Mortgage Valuation a whopping 77k under agreed sale price

Lloydage

Hi

We viewed a house that was on the market for 750k. The vendor eventually agreed on our offer of 737k. Essentially he bought it 3 years ago for 360k in Epping, Essex and completely modernised it and it now looks amazing. He has put it up with House Network so hardly any fees for him and with House Network you can set the price. Our LTV at this point is 75%.

We thought it was over priced but when Santander sent in their surveyor to do the mortgage valuation it came back as 660k!!!! A whopping 77k (more than 10%) under the agreed sale price.

I can't believe how much he has overvalued his house and been so greedy. We love the house but equally do not want to pay much above the valuation. Surely he will run into this issue every time someone does a survey?

My initial thoughts are to go back with 670k offer and then after some haggling settle on 690-700k but not a penny over.

Any thoughts? This is the biggest down valuation anyone I know has ever seen?

Thanks

Pixie5740

The vendor might not be being greedy. He might just be delusional or perhaps the estate agent has over-egged the valuation to get his business.

Whilst Santander might have valued it for 77k under asking price other lenders might not but then again they might so yes, he could encounter the same issue with another buyer.

If you can't/don't want to stump up the additional 77k (and I can't say I blame you) then your options are negotiate a lower price or walk away.

MobileSaver

Lloydage wrote: »

Surely he will run into this issue every time someone does a survey?

A seller can ask for as high a price as he wants and a buyer can offer as low a price as he wants, unless the two can find common ground then no sale will happen.

There is no magic formula that proves Santander's valuation is correct and the seller's is wrong. Other valuers may agree with the seller.

Your problem is (presumably) that you cannot afford the house without a mortgage and so you'll need to walk away if the seller won't come down to what you can afford or you cannot fund the shortfall yourself. Other buyers may not need a mortgage or their valuers may come up with a higher price.

Conversely your needing a mortgage is a good stick to justify lowering your price but whether the buyer will accept is anyone's guess.

davidmcn

Did you have any evidence to persuade you that £737k was a fair price?

Miss_Samantha

Lloydage wrote: »

I can't believe how much he has overvalued his house and been so greedy.

Er, you are the one who offered to pay 737k for it so presumably you are happy with that price.

davidmcn wrote: »

Did you have any evidence to persuade you that £737k was a fair price?

Well, it's a bit below the asking price Standard anchoring bias.

Properties which have been done up are usually put back onto the market at a huge premium so it's not unreasonable for the surveyor to start by slashing 12% off the asking price.

Lloydage

We thought it was probably worth around 700-710k but didn't mind paying a bit more and he wasn't budging below 737k and we were desperate as we hadn't seen a house that had come close.


We had no idea it would get valued as low as 660k and that has affected my LTV %age and associated rates and don't have a spare 77k to add to the fund to make up the shortfall.


House Network allows customers to set their own prices and charge hardly any fees so he is really maxing out his chances. To be honest I feel he has taken the p***.


He will run into this everytime someone does a survey unless he is lucky enough to get a cash buyer one day (unlikely).


Why should I now pay much more than 660k knowing all this now?? I think 680-690k is very generous of us considering and he should bite my hand off for it too

Lloydage

Ultimately even if he finds another gullible (or stupid as you put it so nicely earlier) punter to offer a silly amount - they will no doubt do a survey and find out the same as us. Also wont this valuation now come up in searches?

MobileSaver

That's an amazing insight from someone who has never seen the property and so has no idea whatsoever what it is worth.

Miss_Samantha

You seem willing and able to offer 690-700k. I think he may accept.

This shows that he was right to market it at 750k.

Bluebirdman_of_Alcathays

MobileSaver wrote: »

That's an amazing insight from someone who has never seen the property and so has no idea whatsoever what it is worth.

If buyer and seller have agreed it's worth £737k then it is worth £737k.

davidmcn

Lloydage wrote: »

wont this valuation now come up in searches?

No. A valuation is a private piece of advice carried out for you (or your lender), not something which goes on a public register.

What is available on public registers is the price actually paid for properties - did you look at those for comparable properties?