House under valued by 4% by surveyor - what are my options?

HumphreyDumpty

I have been waiting patiently for my Santander mortgage to be approved and today I had the bomb shell dropped on me that the surveyor has down valued the property by £12,500. The estate agent is adamant that the house is worth the full amount and they would therefore not expect the Vendor to reduce the price.

Obviously, I don't want to pay more than the house is worth but my MA advises me that he has had 3 under valuations in the last week and believes that surveyors are being especially cautious at the moment.

The house was valued by a local surveyor however the EA have never seen him before and suspect that he is either newly qualified or new to the area. They have contacted the Estate Agency that he works for with a view to finding out which houses he based his price comparisons on. The property is in a little village and houses rarely come on to the market so there are no similar properties sold nearby within the last 3 months. The house was also valued for sale by a qualified surveyor turned EA who is confident that it was competitively priced.


MA says he has never had a valuation overturned in the last 17 years so what are my options??

Do I attempt to get the valuation overturned? Pay the difference myself (not an option as I don't have 12.5k lying around)? Try to reach a compromise with the vendor even though they currently don't want to play ball? EA has suggested that I move mortgage lender however I have large ERC charges that I really need to avoid.

I read in a national newspaper that valuations haven't caught up with rising house prices yet? Is this the case? The property is in the Midlands so not a property hotspot however it is in a picturesque village location.

Many thanks for any assistance!

ACG

Ive never had a valuation overturned either.

The EA is going to say that, his commission is probably a percentage. It would also reflect badly on him that he has overvalued a property.

You have to make a decision, would the vendor be happy to reduce the price by however much your ERC is? Then you can look at another lender without it costing you.

HumphreyDumpty

Hi ACG

The vendor doesn't seem willing to consider any drop in price. They are absolutely convinced that now the market has picked up they will easily find another buyer with a different lender. They have already bought and moved in to their new property (the lack of an upward chain was part of the appeal) and they have no mortgage on this one so they're in no rush to proceed.

ACG

So your option is to appeal or find a new lender.

There is nothing stopping you appealing whilst going with a new lender, but bare in mind the new lender may instruct the same valuer.

Silky_Racing

Do the valuers get to see the agreed sale price? Ie they know they are under valuing it compared to the sale price?

mrginge

An overturn is unlikely anyway, but 4% is nothing so it's even less likely.

Different lender may well use same survey.
Tell the EA you cant pay more than the valuation, so either they drop or you walk.

rizla83

esurv are doing that a LOT lately. I have heard that Santander are doing everything possible to stop 95% mortgages going through. I'm not sure if that applies to you though.

There is strange goings on in the mortgage world at the minute.

midget_1907

Can I ask how you knew the property was undervalued by Santander? Was it through your broker or the written offer?

Only because we were told friday last week by our broker that mortgage offer was in the post and took that to mean the valuation was fine. . . .

We have been warned by broker that our property may be undervalued as the one next door sold for 10 k less last year. We have 2k spare in savings but nothing more so hoping this isn't the case!

Silky_Racing

How does deposit size effect valuations?

HumphreyDumpty

Hi midget_1907. I found out through my broker.

Mortgage is an 85% LTV so not failing foul of the 95% issues.

EA is trying to find out which properties the surveyor used as comparisons so the he can hopefully show grounds for appeal...

kingstreet

FWIW, you/your broker need to find three comparables to justify the agreed price so the surveyor can see why he should increase the valuation. As things stand, he can simply say he followed the RICS Red Book guidance and has to provide nothing to you.

The comparables are usually recent (last 120 days) sold prices of similar property in the vicinity (upto 0.5 miles)

If you can find nothing in that range, move out to 180 days and 1.0 miles.

Silky - the valuation template comes from the lender with the agreed price and mortgage amount printed on it via Quest.