Mortgage Company valuation less than purchase price - what can we do?

Shadowplay_2

Hi everyone, i wasnt expecting so many replies!

Ok i phoned Persimmon Homes and said that the property is way overvalued and we would be pulling out of the purchase unless they lowered the price to £150,000.

The sales woman indicted that (a) this is the first time they have had such a low valuation and (b) that the 'extras' they are giving us equals over £18,000.

I told her that they dont ,they equal more like £11,500 and that means there is still a £7,500 deficit. Just arguing for arguments sake by this time.

So basically Persimmons homes have come back and said that they will pay for another valuation of the property for us. I said only if we can use someone independant and of my choosing. but i dont really know if this second valuation will serve any benefit? I phoned the Nationwide and they said the second valuation would not influence their decision.

We are FTBs with very little money saved. All the incentives they are supplying are worth real cold hard cash to us. Easily £12,000 and i dont see the difference between paying out that figure via a 105% mortgage or through taking out a seperate loan to fund the things which are incorporated into the asking price (yes we should have saved harder but we both had student debt to clear).

What i'm saying is, i know the mortgage is going to be above the value of the next day resale value of the property (we knew that all along). Is it not a balance between gaining the incentives and the purchase price?

I do still agree that £167,995 is too high and i am not willing to pay that amount now after the valuation, but is there a price inbetween that is reasonable - £161,995? (minus) deposit paid, legal fees, etc. = about £150,000 (which is the vaulation).

or am i missing something?

Its such a big decision and so so so stressful at the moment... maybe my head will go 'pop'

S.

lynzpower

1)

The sales woman indicted that (a) this is the first time they have had such a low valuation and (b) that the 'extras' they are giving us equals over £18,000

.

Shes a saleswoman. New builds get downvalued all over the place. Im not saying she is a liar, but I wouldnt believe her.

2) the extras? are they extras? No.if they include a kitchen, flooring etc, they are not extras,cos you cant buy a persimmon home without these "extras" therefore they are part of the building, and not extras to be thrown in.


If they are putting in a 5% deposit, then they property cannot be worth ( extras or not, this is frippery designed to seduce you) at its top its worth 157

I wouldnt, to be honest.

Doozergirl

Shadowplay, how many flats have you looked at? Have they all been brand new? Where are you looking?

You can't play this game. It is dangerous. Your mortgage company have valued the flat as not being worth what you are paying for it and you need to listen to that and block out whatever BS Persimmon are feeding you. It doesn't matter that everyone else in the block has a mortgage - it is not worth what you are paying.

Get over the fittings. Every house comes with fixtures and fittings and I could completely kit out a flat with a kitchen and a bathroom and carpets and entirely furnish it for £12,000, make it look great and still have change. But the fact is that you will be able to find a place, complete with a lovely kitchen for £150,000. You are being ripped off by Persimmon; their prices bear no relation to comparable properties and your valuer is telling you that. You will be able to buy in the same block next year for £150,000 when someone thinks they will sell their BTL cash cow and gets a massive shock

Not only are new build flats not worth what you pay, but in many cases the prices continue to fall until they hit a price that fits in with the rest of the community. Your fixtures and fittings are bog standard basics widely availble at half the price Persimmon say they are.

Please get out there, stay out of the show apartments and go and look at second hand apartments or play safe and look at 2 bed terraces in an established residential area.

Please. Please, please, please

Dithering_Dad

If I were you Shadowplay, I would re-read this thread and try to imagine it wasn't your post. Then read the other threads that have been linked to and ask yourself whether you really want to buy an overpriced apartment at the height of a property boom just as we're about to head into a global recession.

I'll add my voice to the 100% unbaised feedback on here and say "Run! Run like the wind!".

Shadowplay_2

Hi Lynz,

Yes sales people are sales people.

They are paying (extras is not an accurate term) 5% deposit (£8,400), we dont have this so the only Mortgages we could look at where 100% hence more expensive (and limited choice), 95% mortgages are slightly more competitive (better rates which again saves us over the fixed term saves money). Legal fees (£1000), Stamp Duty (£1,600), Solicitors fees (£1000), Carpets (£1000) and all the kitchen appliances (£1000).

None of the above are supplied as standard in a new property (well maybe the carpets are). I know the above are not 'free', we are paying for them hence the overvaluation.

Is their a happy medium? getting the above but not overpaying for the property?:o

Shadowplay_2

Hi Guys,

Im at work so unable to read everything properly. I am most certainly not ignoring everyones very helpful advice. Just posting my thoughts whilst trying to look like i'm doing (job) work.

I will re-read the whole thread tonight with my partner and have a chat.

Its not looking good though, is it lol.

S.

Doozergirl

Well. Legal fees and solictors fees are the same thing. They will cost around £1000 in total.

If you barter on a second hand flat, you will very easily get the appliances thrown in, in fact, most of them are integrated anyway.

I can carpet a five bed house for £2300 with exactly the same stuff Persimmon use.

The 5% deposit is a clever ruse to make you think you are getting something. They are giving you nothing of the sort; they are simply selling it to you for neaer it's true value whilst conning mortgage companies and getting you a 95% mortgage. That is why lenders will not accept any more than a 5% deposit paid by a developer - they know it is a tactic.

So you are not getting £8,400 depoist, you are not getting £1000 legals but you are getting Stamp Duty and you 'might' be getting some new carpet and appliances which add up to £4,600. Nearly new, Second hand properties you can easily get come with carpet and fitted appliances.

I am putting it to you that you are getting £2,600 worth of extras on a £150,000 flat and you are basically paying the rest because you haven't got the money for a deposit. Not only is it a terrible thing - you end up paying double that 5% deposit because it should have been 5% of £150,000 and then you double it again over the life of the mortgage - that 5% deposit of £7,500 is going to cost you £30,000.

Mate, I know I'm a bit of a mentalist but I've been watching this farce paly out for a few years now and I want people to stop people like you getting duped and trapped in a flat you can't get out of without finding cash to do so.

I don't get excited over property prices on the whole, I buy and sell property myself which means I will take calculated risks but never a new build apartment.

How long would it take the two of you to save £7,500 for a 5% deposit on £150,000?

mr218

dont want to sound rude, but maybe you should not be buying a place now. if you cannot afford the deposit and costs, it probably is a good indication that now is not the time for you to buy.

but you have your mind set on it and you are seeing it as a wasted opportunity. but it is not. it is a great escape hatch for you. new homes lose their premium (above older homes) really quickly. imagine you are buying a top hatchback car. there is a big difference between the values of nearly new and brand spanking new.

also, this is a market which has probably reached its top in my opinion. flats and newly built ones will suffer the most even without a crash. why are you letting yourself be tied and dragged under by this huge loan.

do you mind putting your figures here. how much would an equivalent older property cost? ( dont just look at the rightmove prices). in this climate people generally offer less than the price indicated and the actual price you will pay for a older place is generally lower than list. how much are you paying in rent now. how much would the interest part of the mortgage be. can you save for a year to get a decent deposit and be in a better position to buy later.

good luck and take your time making a choice. with rising interests and growing unease in the financial and housing market, it is hardly the time to saddle yourself with what could potentially turn out to be a white elephant.

i guess your desire to 'own' a place is great but if you emotionally detach yourself from that thought and look at the situation dispassionately you will realise that the bank has a better idea than individuals about the value of the property. after all they are lending on it.

dwsjarcmcd

I think if this was a house, rather than a flat I would be more posative about it (I have lived in new builds and resales and did just fine on all, except a new build flat many years ago!). There is just a vast oversupply with flats.

The flat is overvalued but to me but you have thought that through and sound really sensible. How many of the flats have been sold? What phase is the development at, are people living there? If so, can you look on 'upmystreet' or any of the sites that tell you how much your neighbours paid. Use that to inform your discussions with Persimmon.

As I say, I'm not against new builds generally, but I would be very nervous and cautious about flats specifically.

irnbru_2

Doozergirl wrote: »

vodkagirl who couldn't believe that her flat might only be worth what she paid for it when new new ones were selling for £40k more :eek:.

This thread?


The OP might like to read this one too.