Low valuation... gutted, what to do?

CrippsCorner

Hi everyone. Currently going through my first mortgage application so learning a lot! Today though I received a potentially terrible phone call.

The place we have put in an offer in at £188k is apparently only worth £177.5k

Now overpaying is one thing, so what... can suck it up being the place we want. However I didn't realise that this affects how the lenders feel! So we're left with a choice of paying an extra £10k or so (don't have it) or dropping our LTV significantly.

I know it's our choice at the end of the day but just wondering if anyone has experience with this situation? I know the sellers are pretty tight lol. We originally put in a low ball offer of £175k and they said they wouldn't take a penny under the asking price. We still tried our luck and tried again at £187.5k but they still wanted an extra £500!

I should add we're actually currently renting the place we're looking to buy.

My gut feeling is to go somewhere in the middle and offer £180k... thing is we have our first child on the way too (due in the autumn) so really don't need the added stress of being homeless (they said we had to be out by the beginning of April if we're not buying)

amnblog

They clearly think you are a captive audience because you are already resident.

If you pull out they have no buyer for a property that is probably worth no more than £180,00.

Paully232000

Pull out and start looking elsewhere, they may change there tune on the asking price.
Not suggesting this, but It has also been known, through readin these forums, that other tenants, in other houses have refused to accommodate any viewings, and refused to move out until they have found somewhere else, which makes it difficult to sell a house.

Mizenberg

CrippsCorner wrote: »

Hi everyone. Currently going through my first mortgage application so learning a lot! Today though I received a potentially terrible phone call.

The place we have put in an offer in at £188k is apparently only worth £177.5k

Now overpaying is one thing, so what... can suck it up being the place we want. However I didn't realise that this affects how the lenders feel! So we're left with a choice of paying an extra £10k or so (don't have it) or dropping our LTV significantly.

I know it's our choice at the end of the day but just wondering if anyone has experience with this situation? I know the sellers are pretty tight lol. We originally put in a low ball offer of £175k and they said they wouldn't take a penny under the asking price. We still tried our luck and tried again at £187.5k but they still wanted an extra £500!

I should add we're actually currently renting the place we're looking to buy.

My gut feeling is to go somewhere in the middle and offer £180k... thing is we have our first child on the way too (due in the autumn) so really don't need the added stress of being homeless (they said we had to be out by the beginning of April if we're not buying)

Do you know if you are still actually being offered a mortgage with the potential change in LTV?

(We are also potentially facing this issue next week, as are expecting an under-valuation compared to agreed sale price)

Brock_and_Roll

It comes down to brinkmanship - they think they know your situation - existing tenants, baby on the way etc etc etc.


So threatening to simply move out and playing awkward wont cut the mustard and they wont believe you.


Being a cynical old git, I would get mum-to-be on the phone to landlord in tears saying that love the house and think it worth the price, but simply don't have the savings to bridge the gap. Much more believable IMHO.

lorien71

Or you could try and get a second valuation? Having two surveyors turn round and say that the place isn't worth what the vendor is asking for may help your case?
It depends how much you're wanting to keep this place, if not then I'd walk away and look elsewhere.

audigex

There's also the point that the market value of the house is what someone will pay for it, and is not necessarily the same as the valuation the mortgage company gets...

Just because your bank disagrees with your price doesn't stop that being the price you agreed on.

It's certainly worth putting in a counter offer and threatening to back out, but be aware that the seller can equally call your bluff (or not bluff), or simply refuse.

The LTV will be higher, but if you're still able to get the loan, will it actually make that much difference? Dropping one LTV band isn't usually too horrendous, unless you're already in the 90/95% region. Mine dropped from 70% to 80% and only cost me ~£30 a month or similar: annoying, but not that painful in the scheme of things

CrippsCorner

The quoting's gone a bit weird here but I'm trying!

@Mizenberg we have actually been accepted at about £100k more than we're asking for, so getting a higher LTV shouldn't be a problem.

Brock_and_Roll wrote: »

It comes down to brinkmanship - they think they know your situation - existing tenants, baby on the way etc etc etc.

So threatening to simply move out and playing awkward wont cut the mustard and they wont believe you.

Being a cynical old git, I would get mum-to-be on the phone to landlord in tears saying that love the house and think it worth the price, but simply don't have the savings to bridge the gap. Much more believable IMHO.

No one knows we have a baby on the way, we only found out a couple of weeks ago.

lorien71 wrote: »

Or you could try and get a second valuation? Having two surveyors turn round and say that the place isn't worth what the vendor is asking for may help your case?
It depends how much you're wanting to keep this place, if not then I'd walk away and look elsewhere.

It's been suggested to me that this could be an option if our counter offer is rejected, but getting them to pay the fees... in hindsight I wish I went feeless because I've already paid £999!

audigex wrote: »

There's also the point that the market value of the house is what someone will pay for it, and is not necessarily the same as the valuation the mortgage company gets...

Just because your bank disagrees with your price doesn't stop that being the price you agreed on.

It's certainly worth putting in a counter offer and threatening to back out, but be aware that the seller can equally call your bluff (or not bluff), or simply refuse.

The LTV will be higher, but if you're still able to get the loan, will it actually make that much difference? Dropping one LTV band isn't usually too horrendous, unless you're already in the 90/95% region. Mine dropped from 70% to 80% and only cost me ~£30 a month or similar: annoying, but not that painful in the scheme of things

I think it works out about £100 p/m more for us.

pollydollydoodah

Is it comparable to other houses selling/for sale in the area.
Do you think it's worth it?

I don't think (unless they've officially given you notice to leave) that they can turf you out.

But if you look for rental now, could you move...have baby then move later? Once it's not hectic?

But if you still want the house, it would probably mean changing the mortgage application and either paying it yourself or go halves/ask them to pay.

CrippsCorner

I have to admit not many flats go up around the area... I think it is slightly overpriced, but I guess we're paying the extra for convenience of not having to move, plus we obviously know the area is good now we've been living there a year.

We phoned up the estate agents and was met with a brick wall, that they're not going to move a penny. I think we will try our luck anyway... we've been a bit of a pushover until now, but I feel it's time to put our foot down. I think,originally if we weren't already living here I would have walked away at anything above £182.5k

MARTYM8`

I do always find these threads amusing.

Seems the OP has offered to pay £10,500 more for a property than its apparently worth. If people were overcharged by a garage for work on their car by £100 they would be outraged - yet when we buy houses the opposite applies.

Offer £178k - and see what happens.