Amended valuation - advice needed

rainbow_carnage

We're in the process of buying a first-floor flat in London. When we viewed the property, I asked whether the loft space was included in the lease. It wasn't part of the property description, so the estate agent went back to the vendor, who said that it was included.

We've had a valuation done and a mortgage agreed by the lender. That was all fine.

However, when we saw the lease, there was no mention of the loft space. Our solicitor went back and forth on this with the vendor's solicitor, and in the end, it looks like it's not included. We were disappointed, but decided to go ahead with the purchase anyway and try to negotiate with the freeholder at a later date. Our solicitor then went back to the lender to clarify that the loft space is not included. The lender went back to the valuer. The valuer has now amended the valuation, and it's £10k less than the agreed price.

This is a big problem as the lender is no longer willing to lend the agreed amount at that rate. We can either put down a larger deposit, which we can't really afford, or agree to a significantly higher interest rate.

We're incredibly frustrated by all of this. All of the legal paperwork has been prepared and was ready to go to the vendor for signature. We were days away from getting the keys to the flat. Between the various costs, we've already spent £2.5k on this flat and wasted almost 10 weeks.

It's now 4am, and I'm sitting here trying to figure out what are our options. I don't understand why the valuer would have included the loft space in the valuation in the first place. It was not in the property description. It's not usually included in these types of leasehold flats (we've seen dozens over the past two years). The only reason we thought it was included was because the vendor verbally told the estate agent that it was, and he told us. The valuer wouldn't have known this. Had he valued it at the lower amount in the first place, the only thing we would've lost is the cost of the valuation.

We could try to challenge the valuation, but from what I gather from an hour of googling is that lenders rarely change their minds on this.

We could try going back to the vendor and offering £10k less, but I doubt he'll agree. Despite what the valuer says, we've been looking at properties in the area for a while, and it is a good price. He can get more if he put the flat back on the market.

I'd appreciate any advice. We have an eight-week-old baby and have to be out of our rented flat by Christmas, so this is really very stressful.

Pixie5740

You've pretty much laid out your options in the OP. If you like the property and think it's a good price even at £10k over the valuation you could still go ahead albeit with a higher LTV. How easy it is to alter the LTV will depend on the lender.

Alternatively you could choose to challenge the valuation or use a different lender both of which will take time.

Are you using a broker for your mortgage?

rainbow_carnage

Pixie5740 wrote: »

You've pretty much laid out your options in the OP. If you like the property and think it's a good price even at £10k over the valuation you could still go ahead albeit with a higher LTV. How easy it is to alter the LTV will depend on the lender.

Alternatively you could choose to challenge the valuation or use a different lender both of which will take time.

Are you using a broker for your mortgage?

We are using a broker. He's very good. He's trying to see what can be done.

Am I correct in thinking that the valuer is in the wrong? Not because the valuation is lower than I'd like, but because his initial valuation included space that is not part of the flat. It's as if he had included the neighbour's garden. Like the loft, it also belongs to the freeholder. His mistake is now costing us time and money. Do we have any sort of recourse?

DaftyDuck

We could try going back to the vendor and offering £10k less, but I doubt he'll agree.

Why the "could"? Sure, he might not agree. He probably won't. But he might. How long does it take you to earn £10,000? No, £10,000 after tax, deductions galore, overtime, commuting, putting up with the boss, whatever.

Prepare a careful case. Point out that not only the vendor now knows, but the agent as well. The property will be clearly marketed without this space in future.

So, you say the vendor can bung it back on the market & still sell, so I'm not suggesting you lay your demands out and request a positive response in four hours... that way lies rejection. But try... why volunteer to spend more, even if it is spread out in 35 years of "easy payments"...

Then, if necessary, gracefully concede, continue with the purchase, and sleep knowing you tried.

£10,000..... Think of it in a stack of £10 notes.... fivers....

*BigBird*

We've had a similar situation regarding the mortgage for our house purchase. The mortgage we applied for was at the upper limit of the LTV for that deal, but the valuation came in slightly below what we'd offered so we were looking at needing to reapply for a more expensive rate with a higher LTV. However, I noticed that the mortgage offer said the rate was applicable to 65% LTV "unless otherwise agreed". I queried this with the bank and they admitted that the underwriters have a 3% leeway and can approve the loan above the specified LTV. I asked for this to be considered and it was agreed by the underwriters, so we are keeping the rate originally applied for. Depending on what difference the down-valuation makes to your LTV, it might be worth asking your lender if this is possible (I suspect this is something they wouldn't tell you about themselves, but may be there if you ask).

davidmcn

rainbow_carnage wrote: »

I don't understand why the valuer would have included the loft space in the valuation in the first place. The only reason we thought it was included was because the vendor verbally told the estate agent that it was, and he told us. The valuer wouldn't have known this.

Surely the valuer was in contact with the estate agent (and/or vendor) when they arranged their visit, and would have been given the same story (if anyone had brought it up)?

eddddy

rainbow_carnage wrote: »

... so the estate agent went back to the vendor, who said that it was included.

...Our solicitor went back and forth on this with the vendor's solicitor, and in the end, it looks like it's not included.

So this sounds like it's mainly the vendor's fault.

They gave the wrong information, and a chain of events followed that resulted in the flat being down valued by £10k.

In these circumstances, I would be tempted to tell the vendor that they have to take the £10k hit (but perhaps being prepared to compromise at £5k).


I can understand your frustration with the valuer, but I think that persuading the valuer that they have made a mistake will be a big challenge.

rainbow_carnage

eddddy wrote: »

So this sounds like it's mainly the vendor's fault.

They gave the wrong information, and a chain of events followed that resulted in the flat being down valued by £10k.

I agree, it's at least partially the vendor's fault. Unfortunately, it's a seller's market. We've called the estate agent. He's going to speak to the vendor and get back to us. I would be shocked if he agreed to take a £5k hit, much less £10k, but it's worth asking. If I thought that we could negotiate down the price, I would've done it when we first found out that the loft is not included.

Despite what the valuer says, it already reasonably priced. I've looked at several very similar properties that have sold on that street (same type of conversion, same layout/floor space). One sold last month (STC) for £50k more than the valuation. It's in better condition, but certainly not that much better. It's a ground floor flat, so there's no loft. Another sold last year for £53k more. Another has just been listed at £20k more, and it doesn't have a garden. I know everyone in my position thinks that they're right and the valuer is wrong, but I really am pretty certain. I have no desire to overpay for the flat.

*BigBird* wrote: »

We've had a similar situation regarding the mortgage for our house purchase. The mortgage we applied for was at the upper limit of the LTV for that deal, but the valuation came in slightly below what we'd offered so we were looking at needing to reapply for a more expensive rate with a higher LTV. However, I noticed that the mortgage offer said the rate was applicable to 65% LTV "unless otherwise agreed". I queried this with the bank and they admitted that the underwriters have a 3% leeway and can approve the loan above the specified LTV. I asked for this to be considered and it was agreed by the underwriters, so we are keeping the rate originally applied for. Depending on what difference the down-valuation makes to your LTV, it might be worth asking your lender if this is possible (I suspect this is something they wouldn't tell you about themselves, but may be there if you ask).

That's interesting. I've checked our paperwork. It says, "This mortgage is available up to a maximum of 85% of the property's value." I think that's pretty clear.

davidmcn wrote: »

Surely the valuer was in contact with the estate agent (and/or vendor) when they arranged their visit, and would have been given the same story (if anyone had brought it up)?

It's certainly possible that the estate agent said something, but surely the valuer should be going by what's in the actual property description? The documents that we have from the estate agent all say that the sale only includes those items listed in the property particulars. The loft isn't in there. Which is why we can complain that the vendor misled us (most likely unintentionally), but can't really do anything about it.

davidmcn

rainbow_carnage wrote: »

It's certainly possible that the estate agent said something, but surely the valuer should be going by what's in the actual property description? The documents that we have from the estate agent all say that the sale only includes those items listed in the property particulars. The loft isn't in there. Which is why we can complain that the vendor misled us (most likely unintentionally), but can't really do anything about it.

I would expect valuers to go largely on the basis of what seems obvious when they turn up to the property, rather than looking at the sales schedule. Is there a hatch to the loft from within the property? Is the vendor currently using the loft? If so then it's not unreasonable for the valuer to assume that it's included. If it's not included then they can revalue on that basis, which they've done. The fact the original valuation was erroneous ought to be irrelevant.

sheramber

If the valuer had come back with the lower valuation in the first place what would you have done?

rainbow_carnage

davidmcn wrote: »

I would expect valuers to go largely on the basis of what seems obvious when they turn up to the property, rather than looking at the sales schedule. Is there a hatch to the loft from within the property? Is the vendor currently using the loft? If so then it's not unreasonable for the valuer to assume that it's included. If it's not included then they can revalue on that basis, which they've done. The fact the original valuation was erroneous ought to be irrelevant.

There's an access hatch in the bathroom, but there's no ladder. The vendor was not using the loft.

We've seen literally dozens of these types of flats over the last two years. We're specifically looking for a two-bed first-floor flat with the possibility of a loft conversion (can't afford a three-bed). At one point, we were viewing five or six flats each Saturday. We checked every time whether the loft space was included in the lease. Nine times out of ten it wasn't. It would be silly to assume that it was included, when there's no mention of it in the property description.

sheramber wrote: »

If the valuer had come back with the lower valuation in the first place what would you have done?

It's hard to say since we were in a different position 10 weeks ago. We probably would have appealed it then because we would've had the time to wait for a response. At the very least, would've done that before paying for a full building survey and a solicitor.

Once we had our offer accepted and a mortgage approved, we stopped flat-hunting. So who knows, we may have found a better flat.