Valued down can I still buy ??

porched

Our valuation came back friday and it was £30.000 down on what we agreed to pay . We are in need of a small mortgage but can make up the difference . The price we agreed to pay is £195.000 but the valuer has said it's only worth £165.000 and the mortgage is £60.000 . I couldn't speak to the valuer but the mortgage people are saying they are downgrading due to economic worrys . Stupidly I didn,t think to ask if we can still buy it!!!! They said we need to negotiate But they are shut until tomorrow . Now my OH wants us to pull out and wait for the market to fall .Is this realistic ?

Has anyone been in this situation .

booksurr

your situation is no different to the millions of times this has happened before (and will again). The lender has a valuation, they may adjust what they will lend to you to reflect that valuation depending on whatever LTV deal you have with them. If you can make up the shortfall between the mortgage and the selling price then of course you can buy, why ever wouldn't you be able to?

whether paying the same amount for a property which has been downvalued is a wise move at this time is another question and will doubtless in due course produce a flurry of responses from the house price crash numpties telling you it will be a disaster. In answer to them take your pick between the following:
- you have your own crystal ball which says yes/no
- you are buying it as a home to live in, not as an investment to sell
- you are too afraid of loss to risk investing this side of Armageddon so run away
- you are prepared to gamble and enjoy living there in the meantime without being too concerned if you make or lose money

dgtazzman

Who's to say what the market will do. What we are seeing now is the initial panic reaction, but at the same time the shortage in housing stock remains and the weak pound is pulling in interest from foreign property investors.

I'm sticking to my purchase, though I could pull out without consequence. Luckily my valuation was done pre vote and HSBC doesn't seem to be reassessing it.

To be honest, I'm sceptical a Brexit is going to happen with all that's been happening...

porched

OK thanks . My OH is saying we should wait a bit if the valuation is down but I have fallen in love with the property and see it as a forever home!!! OH is also saying which concerns me that if prices come down then forever home doesnt mean anything because in the future a forever home might now cost £300.000 but if the prices drop then we could afford it and yes we would be tempted but wont be able to as we would have already moved and be in negative equitie . SO the valuation has thrown a spanner in the works so to speak and shown a divide between us . Am worried . Can I get a second onpinion on the valuation? Yes we can make up the money from our savings.

dgtazzman

You can challenge the valuation (this is typically done by presenting recently sold comparables, but you could have your own surveyor make a valuation report to present), but this doesn't have a very high success rate, so it's not something I would consider.

My main consideration would be how long you would see yourself living in the property. If it's only a temporary thing (5 years or less), I'd be far more concerned over the down valuation than if I planned to live there 10 years+

Think of it as if you were renting. I you rent, you pay the money, but you don't have anything to show for it at the end. If you buy, you will (mostly) have something to show for it at the end. Rent for 10 years and you will have spent around 80 grand on the rent, without any of that going into equity. Pay that 80 grand into your mortgage, take a 30 grand loss in equity into consideration, 30-40 grand in interest payments and after 10 years, you are still in the plus and you've had a family home to enjoy in that time frame.

Yes, I am ignoring maintenance costs, but it's just meant as food for thought.

Also, nothing stopping you from going back to the vendor with the valuation report and negotiating, see if you can find some common ground and meet halfway or something, then at least if there is a crash, the pain won't be so bad.

To me it sounds as if your OH is having doubts about it being your forever home, sit down and talk it out, just because you are totally in love with it, doesn't mean your OH is.

'Wait till the market falls' isn't really a good excuse. When will it fall? Today? Tomorrow? Next week? Next year? 2076? Never? People are afraid of change, but nerves will settle and financial institutions around the globe seem to be doing their best at damage control. Probably too many vested interest to let the market completely crash. How does the price of the house compare to similar houses in the area? Just because they say it's because of economic worries, doesn't mean it actually is, the person at the other end of the phone might be clueless and just spouting nonsense. The house might just genuinely be horribly overpriced.

konark

The reduced valuation is good news for you, but will the seller accept it? If they do you can still buy.

If they reject it you could remind them that they may be faced with a similar situation when they find a new buyer.

Paying the original price over and above the valuation is not wise, even if you are able to do this.

AlexMac

If as you say its your "forever home and you love it"... go for it. The market (IMHO) ain't going to drop and in fact has only wobbled down twice in my home-owning lifetime, in 1987 and 2007 before bouncing back. Implying the next one will be in ten years time... but will be back in the black within 3 years?

Best to buy when you can; it's a home not an investment gamble? I never bought to make money but almost always did. The £10k wreck I bought in 1975 is now worth £900k (to whoever bought it last year; I moved on 30 years ago), the £34k BTL flat I bought in 1996 is worth £200k, the £365k one we bought on the millennium doubled in 10 years....
Only once did we sell on without a profit; buying at £155k in 2007 at the height before the wobble, spending £20k doing it up then selling at £175k a few years later; but in that time we'd enjoyed it as a seafront holiday home for a few seasons then rented it out for about 15k gross over 2 years...

The bigger issue however is whether your partner and you can agree on big life choices? You at least need work on how you approach big decisons... a metaphor for the way you will harmonise (or not) over the next 40 years? Which could be more important than buying a home. No matter how right you are, if you steamroller big decisions, you'll end up lonely

peter_we

Porched.

Listen to your OH, he/she is right. Rics valuations are down countrywide, sellers and lenders have to accept it. Valuers will not increase a valuation because they (the insurance policy)are liable for it.

Go back and renegotiate or look at the new, lower, market for what else you can now afford.

To be honest, I'm sceptical a Brexit is going to happen with all that's been happening...

Parliament can't stop it, unfortunately. Freedom of movement is another thing, I think we will have to accept it if we want access to the single market, if we lose that the price of houses will be the last of our worries.

Who's to say what the market will do. What we are seeing now is the initial panic reaction, but at the same time the shortage in housing stock remains and the weak pound is pulling in interest from foreign property investors.

This is nothing like any previous economic event. The vote was largely driven by a desire to reduce immigration, the population is expected to fall by 1 million by 2020. The shortage will therefore evaporate. Foreign investors are not interested in instability and currency risk, that's the very opposite of a Safe Haven. Add to it that the UK has signalled its hatred of foreigners - worldwide.

Ozzuk

If this is a 'forever home' then I'd just go for it. Sure, you can't guarantee the future value but that is no different today from two weeks ago.

Peter...I think you are scaremongering. Population is still at an upward trend in the UK, births outstrip deaths and buying land is getting more and more difficult. So someone buying a forever home shouldn't be overly concerned.

And this is an event - can you predict the next one? Who knows what the next 5, 10 or 20 years will bring? A war? Many wars? Farage in government (that would be a shocker), natural disaster (those last two may be linked).

In summary OP, in your position I'd use the valuation to try and get a reduction but if I really wanted the house and this was long term I'd still go for it.

TBagpuss

OP, if you can make up the difernce then you can still buy - your mortgage is less than 40% of the new value so I would not expect you to have much trouble getting a mortgage. You may or may not be able to have exactly the same product as your current offer, that is down to the lender.

That said, a 15% reduction is pretty big and I would certianly ssuggest showing thevaluation report to the sellers to see whether you can negotiate.

I agree with those saying that if you see this as somewhere you are likely to be staying long term then it is less of an issue than if you expect to move again within the next 5 years or so - assuming that you have a repayment mortgage then you reduce your risk of negative equity over time by reducing the mortgage.

But you and your OH need to discuss and agree on how you will proceed. If you go ahead because you've fallen in love with the house, and your OH is not happy with it, you have the potential for conflict, and if things did go badly, you OH could resent you and blame you, and they may find it harder to setle and feel the place is home if they feel that you made a mistake in buying it. Similalrly, if you don't go aheaad and prices don't fall, you may feel resentment that your OHs concerns caused you to lose the hoseu you fell in love with.

So whatever you decide to do, discuss it and ensure that you are both on board with the decision.

davidmcn

TBagpuss wrote: »

That said, a 15% reduction is pretty big

Or to put it another way (probably more appropriate), they've offered 18% more than the market value. Which is a lot, unless it's in a fast-rising and competitive market (doesn't sound like it is though).