Buying a house - undervalued!

tori_s

We put in an offer on a house last week and after some negotiation it was accepted. It was on the market for £140k and our offer of £130k was accepted. It had been on the market for 10 months. We have started proceedings and had a mortgage valuation. The valuation has come back at £110k! I know the current owners won't accept this as we didn't even start this low for negotiations. Is there a way we can get around this? Clearly we don't want to be paying over the odds but it is a decent enough area and a 3 bed semi so £130k seems like a bargain to me. It does need some modernisation but no major work. We are dependant on a mortgage to buy this property but we do have up to £20k as a deposit. I have considered seeing if they would sell for £110k and then accept £10k cash but I'm not sure if this might be illegal! I really don't know what to do as don't want to lose the house but obviously can't force the building society to lend us the money if they don't feel the property is worth it. Would appreciate advice and opinions.

tigsly

I dont think you can pay them 'cash'..

I think you have to go back to them - and say - the property was valued at 110 - at the end of the day if all valuations lead to this price -the vendors will onlly have to option of getting cash buyers to get more.. so it will depend on whether there are many of those where you are....

TallyWhittaker

Hi hun,

It sounds like you obviously love the house, but £20,000 under your offer and £30,000 under the original asking price is a HUGE difference.

Have you looked what similar properties are selling for in the area?
Do you think the valuation is fair? If not, you can challenge it. If you search in the forums here there's a few posts about it, but predominantly from the sellers point of view, but still helpful.
Did the valuation throw up any work do be done? Our lender knocked a bit off the value due to some work needing doing

I'll be honest, personally I wouldn't dream of paying such a large chunk of cash, particularly as Tigsly said it's likely that any other potential buyer they get in will have the same problem as you did. And even if they find a cash buyer I doubt they would want to pay that much over the odds.

I think the best thing you can do is check you're happy with the valuation and if you are just be honest with the seller. Just tell them the information and see what they say before you suggest paying more than the valuation etc.

Hope it all gets sorted for you hun

Foxy-Stoat_3

Odd how you offered £5,000 over the SDLT threshold, would of thought and the seller would of probably expected an offer of £124,500, so they may be able to move down a few thousand. You could then go back to the lender to see if they will lend you a slightly higher LTV although your at 85% now so maybe they wont budge much.

You may need a to find bigger deposit to secure this house but ultimately you will need to think and know its worth it.

What have similar properties sold for locally and how long ago? If this one has been recently refurbished, new kitchen and bathroom it may be worth an extra £10k to YOU but not to the lender.

fishpond

You can dispute the valuation with the lender if you can provide proof that their surveyor has undervalued it.
Whether you get anywhere remains to be seen, 20000-30000 is rather a large error for a valuations surveyor to make.

tori_s

Thanks all, our original offer was 124,500 and was rejected. I don't think I'm very good at this negotiating business! It's more the area than the house we love and houses rarely come up for sale round there but having looked at sold prices, the houses on that particular estate seem to go for around 110k-120k. I think it may be because they are ex council and somewhat dated (bathroom is downstairs in the one we want). For us we can see the potential but I am beginning to see why it has been given such a low value. So I guess we need to see if they'll take 110k! Can't see it happening myself but I do feel if we somehow managed to buy it for more we probably wouldn't make our money back so we need to be sensible.

Mind_the_Gap

OP : I think your response in your last post is spot on. Don't forget that this property has been on the market for 10 months. If it was that much of a bargain at £130k, someone would have snapped it up by now.

There is a mindset among some vendors that seems to be rooted in the idea that their property is 'worth' £xk, i.e. some arbitrary amount (this may or may not have anything to do with the real world!) and if nobody will pay them that much for it, then they won't let it go for less. That's their prerogative, of course, but they could be there for a long time. (Which is, of course, what some people want, consciously or subconsciously - e.g. one half of a divorcing couple, for example...) In the end a property is 'worth' what someone will pay for it at the time, no more or less.

Offer them £110k, tell them why, and if they reject it, find another property. There will be others.

MrRee_2

I would just offer £110k and tell them why - the EA will have told the Vendor that they will be lucky to get over the £125k SD barrier.

The EA and Vendor will know that any other valuation will come in at around £110k all day long.

cattie

I would never pay any more than surveyor's valuation for a house with a downstairs bathroom.

You're being sensible thinking that if £110k doesn't get you the house, you'll walk.

If any other buyer comes along, chances are they will get a low valuation too, so vendor will come to realise how unrealistic they are being expecting the high value they put on the property.