House undervalued - dead end!

SPD14

Hi, not sure if this is the right forum, so feel free to move it if not!

I'll try to keep this brief.

My Wife and I purchased her parents house in August last year. It had been valued at £289,995 in 2012 and they'd had offers of approx £280,000 that same year, but turned them down.

With this info in hand, we applied for a £250,000 mortgage, as her parents were gifting us the other £30/40k. All went well until the Building Society's valuation came back at £250,000 (which, conveniently was the amount we were paying, not the actual value of the property), This meant they retracted our original mortgage offer and we had to settle for a worse mortgage (to the tune of £300 per month for two years!) otherwise the chain would've broken - and as we'd been messed around since March, we just went with it.

Anyway, in January this year we wrote a long letter of complaint to the BS, as we were less than happy at the undervaluation of our new property and we wanted some answers. They finally replied with the expected 'not our fault guvnor, you need to report it to the valuers and their governing body', which we did. We sent a letter to RICS and the guys who valued the property on the BS's behalf, and they replied with the same noncommittal answers.

We just don't know where to turn next, as the BS, valuers (who also happen to be owned by the BS) and RICS are all saying 'nothing we can do'.

Essentially, we don't want the records to show that our house is only worth £250k, when it's got to be worth at least £290k, as proven by two similar properties which were sold at the same time as ours.

The valuers haven't done their job correctly, which we pointed out to them (i.e. research previous sales etc), but they deny it.

Are we wasting out time in chasing them all? Does it really matter anyway? I guess we're just pee'd off with their ability to make a !!!!-up and then get away with it!!

Any ideas?

anselld

SPD14 wrote: »

Essentially, we don't want the records to show that our house is only worth £250k, when it's got to be worth at least £290k, as proven by two similar properties which were sold at the same time as ours.

Not sure I understand your concern here. The records will show the agreed purchase price, nothing to do with the mortgage. What was the final agreed price for transfer, SDLT, etc?

kingstreet

You did go to a lender which accepts concessionary purchases cases?

Did the lender set the case up correctly?

If the surveyor was told £250,000 purchase price, he would only value it at that if not told about the undervalue aspect of the purchase.

I know one particular lender that has a special process to deal with undervalue transactions which require a call through to the service centre immediately the case is submitted to make an amendment to the price/value.

Is this Halifax (I have just described above) and did you apply direct, or via a broker?

SPD14

anselld wrote: »

Not sure I understand your concern here. The records will show the agreed purchase price, nothing to do with the mortgage. What was the final agreed price for transfer, SDLT, etc?

The agreed price was £249,995 and everything was based on that. Our actual mortgage was approx £236k (95%LTV). The issue is, when we come to re-mortgage next August, will the new mortgage lender look at the previous £250k valuation and just use that, or do they just scrap it and start again based on their own findings/valuation?

I guess we're worried that this poor valuation will come back to slap us in the face in the future!

Sorry for not being clear!

stator

If your remortgage with the same lender they might do a calculation based valuation. eg your house was valued at £250k, prices have gone up 10% in your area, we now guess it's worth £275k. If you remortgage to another provider they are likely to get a full valuation done, which would be completely independent of the old valuation and would look at sold house prices in the area plus the usual factors.

Foxy-Stoat_3

I would speak to your lender nearer the time and if you are not happy with their valuation then, you can pay for another one....or use a broker and find a new lender at the £290,000 value. If you are 100% sure that its worth £290K though as you may find the same problem with another lender.

Baby_Angel

As I understand it, you were happy when it was valued at £250k so you can buy the house for the reduced price/value. Now that you want to sell it, you don't want the value to be at £250k, but rather at £290K. Right?

When I use the Nationwide property price calculator, it always asks when the house was last bought and for what price. I am guessing (I am not expert at all in this), that the purchase/sold price will be a favoured for future valuations than any speculative valuations.

SPD14

kingstreet wrote: »

You did go to a lender which accepts concessionary purchases cases?

Did the lender set the case up correctly?

If the surveyor was told £250,000 purchase price, he would only value it at that if not told about the undervalue aspect of the purchase.

I know one particular lender that has a special process to deal with undervalue transactions which require a call through to the service centre immediately the case is submitted to make an amendment to the price/value.

Is this Halifax (I have just described above) and did you apply direct, or via a broker?

Sorry for the late reply, too tired last night due to the usual nightmarish 'putting the girls to bed' drama!

It wasn't the Halifax, and i'd rather not name them.

The whole process was dealt with by a broker and it was a concessionary purchase from the word go.

We know that the surveyor was asked to value it based on the £250k purchase price, and I suppose that's to be expected - they want to make sure that they won't get shafted. Maybe we were naive, but I would've expected a true valuation.

I guess non of this will matter if the new mortgage next year is valued correctly, rather than a lazy valuation based on the previous £250k.

Thanks for the help/answers!

MisterB1959

you've answered your own question, the surveyor was asked to value it based on a 250k purchase price, so they did! the surveyor is working for the lender and they just want to be sure they will get their money back. any land registry search will show the price the house was sold for NOT what the valuation was at the time of selling/buying. I don't understand why you think asking a higher price when you sell is an issue.


of course I also assume that this wasn't some sort of tax avoidance scheme ?

SPD14

Baby_Angel wrote: »

As I understand it, you were happy when it was valued at £250k so you can buy the house for the reduced price/value. Now that you want to sell it, you don't want the value to be at £250k, but rather at £290K. Right?

When I use the Nationwide property price calculator, it always asks when the house was last bought and for what price. I am guessing (I am not expert at all in this), that the purchase/sold price will be a favoured for future valuations than any speculative valuations.

No, we weren't happy with the £250k valuation, as the house should've been valued at approx £290k. We only paid £250k for the house because we were getting it 'on the cheap' from my inlaws - or not as it turned out! This is our 'forever' home, so we're not looking to sell. We just want the BS & surveyors to admit that they've made a mistake.

We had a mortgage in principal from the BS, based on a valuation of £290k (80%LTV), for two months prior to the valuation, so the BS knew the perceived value.

This may be a coincidence, but they pulled the very good rate we were getting just before the valuation, but allowed us to stay on it. Once the valuation came in, they said 'we have valued your house at £250k (95%LTV), therefore we have withdrawn the original offer', but they kindly allowed us to take an inferior mortgage that gave them an extra £300pm for the two year duration! Now is that a coincidence? Who knows, but we just wanted some answers, but haven't got them (surprise, surprise!).

...And breath!

SPD14

MisterB1959 wrote: »

you've answered your own question, the surveyor was asked to value it based on a 250k purchase price, so they did! the surveyor is working for the lender and they just want to be sure they will get their money back. any land registry search will show the price the house was sold for NOT what the valuation was at the time of selling/buying. I don't understand why you think asking a higher price when you sell is an issue.


of course I also assume that this wasn't some sort of tax avoidance scheme ?

I didn't realise i'd said we were selling the house?? We are never going to sell the house, unless something disastrous happens!

The issue in a nutshell, is that those land registry searches will show the house to be worth/sold for £250k, yet it's worth at least £290k! Now as i've said previously, if the house is valued correctly in 15 months when we remortgage, then this will all be forgotten about. But our worry is that the £250k valuation will be 'set in stone' as a guide for future valuations.