property valuation by bank

stranger12

Hi all,

I have placed an offer on a house which I think is quite expensive but that is the price range in london .

Have agreement in principle and have proceeded to full application.

Next stage is valuation and i am quite worried.

Do banks normally come back under valuing the place?

I only have 10% deposit and purchase price is 390k .

In my view the house is worth 360k but you can't see a single house on rightmove for that price. I think all estate agencies try and have a much higher asking price.

Do bank valuer also look at the silly prices on rightmove before giving their price or valuation ?

for instance I had valuation done on my flat for around 270-320k by agencies and when I asked a RICS certified person to do it , she mentioned it is around 340k. That is a 30k difference at best .

this makes me worried that london property prices are so ridiculously priced that no one can get a mortgage unless they have big deposit in place.


do you think a three bed in good condition is worth 390k in enfield?

marksoton

stranger12 wrote: »

do you think a three bed in good condition is worth 390k in enfield?

It doesn't really matter what any of us think just your potential lender.

All you can do is crack on and get the valuation done.

hazyjo

EN2 is generally pricier and a friend of mine will be selling his 3 bed terrace for in excess of £500k. It varies a lot in Enfield generally.


In my experience, they are more likely to undervalue in a falling or risky market. It's pretty strong over there at the mo.


They will value on similar nearby SOLD properties - not asking prices. You can look for these on Zoopla or Rightmove (map view may help, or part-postcode).


If they do undervalue, it gives you some leverage to reduce the price. They may or may not budge.


Jx

stranger12

ok but is sold prices from land registry ?

for instance, I can see zoopla had a property advertised at x amount and shows as sold 5 month ago but last record for sold is 2008.

I should trust the one in 2008, right ? as the one from 5 month ago suggets the sell did fell through?

I saw a neighbour property in sep 2015 sold for 365k wtih a much nicer condition. do you think the property in london could have moved and be seen as reasobale by lenders in 6 month to jump to 390k ?

marksoton

You're over thinking it. London prices are so bonkers it's pointless speculating.

Just get the valuation done asap.

lewishardwick

No point stressing about it.

My own survey valued the place I'm buying at £28k less than I offered. The mortgage valuer saw no problem with my offer...

cattie

stranger12 wrote: »

I saw a neighbour property in sep 2015 sold for 365k wtih a much nicer condition. do you think the property in london could have moved and be seen as reasobale by lenders in 6 month to jump to 390k ?

A neighbour of mine paid £295k for her 2 bedroom flat about 12 months ago & currently a couple of same size properties that have come on the market since Christmas have been listed at offers over £350k & were very quickly under offer.

London properties prices seem to increase every month. The more you hesitate to take the plunge, the harder it might hit your pocket.

westernpromise

Lender-appointed surveyors always understate the value, in my experience, although when you ask them where you can buy a similar property at what they claim is the correct price, they always fall silent. I bought a place in 1999 for £265k that they insisted was worth £220k (now it's worth £950k) and when I bought in 2012 at £955k they claimed it was only worth £895k (now worth £1.3 million).

The reason they undervalue is so that if you default in the early years on the mortgage and they have to repossess, the lender can sell the property at the surveyor's undervaluation. The lender then deducts what is owed and gives you what's left, which is usually nothing.

If you sue them for selling it too cheap and thus losing all your equity, they can point to the surveyor's valuation, which "proves" they sold it for its true value. After a few years you'll have paid down enough of the loan that this no longer matters.

This is why the big delay in mortgage-funded buying is getting the valuation done. Mortgage lenders use a panel of surveyors for all their lending valuations, so you have to choose one from a small group that they have picked, and then you wait several weeks until they can fit your valuation in. Surveyors know, of course, what they have to do to get on and stay on those panels, so the valuation is usually lowball.

dc197

westernpromise wrote: »

The reason they undervalue is so that if you default in the early years on the mortgage and they have to repossess, the lender can sell the property at the surveyor's undervaluation. The lender then deducts what is owed and gives you what's left, which is usually nothing.

If you sue them for selling it too cheap and thus losing all your equity, they can point to the surveyor's valuation, which "proves" they sold it for its true value. After a few years you'll have paid down enough of the loan that this no longer matters.

Surely that valuation from then the house was bought is then a few years out of date at the point of repossession.
My solicitor explained that banks are now far more careful to sell reclaimed properties at a fair price, to avoid being sued by the previous owners.

westernpromise

dc197 wrote: »

Surely that valuation from then the house was bought is then a few years out of date at the point of repossession.
My solicitor explained that banks are now far more careful to sell reclaimed properties at a fair price, to avoid being sued by the previous owners.

They'd argue that prices were flat and you'd have to prove different. As this is in the context of a repossession (meaning you haven't got any money), their lawyer is likely bigger than your lawyer.