House has been undervalued...are we right to renogatiate?

Leeds_House_Mover

We have recently agreed to buy a house at £450,000.

All was going well until the Surveyor valued the house at £425,000. No real reason given.

We’re guessing it’s bacuase the house is on the edge of a slightly grotty area in Leeds.

What is the best thing to do? We can afford £450,000 but don’t want to overpay. Equally, don’t want to upset the house sellers or lose the purchase.

Foxy-Stoat_3

You can offer what you like.

If the lender agrees that the property is only worth £425K and you cannot increase the LTV ratio then you will have to fund the additional £25K.

I wouldn't worry about upsetting anyone in the house buying and selling process.

vuvuzela

Leeds_House_Mover wrote: »

We have recently agreed to buy a house at £450,000.

All was going well until the Surveyor valued the house at £425,000. No real reason given.

We’re guessing it’s bacuase the house is on the edge of a slightly grotty area in Leeds.

What is the best thing to do? We can afford £450,000 but don’t want to overpay. Equally, don’t want to upset the house sellers or lose the purchase.

Couple of options spring to mind :
You can bite the bullet and press on with the purchase, then think 'Did we overpay' ?
You can go to the EA, show them the survey valuation and re-negotiate. If the sellers are 'upset' then their loss - don't worry about this - negotiating is a tough business.
£25K on a £450K house is only 5.5% - did you go in at full askingm price or negotiate them down to £450 ?

Which 'grotty' bit of Leeds, out of interest ?

LateStarter

The only thing the valuation may impact is your mortage - the LTV is calculated based on the valuation, and your lender may offer you less. You would then have to find the extra money if the sale price stays at 450k. You could talk to the EA - if you're at the point of valuation the vendoe may be willing to compromise on price rather than start over.

Other than that, the value of a house is how much you want it, and how much the seller wants for it. If you can afford it, and you were happy to pay 450k for it 2 days ago....

Leeds_House_Mover

Asking price was 450. We negotiated a bit to get to that amount but not much.

It will affect our LTV but not by much.

It's hard...I don't want to overpay but don't want to lose the house if we negotiate too hard.

westernpromise

Almost every time I have bought a house, the lender's surveyor has claimed it was overvalued. When you ask them to point out to you a house that is identical and for sale cheaper at the "right" price, they just shrug.

What is going here is that if you default on the mortgage, the lender repossesses the house, sells it at a knockdown price and uses the proceeds to cover the mortgage. They then hand you the bill for any shortfall between the sold price and the mortgage balance.

If you protest that they sold your house too cheap, they just point at the survey valuation and argue that it was only worth £425k. This undermines your claim.

Surveyors know this is what's expected. These days lenders use panel surveyors i.e, one from a limited range of local firms. These firms all know that they have to do this to get on the panel and get any business.

Jhoney_2

Can you offer to split the difference?

Vendors usually put a premium on the sale expecting to negotiate i'm told, so it's possible they will try to work something out with you.

If you really want the property and there is nothing else around that you want to buy, it isn't worth losing so ask, they can only say no.

Ultimately, if they will not budge on price and you don't want to lose the house, you need to be financially prepared to pay without regret.

Cheeky_Monkey

Leeds_House_Mover wrote: »

We have recently agreed to buy a house at £450,000.

All was going well until the Surveyor valued the house at £425,000. No real reason given.

We’re guessing it’s bacuase the house is on the edge of a slightly grotty area in Leeds.

What is the best thing to do? We can afford £450,000 but don’t want to overpay. Equally, don’t want to upset the house sellers or lose the purchase.

I wouldn't be paying that sort of money for a property in that location at all then. Grotty areas tend to mutate outwards :eek:

ReadingTim

Cheeky_Monkey wrote: »

I wouldn't be paying that sort of money for a property in that location at all then. Grotty areas tend to mutate outwards :eek:

Depends on which edge the OP is - the outer edge or the inner edge... gentrification also tends to mutate outwards...

OP - depends on how much you want the place.... your best tactic would be to suggest to the vendor that if your valuation came in at that, then so would others, and sooner or later the vendor would have to take that price. You could them suggest (say) meeting around the middle, and it's a win-win situation. However, if the vendor doesn't think other valuations will arrive at that figure, wants to take a change, or sells to a cash buyer, it won't work - how much do you really want the place, and how gutted would you be if you missed out on it for the sake of 5% of the potential purchase price?

Mickygg

Your surveyor is one opinion. The sellers opinion is they wanted £450k. You offered that as that is what it was worth to you.
I wouldn't give a hoot when selling my house what a surveyor says its worth.
Negotiate if you want to. If you were negotiating with me I'd just say stick with what we agreed or jog on. Others may be more accommodating.

MysteryMe

Ignore all posters who come out with the don't worry about upsetting anyone nonsense. Successful negotiation has nothing to do with upsetting people or making friends. Act professionally and reasonably and you'll stand a far better chance of achieving a successful outcome.