House overvalued

maiz

We are purchasing a house and using a mortgage broker. There is no chain, we are in rental and the property is empty.
The mortgage company had a valuation at the start of September. We are finally getting to the offer stage now. It has been verbally agreed by the underwriter but today we have found out that the house has been overvalued. Now, we haven't seen the valuation.
Can we find out how much it has been valued for? How?
What do we do with this information?
Do we involve our solicitor?

Mokka

Do you mean the mortgage provider overvalued your property?
Not sure why this would be a problem?

Mossfarr

How did you find out it had been overvalued?
Why don't you ask for a copy of the valuation report? They are not obliged to provide a copy but it won't hurt to ask.
Also, you will be in a better position to negotiate the price when you get your homebuyers report ( you ARE getting one aren't you)??

kinger101

Is everything backwards?

Offer is usually before valuation.
Valuations are usually under or at offer price, not over.

Please confirm the details you have posted is correct, and if so, what your issue is?

The lender's valuation is just an opinion, and it can't possibly cause a problem if it's too high.

maiz

We have agreed a sale price of 205000 in August.
Mortgage broker told me this week that the valuation is 195000. The underwriter has accepted all our financial paperwork for the mortgage.
The broker said it was a drive by valuation and, for no extra cost, he has requested an internal valuation.
Our homebuyers is booked for 3rd Nov.

(I meant under valued, didn't I?)

Caz3121

If the alternative valuation comes back at the same figure you will have 3 main options
1) find the difference yourselves (mortgage will be based on the valuation rather than purchase price) so this would mean either finding additional cash, or increasing your LTV
e.g. a planned 85% LTV now becomes a 90% LTV....the higher your current LTV the more of an issue this becomes
2) negotiate price with seller (if the valuation comes in lower than the offer then they will likely have this issue with many purchasers)
3) walk away

hopefully your homebuyers report will come out in your favour

note: the property may not be undervalued, it may have been overpriced...until you get your other report I guess you will not know which it is

Rizla300

Maiz I wouldn't pay much attention to the mortgage valuation of the house. Their valuation is for purposes of lender and they almost always go under the value that buyer offers on property. They do this to cover their backs and lenders to minimise risk on lending.

It's laughable that the mortgage valuation was a drive by as well so that valuation has no strong grounds. It is the homebuyers report valuation that is the key and that can be used to renegotiate with vendor. That's what we did with vendor. We also got a copy of our valuation report automatically without asking from our lender. Some if the things suggested to improve the value of property was laughable as well. I would ask lender to wait until you get the homebuyers report.

maiz

Our mortgage broker has now advised us to gazunder. So, I contacted the estate agents with a copy of the valuation and told them to put forward a new offer of £195000. Estate agents are not best pleased but then, neither am I.
We are just waiting to hear back from the vendors since Friday. I am feeling uneasy about the outcome.

jacko74

If the homebuyer mortgage valuation also comes in at £195k then stand firm and don't allow yourself to be psychologically bullied by the estate agent being 'not best pleased'... it's a common tactic for them to act personally offended if they don't get their own way. (At least I assume it's an act.. or else there are a hell of a lot of very thin skinned ea's out there)

The only people the ea should be 'not best pleased with' is themselves for over-valuing the property in the first place.

I still remember the article where estate agents were whining about buyers putting in 'spiteful offers'. Hilarious.

TrickyDicky101

Rizla300 wrote: »

Maiz I wouldn't pay much attention to the mortgage valuation of the house.

Their valuation is for purposes of lender and they almost always go under the value that buyer offers on property. They do this to cover their backs and lenders to minimise risk on lending.

It's laughable that the mortgage valuation was a drive by as well so that valuation has no strong grounds. It is the homebuyers report valuation that is the key and that can be used to renegotiate with vendor. That's what we did with vendor. We also got a copy of our valuation report automatically without asking from our lender. Some if the things suggested to improve the value of property was laughable as well. I would ask lender to wait until you get the homebuyers report.

The mortgage valuation is critical in terms of what the lender is prepared to lend - if the OP has no additional funds to make up the shortfall between what the bank will lend and the offer agreed then that's the end of purchase (without renegotiation with the vendor) - full stop.

My experience is clearly different from yours as in mine it is rare that the lender valuation is less than the agreed offer. The lender valuation is usually carried out with full sight of what offer has been made.