Mortgage valuation lower than agreed sale price - FTB

suski1

Hi,

I am hoping someone can help me...

I am a first time buyer and have found my dream home. The asking price was £159950 however a sale price of £155k was agreed. I have a £55k deposit so I was looking to lend £100k. I have been limited to certain lenders because of some adverse credit from 5 years ago.

The valuation has come back today and has valued the house at £145k rising to £147k after some minor work.

I have been looking for my first house for 18 months and I have totally fallen in love with this property so don't want the sale to fall through.

Can anyone advise on what my options are?:o

LHW99

As I understand it you could:
a) walk away
b) try to negotiate the price down
c) pay the agreed price, but on the basis that if you borrowed 100k, then your loan to value would be close on 70%, as far as the BS are concerned. This may mean that even if they lend they might charge more in interest.

Also if you had to move again in a few years, you would probably have to sell it for less than you pay.

Do you know why the valuation has come in lower?

DpchMd

You must be very relieved, the surveyor just saved you from paying too much.

justcat

Where is the house?

When did you offer on it?

Whatever you do, I recommend telling the seller as soon as possible so they don't have to wait any longer than they have to if you end up having to pull out.

What is the work that they suggest is required?

md87

DpchMd wrote: »

You must be very relieved, the surveyor just saved you from paying too much.

Big cause of purchases/sales falling through, often for no reason. Surveyor did same to me, 4 yrs later sold at 20k profit. They cover their own backs with low valuations. Personally I would not let it put you off so long as you are sure its the property you want, you plan to stop there a few years and you can afford the mortgage, as you may not be within the bracket to get the same mortgage deal/rate.

DpchMd

md87 wrote: »

Big cause of purchases/sales falling through, often for no reason. Surveyor did same to me, 4 yrs later sold at 20k profit. They cover their own backs with low valuations. Personally I would not let it put you off so long as you are sure its the property you want, you plan to stop there a few years and you can afford the mortgage, as you may not be within the bracket to get the same mortgage deal/rate.

Regardless of your opinion, the surveyor is far more qualified to value the property than the buyer, vendor or estate agent.

It's is in the lender's interest for the surveyor to value the property accurately.

suski1

Thank you all for your comments.

The property is in North West England. It went on the market on 28th Jan 2015 and I put my offer in on 7th of Feb.

I have received the following message from the lender -

I advise that we have received the valuation report and the property has been valued at £145,000 in present condition with an after works figure of £147,000. The valuer has also stated that a Timber and Damp report is required which will be a condition of any offer issued. Whilst this does not affect the loan the purchase price quoted is £155,000 therefore please advise if the applicant is to proceed with this property and if the purchase price is to be renegotiated.

Does this mean that they are still willing to lend me the £100k? And if I wanted to purchase at £155k I would need to find £8k to make up the difference?

I just want to understand the situation so I can make an informed decision.

Many thanks

amnblog

Be smart and reduce your offer to £145,000 - walk away if it is not accepted.

A property you have paid £10,000 too much for is not a 'dream home ' it is a nightmare.

amnblog

By the way - do not pay for the timber and damp report - the vendor must pay.

If it is not satisfactory, withdraw your offer of £145,000 and renegotiate to cover cost of repairs.

dekoder

They can still lend you 100k, but with higher LTV and probably higher interest rate.
Surveyors do sometimes undervalue properties, it happens. It's up to you to decide if they did in this case. Use sold prices in your areas, involve friends/family with buying/selling experience that could give more objective opinion.

Speak to the EA to tell them the valuation came back 10k lower then agreed price and try to negotiate a compromise. If they agree reduction, decide if the house is worth it (sold prices/others opinions/ research).

nubbins

DpchMd wrote: »

Regardless of your opinion, the surveyor is far more qualified to value the property than the buyer, vendor or estate agent.

It's is in the lender's interest for the surveyor to value the property accurately.

They maybe more qualified but definately not necessarily more accurate. I have tested this in having a remortgage valuation coming in at 30k under what I and estate agents thought, I did not go through with the remortgage and sold the property not long after at just under the price what I and the EA thought. They undervalue all the time to cover their backsides.