dad doesn't budge on price, when he's been valued at £100k, the Estate Agent could see it that Dad isn't being a willing seller and therefore in breach of his contract

There is, literally, no chance of a court seeing it that way. He agreed to sell at £112k, unless he has ever said he'd sell at something like £100k to the estate agent then they've got no grounds to claim he is in breach of contract.

I'd be very dubious about dropping price £12k without a lot more information on why the bank valued it so low, and frankly without making sure they really did and this isn't an attempt to draw the price down.