Mortgage Valuation-Downvalued by 30k

sugarcoma101

Hi all,

Hoping someone has been through something similar and can advise! I had my mortgage valuation back yesterday on a property I am buying and it's been down valued by 30k...

The bank have issued the full loan anyway, so I'm told I can still pay the price that has been already accepted, but I shouldn't obviously ignore it. The mortgage broker has told me that that EA has obviously overvalued it.

Now, I'm not sure what to do next. The property prices area I'm buying in London are going up massively month to month so I don't want to lose it.

Is this common that prices are down valued in the mortgage valuation?

I'm thinking the seller will want to sell regardless, so I will offer 30k less and test the waters. If they knock it back, I'll go a little higher but i'm hesitant to pay full price now that I'm told it's not worth it...

From what I can see, the sellers only option is to either take my new offer, or put it back on the market to either find a cash buyer, or a new buyer that perhaps won't get the same valuation on the mortgage??

All help and advice greatly appreciated!!

questionss

30k - what as a percentage? 30k on a 200k property is much more significant than on a 600k property. What are sold prices like locally. How long did it stay on the market? Have you missed out on other properties? What comparables are there local to it? What type of survey did you have?

What do you think it's worth to you? How much are you prepared/able to pay?

I'd choose a figure I was happy with but go asking them to meet the valuation figure & negotiate from there.

sugarcoma101

My offer was 440k and the valuation has come back with at 410k, so nearly 7%.

Ive done a Hometrack valuation and that's come back with 418k-using comparable properties nearby. So 440k is pretty much out of the ballpark so it seems the EA definitely overvalued...

This is based on the mortgage survey. I've had a verbal building survey report back (waiting for the full report) who said it was ok with no major issues (apart from a chimney stack in urgent need of repair...).

I'll wait on the full building survey report and make a call then. But it looks like I won't be paying 440k for it...I just hope the vendor is reasonable and doesn't pull out. Risky for them to do that though, considering it might just happen all over again with someone else!!

Fingers crossed....

Hoploz

A surveyor I spoke to last year when remortgaging explained that an EA is ahead of the market (ie takes account of marginal local increases) whereas a surveyor is behind the market. He suggested his valuation was x for the purposes of the mortgage, but as the busy season was coming up, that it could be put on the market at a higher price, which we would stand a good chance of achieving.

So if the local market is flying then the EA sees this and values at next months price (for example)

Have a go at negotiating a reduction, theres no harm asking. But if they say no, you have to ask yourself whether you stand a good chance of buying another property which you like just as much, for any less. Perhaps this property will be worth the 440k within the next few months? Will you have found anything else by then? Someone else could well be willing to pay it - like you were.

pathtofreedom

Depends as well if you're willing to risk negative equity. What is the ltv of your mortgage with the lower valuation. If you had some unexpected life event in a year or two and had to sell, or get permission to rent, would it put you into negative equity and be looking at selling at a loss?

I bought in 2007, not in london but my house still hasn't regained the 20% drop after that crash and it look years to get myself out of negative equity with a lot of over paying. I couldn't remortgage or get permission to rent due to it either so if prices did drop if you think you're at a disadvantage already how much could you lose and still feel happy living there.

Depending what area you're living in could something like a new flight path over head impact the house prices in that area, or any other developments. Where I live fracking is getting more and more likely to start which will cause me more problems and probably more negative equity but you can't always predict what might happen to the local area.