First time buyer - full panic mode!

Dollydot

Hi everyone just looking for some advice and hopefully reassurance.
My partner and I are buying our first home and have a 10% deposit. We had a decision in principle with nationwide and had an offer accepted on a lovely house. Unfortunately the valuation has come back and nationwide say it is worth £10,000 less than our agreed price. We have asked our seller if we can meet halfway we will pay him an extra 5k but could he drop 5k off our agreed amount. Unfortunately he is unable to do that so we have appealed the valuation.
Has anyone had any success with mortgage lenders changing their valuation?

thanks in advance

amnblog

Ask your self instead why you want to pay £10,000 more than it would be valued for if someone were to buy it from you today?

Valuation appeals are nearly always not successful. You need to provide sufficient evidence for a Professional to admit they were wrong in front of their client (the Lender).

If the vendor won't compromise as you have suggested, be brave and drop the deal.

What buyers do not always appreciate is that the valuation not only protects the lender from making a mistake it also protects the buyer.

I can guarantee you that everytime one of our buyers has had to pull out of a purchase they find a better deal the second time. We believe it is something to do with the eyes being sharpened and the heart not ruling the head so much.

AlistairM

This happened to me. I'm a FTB and was the house undervalued. I got the bank to send me a copy of the valuation and forwarded it on to the Estate Agent. We were £15K over the valuation and just reduced our offer to match that and left it up to the seller, he reluctantly took £5K off the price for us. Fortunately we had a 28% deposit which we changed to 25% of the new price.


We decided it was worth overpaying as there's no house anywhere like it for sale.


I guess your problems are that you've only got 10% to begin with, so no room to manoeuvre, and offered the £5K straight away.


Unless they get a cash buyer they're going to have this problem with everyone. It might be best to tell them you'll drop the offer without a negotiation on price. It sucks to lose the money paid for the valuation though.


Our agreed mortgage deal expired because the house price changed so we had to resubmit it after that. If you do get the house price changed then you'll have to do the same.


Hope you can get it all worked out.

Paully232000

suppose as well it depends on how much you want the house, how easy it will be to get another house that you like in your area, and how much of a % is £10K.
Also, how long do you intend to spend in the house, 5 years, forever? (I know that is hard to say but you must have a rough idea).

Then work out whether 10K extra (if you have to pay it) is worth it to you.

KayTM

Whilst I think that amnblog's advice is excellent, in theory, I'd question how practical it is to take that approach in a sellers' market.

In these days of demand exceeding supply, rapidly rising house prices, and selling tactics such as "best and final offers", it may be entirely logical for a buyer to offer a bit over the official valuation.

It may be better to offer a bit more now to secure your deal, and a foot on the property ladder. If you don't do it, then someone else will.

I'm not a property professional, just someone who is currently going through a house purchase having not done this for many years. That's my take on it. If it was the right house for me, then I might well be willing to pay more than the valuation for it. That said, I'd not expect the lender to pick up the shortfall. That would have to be my risk and therefore come from my savings.

Dollydot

We cannot really afford more than offering an additional 5k as my parents will be giving it to us and that's all they can do. The house is perfect for our needs as our son will be in the catchment area for the senior school we want him to go to in a few years time. The seller wants a quick sale and there is no chain either side (seller is emigrating). We only have 2 options and that is the seller changes his mind and reduces 5k or nationwide change their mind regarding the valuation. If not we will have no option other than to pull out which would be the worst possible scenario.
Fingers crossed that this all works out.

Dollydot

We can almost see it being a 'forever home'. We only have one child and the area is lovely it's a 3 bed so even if we do decide to have another child we have the spare room to use. Definitely a good 5-10 years unless the area drastically changes

Thrugelmir

If the vendors are emigrating then time isn't on their side. Hold firm with your offer. While continuing to keep an eye on other properties that come onto the market.

AlistairM

From everything I've read, there's almost no chance of successfully appealing a valuation


Undervaluing homes seems to be a more common these days as house prices are rising so quickly. I heard that house prices are averaging a price rise of £900 a month now. Is that true!?

Thrugelmir

AlistairM wrote: »

From everything I've read, there's almost no chance of successfully appealing a valuation

Why do people wish to overpay for a property? Easy to do when you are borrowing somebody elses money. Heart rules the head one might suggest.

KayTM

Thrugelmir,

As I wrote at post #5 in this thread, it's quite logical in some circumstances to pay a bit over the valuation for a property. Perhaps by the time the lender's valuation comes in, they may already have invested in a survey of their own and various other costs. It's possible it's easier, and more sensible, to keep going rather than to cut their losses and pull out - perhaps only to have the same thing happen again... and again.

As I also said, if you have the savings to pick up the shortfall, then you might consider it a good use of your money to take the hit of a few grand just to get on with things, get a new home, and not continue with all the uncertainty and hassle of continuing with this horrible system of purchasing, chains, and goodness knows what all else. I will breathe a huge sigh of relief when it's all over, and if it turns out that I've overpaid a bit, then so be it.

As AlistairM says, prices are rising all the time. I doubt if it's as much as £900 p/m for the average house in the average area, but even so it's a valid concern. Also, August seemed to be a very quiet month for new properties in some areas. Some people may well think that a bird in the hand is a good move, as long as they have the savings to cover any shortfall between the lender's valuation and what they've offered.