Low Mortgage Valuation

Flippy

Hi

I'm in the process of selling a flat. I agreed a price of £125k with the buyer. The mortgage valuation came back with a price of £115k which is a significant difference.

He is basing the valuation on two sales in the last 6 months of flats on the same road but half the size. He has rejected comparables from March 2015 (£119k), Jan 2016 (£122k), Feb 2016 (126k) all for flats of similar size to mine and has refused to alter the valuation.

My understanding was that RICs surveryors were meant to take size into account when doing valuations.

I'm not in a position to continue the sale at this price - is there any way that anyone knows to challenge this valuation? Any advice would be greatly appreciated.

Many thanks

davidmcn

Has he explained on what basis he's rejected the comparables you mention?

ReadingTim

I don't think it's your valuation to demand alterations to - I think its the buyer's (paid for either by them or their mortgage provider). You can of course challenge its findings, as it seems you have done, if you think it's materially wrong, or based on flawed assumptions, but have you seen the whole document, or merely an extract? Bear in mind the buyer could be being selective with the information to support a price drop, whereas the entire document might not necessarily come to that conclusion.

I'd also get your EA on the case - make them work for their fees, as I'm sure this won't be the first time they've encountered this problem. You should probably have a full and frank conversation with them as to the flat's actual value - for all we know, the comparables you're referring are cherry picked examples to support your position, and not representative of the overall area/market for you property.

Finally, if you really can't proceed at that price, you need to tell the buyer. The ball's then in their court to either find a larger deposit to make up the difference, or drop out. It's possible they're a low LTV buyer with a pessimistic surveyor, and you'll find a more solid buyer next time (larger deposit, cash investor). Alternatively, you'll encounter the same issue again, therefore you might want to manage your expectations about this sale, and the purchase it's going on to fund (or whatever you're doing with the proceeds).

Good luck!

danslenoir

davidmcn wrote: »

Has he explained on what basis he's rejected the comparables you mention?

I would guess on the basis of date.

A lot can happen in six months, including the Brexit vote.

What has the recent trend been in local sale prices, OP?

Flippy

Thanks for the responses. ReadingTim: I have seen the full report, I've also researched all sold and under offer prices in the area - the five properties mentioned are the only ones comparable. The buyer wants to continue at the agreed price but is struggling to raise the required deposit. My EA has been involved and has challenged the valuation by pointing out that the flats used are not similar in size, to no avail. House prices in the area have been pretty consistent since the brexit vote.

The surveyor has given no reason for using the properties he has and ignoring the others. My EA says that the surveyor is new in the area and that a few of the agents have expressed frustration at the consistently low valuations.

Surrey_EA

Flippy wrote: »

The surveyor has given no reason for using the properties he has and ignoring the others. My EA says that the surveyor is new in the area and that a few of the agents have expressed frustration at the consistently low valuations.

Guidelines to surveyors from RICS, for Red Book valuations mean that surveyors generally ignore any sales more than 6 months old.

Crashy_Time

Flippy wrote: »

Hi

I'm in the process of selling a flat. I agreed a price of £125k with the buyer. The mortgage valuation came back with a price of £115k which is a significant difference.

He is basing the valuation on two sales in the last 6 months of flats on the same road but half the size. He has rejected comparables from March 2015 (£119k), Jan 2016 (£122k), Feb 2016 (126k) all for flats of similar size to mine and has refused to alter the valuation.

My understanding was that RICs surveryors were meant to take size into account when doing valuations.

I'm not in a position to continue the sale at this price - is there any way that anyone knows to challenge this valuation? Any advice would be greatly appreciated.

Many thanks

It`s only 10k? Get it sold before the difference gets bigger is my advice.

shortcrust

Crashy_Time wrote: »

It`s only 10k? Get it sold before the difference gets bigger is my advice.

You're hilariously selective. What's a better indication of the market - what the buyer's prepared to pay or the valuation the surveyor comes up with? That a buyer is prepared to pay over the valuation doesn't scream crash to me. Quite the opposite. But then my username is Shortcrust, not Shortcrash so I can be forgiven for taking a balanced view.

Ozzuk

Sometimes switching lenders will get a different surveyor but you could end up with the same one, or even same valuation. I've been in this position before - I think it is possible to appeal but not easy and likely time consuming. I had to take a hit on the sale price, my buyer stumped up some cash and we split the difference.