Valuation of a new house

IHateDida

Can anyone advise me please...I am buying a brand new house and have just had the mortgage valuation done on the property (I was advised to only do the level 1 valuation). The full value of the house is £xk, we obviously aren't paying this....we are paying £xk.

However, the value has come back at £1xk :eek: and for insurance purposes £xk!:eek: :eek:

Should I be concerned? Is this normal or am I being ripped off in buying it??? Why is the value so low in comparison to what we are paying.

Thankyou

Doozergirl

Oh dear. You do pay a premium for a new build. I always ignore the asking price or the 'full value' as you call it because it usually comes with incentives like 5% deposit etc that make you thinking you're getting a good deal when all they're doing is overinflating the asking price. Even what most people pay, I believe is over the top.

I would never buy a new build without a hefty discount. I don't believe you get value for money and your surveyor obviously doesn't either. The difference between £180,000 and £228,500 is shocking. I would definately be concerned! Is this a major house builder and have you looked at what £228,500 will buy you amongst older houses?

There was a poster last week who had a surveyor downvalue their flat and they chose to ignore them, only to be told by EAs when they have come to sell that the flat is worth less than even the surveyor's valuation.

benood

These numbers are a little odd - the insurance value is the rebuild cost I think - as a rule of thumb 2/3 of the value including land. Which would then give a total value of £246K - thinking about it that's exactly what they've done for insurance 2/3 x 245.

I agree with Doozergirl - the £180 is the number to concentrate on - use it to dig in for a fair deal.

nelly_2

The new builds I have worked on - The developers generally make between 30 and 50 % profit

IHateDida

Thankyou everyone. I did think that the £180k is a little low but how do I test this?

I am buying a 4 bed (ok, some are small), 3 bathroom, double garage link detached. I thought £228k was a fair price but the valuation has really concerned me. What should I do?

epz_2

the 250k house looks massive, frankly unless i had 3 kids i would rather 3 big rooms to 4 small ones but i really hate cramped places.

in a market where prices are static or falling surveyors will likely downgrade prices cause if in 2-3 years time the price doesnt reach the same level they could get hassled where as in market riseing at 10% a year even a bad call gets covered up by HPI.


that said it is almost 50k less than you are paying, is it in really bad area or flood/industrial land, i know a lot of new builds up here are in shall we say questionable locations.


also the prices places sell for is what matters not their asking price though obviously new builds dont count as the builders inflate them, it might be that you could put an offer of £228k in for that second house and they bite your hand off etc.

terrierlady

what is the square footage of the house and what is the market research for that area is there another development for compareable figures?

lucysmum_2

I used to work for a solicitors firm (in the conveyancing department) and I saw this happen quite a lot in Durham City (where I worked). A builder building in the city centre had two phases and we had a client who had a portfolio of buy to let properties. She bought and, about eight months later when phase 2 was finished, she ent to buy another. In this time the builder was charging £80000 more. needless to say her mortgage lender refused to lend her the asking price. She still went ahead as she had the cash to make up the difference. Which leads me to ask if your lender values the house at less, this is all they wil lend you, so how are you going to afford it? I mean where will you get the difference

IHateDida

Hi, thanks again for the replies - I don't know the square footage (I know I should do) - I have got it by room. I have equity in my current property which is what would make up the difference. But having spoken to my mortgage company today and visited the site again, I have decided that I won't be paying our original offer. The mortgage company told me that it would be a big risk and the building company will be ringing me on Monday after they have a meeting about it! If they come back and say that they won't take anything less, we will pull out of the sale as nearly £50k difference is too much for us to risk losing.

However, at £200k we will happily purchase the house but I doubt they will accept this. I am quite gutted as I really like the house but as most people have said the difference is rather dodgy, but I guess any surveyors who come out for other people will quote around the same market value?!?!?

I don't know what the highest we would go to would be....but its a pain as we have already paid out for the searches, £500 deposit on the house and the valuation fee :-(

lynzpower

Honestly? I wouldnt pay much more ( max 5k) over what the surveyor reckoned its worth.

I missed this thread 1st time around and I was staggered to see the difference. Other surveyors, you are right, will say rouglhy the same figure. Indeed when surveyors came into our office ( when I was an EA) we had to offer them "comps" thats 5 properties similar in the same postcode and in the same area, for the same money. And thats SOLD prices, not what they were on the market for.

I know you will have lost probably a thousand pounds here, but my personal feeling is you would be chucking good money after bad if you pursued this.
As you say 50k is a hell of a lot of money. you can buy a whole house in some parts of the country for 50k!

terrierlady

there is always another house for sale at an equal price or some times a better find, so if the developer wont play ball ie provide market research to support their inflated figure walk away, purrchasers are thin on the ground just now the second hand market is sticky, without their sales new build comes to a halt.