Valuation discrepancy - please help!

Home_mover

In March 2012, my wife and I bought our house (which had been advertised for sale at £179,950) for £178,000 (several others were interested, and we had to get close to the asking price). Our mortgage was provided by HSBC. It was valued at precisely this amount by the person HSBC instructed to carry out the valuation, giving us piece of mind that the property was worth what we were paying.

We are now (2014) moving house after both securing new jobs. The market has improved since 2012, and when we had our house valued by two estate agents, they both suggested marketing at £190,000, with the aim of selling at £185,000 . After only 5 days on the market (a time which would suggest how keenly priced and desirable the property is), we accepted an offer of £185,000.

The purchasers are also having their mortgage provided by HSBC, and HSBC instructed the valuation on Tuesday of this week. The valuation given was £165,000.

The house in question is little over 4 years old, in superb condition, and has undergone no changes in the past 2 years. Property prices have risen steadily in the area during that time.


I understand that surveyors opinions will vary - but surely this cannot be right?

Many thanks in advance

cattie

Usually when a house is valued for mortgage purposes, the value is given at exactly the accepted price, never more. There are occasions however when a surveyor will down value & it happened to me once to the tune of £10k.

Very often down valuations in a good market are due to the surveyor not being familiar with the area the property is in or of the uniqueness of a property if it is not a run of the mill one.

Some lenders do seem to use surveyors that have a habit of undervaluing unfortunately, especially on modern houses. Modern houses as soon as they are bought decrease sharply in price from the price that was paid if close to asking price.

There is nothing you can do, except put your house back on the market & avoid accepting an offer from anybody else getting an HSBC mortgage as they could well have the same problem.

When my place was devalued I was lucky as my buyer knew & freely admitted that the property was well worth what she was paying as it was quite unique & in a sought after area.

In the end we ended up with a compromise. She paid an extra £5k more, borrowing the funds from family & I came down by £5k, simply because I didn't want to lose the house I was going to buy as the market was very hot back then.

However, I can't see that your buyers will want to try to strike such a deal being as it's a modern house & no doubt reasonably easy to find something pretty similar. Nobody would want to pay £20k over the top on a modern house I fear unless a very unusual property.

It is perfectly likely that you did pay a little over the odds when you bought, despite the value that the surveyor at the time agreed with.

Home_mover

Hi Cattie

Thank you very much for your reply. Very prompt!!

Your point about the surveyor not being familiar with the area made sense - the house, without wishing to sound arrogant, really is lovely - we fell in love with it as soon as we saw it, as did our potential buyers, and the only other properties to have sold here recently were just not of the same standard. It has been on the market twice now (since the first owner had it from new), and has found a buyer twice in a combined time of 15 days!

We had a budget of £200k when we moved, and could have purchased anywhere within a 20 minute radius, yet this house was comfortably the best property available for the money, even accounting for the fact that it was already 2 years old.

We really feel as if the surveyor has just looked to see what other houses have sold for (which were well short of the standard of ours) and assumed the houses to be the same.

Even if we look at the possibility that we may have paid slightly over the odds (which I am not convinced of - if we didn't pay that price we wouldn't have got the house!), then surely a drop of £13k in a rising market is well wide of the mark?!

Thank you again for your help.

MrRee_2

Have you seen the valuation? I mean, actually seen it?

The buyer 'could' be playing games to reduce the price - just a thought.

Home_mover

That hadn't crossed my mind! I haven't seen it, no. I suppose things like that might go on - but our buyers really did seem like lovely people though.

I have emailed HSBC and hopefully they will get back to me. In effect a financial institution (HSBC) has happily certified their customers property (and essentially, in the event of a repossession, their own) to be of a certain value, then the same institution has 2 years later claimed it to be worth £13k less in a rising market.

They cannot claim to be correct on both occasions. I am certain that the property is currently undervalued, but either way, they surely have to admit to an error?

MrRee_2

Home_mover wrote: »

but our buyers really did seem like lovely people though.

They always do ................

Home_mover

Haha! I'm happy to give them the benefit of the doubt!

Anyone have any idea on the below??

Home_mover wrote: »

I have emailed HSBC and hopefully they will get back to me. In effect a financial institution (HSBC) has happily certified their customers property (and essentially, in the event of a repossession, their own) to be of a certain value, then the same institution has 2 years later claimed it to be worth £13k less in a rising market.

They cannot claim to be correct on both occasions. I am certain that the property is currently undervalued, but either way, they surely have to admit to an error?

john_white

Home_mover wrote: »

They cannot claim to be correct on both occasions. I am certain that the property is currently undervalued, but either way, they surely have to admit to an error?

What does the HPI for your area look like?

davidmcn

Home_mover wrote: »

I have emailed HSBC and hopefully they will get back to me.

It would probably be a breach of data protection for them even to confirm that their other customers exist, never mind get into a discussion with you about their valuation! The buyers will need to be the ones to talk to the valuers.

Valuers do rely largely on comparable sales, and while you think the other properties were of a lower standard than your own, is there any evidence of that, and would the valuers agree with your assessment?

Also bear in mind that the difference is only about 7%, which is within the usually accepted margin of error for valuations - it isn't an exact science.

bigadaj

If the house is only four years old it woudk be interesting to know what was paid for it in 2010.

Apart from that it's down to how keen you are to sell and how keen the buyers are to purchase. If your confident you can get what you want then they either match it or you sell to someone else.

Home_mover

Thank you all for your feedback - very helpful.

The HPI for the area shows very slight growth over the period in question.

In terms of evidence for our property being more desirable to the others - the only one to have sold on the street recently went for £165,000, and had been on the market for 2 years - and we actually viewed it when we bought ours. We did not even consider it. Compared to ours, it had: no garage, inferior garden, smaller room sizes, it was mid terraced as opposed to end terrace, 1 room fewer, cramped bedrooms due to angled walls, separately fitted appliances instead of a fully integrated kitchen (dishwasher, hob, 2 ovens, fridge freezer etc) and was of a far lower standard of finish in general.

I would say that the surveyor must have just looked at the sold price and assumed them to be the same.

Fingers crossed we find a way around it one way or another!