Mortgage downgraded due to (in my eyes) nonsense valuation

audigex

Hi

So I'm in the last stage of my mortgage application: the valuation, and the valuer has valued the house down significantly (~11%) on the sale price. This has obviously affected my mortgage, as the mortgage company are now not willing to lend me as much, and what they will lend will be at a worse LTV (and presumably therefore, worse rate)

The problem I have is that this valuation is, I believe, wrong. Aside from being a miserable git, I could already tell as he walked around that the valuer was basing almost the entire valuation on the sale of a house down the street 3 years ago

Why? Because that's the only comparable house in the street to have sold in the last 8 years.

The problem? That sale was "dodgy" - I know for a fact that the house was
a) In an absolute state (mine needs a little TLC, but not to the same degree - a kitchen and a lick of paint and job done)
b) Sold to a family member for a reduced price with the sole aim of renting it back to the disabled owner, subsidised by benefits payments she would otherwise not have been eligible for.

Of course, I can't prove that it was a sham price, but being the old even vaguely comparable sale recently, and the way he was talking, it's clearly affected things.

Half my street are terraced houses, the other half are semi-detatched. The valuer has valued my 3 bed semi (garden, off road parking) at exactly the same price as a 2 bed terrace across the street (which sold almost immediately at that price).... even considering that the one across the street is newly decorated it just doesn't add up.

I could go further into why the valuation makes no sense based on comparable properties in the area, but the end result is the same: it's affected my mortgage.

Is there anything I can do, other than spend hundreds on getting the property re-valued independently and appealing it, or switching lender to someone able to hire a competent valuer?

anselld

Are you buying this place or re-mortgaging?

Thrugelmir

audigex wrote: »

I could already tell as he walked around that the valuer was basing almost the entire valuation on the sale of a house down the street 3 years ago

That's some psychic power you possess. Mind reading must be priceless.

Jhoney_2

Why not try getting in 3 EAs - and if you know which one sold the one across the road, make them one of them.

That's the market proof and they will be able to give a reason why that sale was so far short of the true value.

Best of luck.

mrginge

Of course there is.
Reduce your offer.

lucie_1985

You are able to challenge it and the criteria for Nationwide for us was two comparable sales within the last 6 months. For a start that's not easy to obtain and some of the more recent ones haven't yet hit the online searches that you or I could do from home. An independent valuation is a waste of money, they won't recognise it as they go by their own panel. Lastly it's very unlikely that you will get anywhere with it, this is down to the fact that if the market takes a downturn, you default on your payments and the house is sold by the bank for less than it was valued at by the surveyors the bank is able to recover the shortfall from them. In that position as the surveyor without hugely strong evidence I wouldn't change it.

Thrugelmir

audigex wrote: »

Hi

So I'm in the last stage of my mortgage application: the valuation, and the valuer has valued the house down significantly (~11%) on the sale price.

To put matters in perspective. 11% sounds a high %. However when stated in £'s can look very different.

Tim_Bisley

We had the same thing happen at the start of the year. You'll get plenty of posts on here saying you've got your own valuation wrong, why do you think you know the right price etc that are none too helpful.

Bottom line is an appeal can only be based on SOLD prices, usually within the last 6 months but this may stretch to a year. Your problem is the same as we had in that there were no comparable properties that had sold recently. Our appeal failed - it goes back to the surveyor not the mortgage company.

We had to go to a different lender who used a surveyor from a different panel. They still valued it less than the agreed price, but it was a more sensible valuation than the crazy price the first one came back with.

audigex

Just to add some more context as to how we came by the original value:

We valued the house by taking a comparable size/age etc property nearby, <1/4 of a mile away in the same area of town (no crossing boundaries into "posher" areas etc), at ~£110-115k. We then totted up the work that needs doing (Kitchen at £5-7, plus perhaps £4-5k of general decorating, carpets, repairs etc).

We also looked at a similar house on the same street which was listed for sale at £120k, then fairly quickly removed from the market due to a change in circumstances.

Knock that £10k off, plus another £5k for the inconvenience of having to do the work, and in case we're aiming a bit low on the cost of the repairs and decoration, and that would suggest £15k off £110-115k, so somewhere between £95k and £100k. Picking the lower estimate of that gives a price of £95k, which is £5k less than ANY other 3 bed semi on the market in the same town, in any condition

So to then have that price further reduced by £10k, seems a little ridiculous: that would suggest the house needs nearly £30k spent on it to get it up to the standard of comparable properties in the area... rather than a £5k kitchen, 2 carpets and a couple of tins of paint.

My feeling is that he took the £95k sale price and then decided to take the condition into account based on that price (ie knocking £10k worth of work needed off that) rather than realizing that price already takes it into account.

anselld wrote: »

Are you buying this place or re-mortgaging?

Buying, but it's a purchase from a family member

Thrugelmir wrote: »

That's some psychic power you possess. Mind reading must be priceless.

Merely observant, good sir - the fact that he said on several occasions that the only house on the street (of the same type) that had sold recently was that one, was a bit of a giveaway. And by "said on several occasions" I really mean "Seemed utterly fixated on it, and barely even looked at the actual house in question other than to note (as I knew) that it needed a little work.

mrginge wrote: »

Of course there is.
Reduce your offer.

Unfortunately not relevant in this case, as I'm buying from family and some of the difference is a deposit gift from the seller: in normal circumstances perhaps, but in this case all lowering my offer would do is lower my LTV, or prevent the purchase at all (meaning I'd have to buy another house, without a deposit gift borrowing more money)

If I believed the valuer was correct, it could make some sense to lower the price accordingly: but the family member selling needs a minimum amount to be able to move, and besides, I'm certain this valuation is wrong.

Thrugelmir wrote: »

To put matters in perspective. 11% sounds a high %. However when stated in £'s can look very different.

~£10k. Not huge money in the eyes of many, but enough to

a) Push me into a higher LTV bracket, costing me potentially thousands over the fixed term
b) Mean that the lender is now telling me I can't borrow the full amount I'd need

Which are the relevant points, as they mean that I either can't buy the house (as I'd have to find several thousand extra myself), or would see a fairly significant rise in the monthly payments.



I do accept the fact that I may be wrong about the value of the property (but considering it's already reduced by ~£15-20k from comparable sized properties in similar condition.... I don't think I am), but for the purposes of this thread, can we just assume that the sale price is fair and discuss the options based on a low valuation?

amnblog

It is the valuer's job to value.


Lenders rely on the valuers opinion, not yours.


They lender is interested in what the property is worth as security on their money - not what you are prepared to pay for it.


Appealing a valuation hardly ever gets you anywhere - if nothing similar has sold for years you have no evidence.


1. The Lender will ask you to identify similar properties in the immediate vicinity that have sold for the kind of value you suggest recently.


2. If you can provide this information, it then goes via the lender to the valuer to invite them to admit that their professional opinion was wrong that that they made a mistake - not likely.


The Lender does not make up their own mind and argue with the valuer. The ball is firmly in the valuer's court.

audigex

Thanks amnblog - it's not what I want to hear, but an understanding of the process helps.

I've found 3 similar (by which I mean identical, same development, same design, built at the same time) which have sold in the last 6 months for between £25k and £35k more than his valuation, and another which sold for £25k more than his valuation 3 years ago and was listed a few months ago for £35k more (but then withdrawn). Literally these are identical houses within 100 yards, so about as comparable as you'd ever like to see! The only difference is condition. Those houses were decorated to anywhere between decent and superb, and I certainly don't expect one requiring decorating to come in at the same level: but I've also outlined the work the property requires and explained how I feel the condition of the house justifies the difference.

Whether anything will come of it, I don't know... but the fact is that he's valued it at between £25k and £40k less than other identical or similar properties within the same development: I don't see how that can be justified when the house needs a kitchen, 3 carpets and a bit of paint (my estimate: £8-10k worth of work, done professionally and to a good standard). If I spend £10k on this house, he's saying that it will still be worth £15k less than one 30 yards away in the same condition: that makes no sense to me. I'd be willing to argue the toss over the fact that the inconvenience of doing the work reduces the price further, but I can't see that accounting for £15,000 worth of difference

He down-valued the house by £10k. If it had been £7.5k it wouldn't have been a problem: so with such a small difference, I've still got some hope that my justification for the price will help. We'll see, I guess