Mortgage Valuation a whopping 77k under agreed sale price

Miss_Samantha

Crashy_Time wrote: »

What fascinates me here is that the seller of the house the OP is interested in is at least trying to justify the 700k price (up nearly 400k from a few years ago) by having had work done to the house, even although the lender thinks they are over-reaching by 77k, but other sellers presumably just think that their house is worth 700k because "that`s the market"?

The only question is whether these properties sell.
Clearly they do, so that's indeed the market.

AnotherJoe

Crashy_Time wrote: »

What fascinates me here is that the seller of the house the OP is interested in is at least trying to justify the 700k price (up nearly 400k from a few years ago) by having had work done to the house, even although the lender thinks they are over-reaching by 77k, but other sellers presumably just think that their house is worth 700k because "that`s the market"?

The only "justification" you need is, will someone pay that much for it. And if the market price for a house of that type in that area is £700k, those "other sellers" are 100% right.

Jagraf

It's the banks who value the house as they are buying it so it will be interesting to see the outcome.

Thrugelmir

Miss_Samantha wrote: »

The only question is whether these properties sell.
Clearly they do, so that's indeed the market.

A crazy world ..........

Jagraf

AnotherJoe wrote: »

The only "justification" you need is, will someone pay that much for it. And if the market price for a house of that type in that area is £700k, those "other sellers" are 100% right.

Well not really. Someone may be paying £300000 deposit while the banks are happy to pay £400000. If either party paid the full £700000 in cash then it's worth that much to them.

The amount of people who eagerly pay, say, £15000 for a car on credit only to end up paying £22000 doesn't make the car worth £22000. They are just paying more than it's worth.

alchemist.1

Jagraf wrote: »

Well not really. Someone may be paying £300000 deposit while the banks are happy to pay £400000. If either party paid the full £700000 in cash then it's worth that much to them.

The amount of people who eagerly pay, say, £15000 for a car on credit only to end up paying £22000 doesn't make the car worth £22000. They are just paying more than it's worth.

So a place is only worth an amount based on the way you fund your purchase?

The second analogy doesnt work as you're not including the interest in the purchase price of a house and therefore you're not comparing like for like.

PS the bank isnt paying it they just are just funding a loan for you to buy it.

Crashy_Time

Miss_Samantha wrote: »

The only question is whether these properties sell.
Clearly they do, so that's indeed the market.

Oh, I thought the OP was still waiting for another bank to value, wasn`t aware a buyer had stepped in to save the day.

Crashy_Time

AnotherJoe wrote: »

The only "justification" you need is, will someone pay that much for it. And if the market price for a house of that type in that area is £700k, those "other sellers" are 100% right.

Not quite correct, it may mean one similar house in the area sold for that much once, doesn`t mean other houses will again, especially in a faltering market.

Jagraf

alchemist.1 wrote: »

So a place is only worth an amount based on the way you fund your purchase?

The second analogy doesnt work as you're not including the interest in the purchase price of a house and therefore you're not comparing like for like.

PS the bank isnt paying it they just are just funding a loan for you to buy it.

I think there is a lot to be said for the way people fund a purchase of a house, or anything else for that matter. If someone will provide loans for any amount that enables someone to get what they really want, many people will take it (hence the mess people get into).

A bank owns a share of the house to the value of the loan, the loan is against the house and is an asset the bank can seize if the debt isn't repaid, so the way I see it is that it's not "your" house until you have the deeds. Also banks won't lend what they value at, only a percentage, which to me speaks volumes of the risk element associated with house prices.

I agree my analogy in my previous post was rubbish.

Miss_Samantha

Does buying on credit make you spend more than you think it's worth, or just, in some cases, more than you can actually afford?

If I saw a second hand Ford Fiesta on sale for £30k I wouldn't buy it even if I had access to a loan.

I think we first make the decision to buy then we may go for a loan because we don't have the cash. Therefore, how a purchase is financed does not really distort what something "is worth".

For example here OP was quite happy to buy the property for £737k. If they had had the cash they would have. If the bank had been OK to lend on that basis they would have as well.
There that property was indeed really worth £737k to OP and the seller/developer was therefore absolutely right to market it at £750k. The final agreed price is still within pretty good range form the asking price.