Concerns around house valuation

02346631

Hi All,

I'm in the process of buying my first home. I've had an offer accepted at 126k. Having done some homework on prices in the area i'm concerned that i'm paying far too much for it. The houses on the same street go for much less (around 110k) than that but the value is quite close to houses that are sold in the same locality (120-140k).

The mortgage valuation survey is being done next week so i'm waiting to see what comes back there. My concern is around how trustworthy these valuations are? I'd imagine they are more reliable than the estate agents who seems to pluck valuations out of thin air! i'm find conflicting reports so i'm not sure where i stand.

My question, if the valuation comes back as ok should i trust it really? Is there anything i can do to get a more detailed valuation if i'm still unsure? Especially as houses on the same street are valued at much less. I'm willing to go with the valuation, but I really don't want to end up regretting the decision.

Does anyone have any similar experience in terms of house pricing? I'm aware there's always an element of a step into the unknown when it comes to pricing, but I'm being a bit spooked at the moment i must say!

Thanks for reading,

Chris

pawlala

02346631 wrote: »

My question, if the valuation comes back as ok should i trust it really?

What do you mean as "ok"? A valuation of 110k or 126k or something in between?

02346631 wrote: »

Especially as houses on the same street are valued at much less. I'm willing to go with the valuation, but I really don't want to end up regretting the decision.

If the valuation comes back less than your offer then you are within your rights to review your previous price and offer less. Having said that, whatever the valuation you have the right to offer less anyway. What led you to offer 16k more than the average? Does that house have something the others doesn't (an extension or better position for example)?

seven-day-weekend

On the whole it is worth how much someone wants to pay. Is your house different in any way to the ones going for less? Does it have an extension, or extra parking, or a larger plot? When were they sold for £110k?

booksurr

valuations are simply someone's else's opinion on what the property may sell for if it went on the market under a certain set of circumstances. They are meaningless until a real buyer pays real money

an EA's valuation says: based on what some vaguely similar properties in this vaguely approximate same area that my EA practice covers might not look obscenely over priced if we were to market it at that price. Based on my "knowledge" of the local market you may, or may not, actually sell for that price, given my "knowledge" of how fast things are selling and what they actually sell for is far from perfect. So here is my best guess and let us see what the buyers are prepared to offer..."

a mortgage surveyor's valuation says: "my true liability is to the lender, not the innocent purchaser who is paying my fee. The lender wants to know with high degree of certainty that the amount they are lending (which of course is no longer 100%) will be repaid in full if the property is repossessed and has to be sold under forced circumstances effectively as a fire sale. The surveyor therefore looks at published info for vaguely similar properties in a vaguely similar area have actually sold for and thinks of a "value" which is only as good as their info source, bearing in mind they may never have been in that area in their life and have no "local" knowledge" but have the comfort zone of knowling your deposit gives them a margin of error

you are showing all the signs of FTB nerves. If this house meets your needs at this time and you can afford to pay what you have offered then buy the thing and have done with it. You are buying somewhere to live in, yes it is handy if you make a financial gain in the future but if all you want is certainty of a financial return then find a different investment rather than a place in which you can live your life for the next x years

walwyn1978

A mortgage valuation will never exceed the offer on the house. However, it may value it at less than the offer on the house.

If yours comes back in line with other sold prices in the street, it's possible that your offer is high, you can choose to either stick with your offer (but be aware this may well have implications for how much deposit you need to raise, or what rate you are offered), renegotiate based on the valuation, or fold the tent and look elsewhere.

I'm intrigued as to why this house was on at more money than those in the street?

02346631

pawlala wrote: »

What do you mean as "ok"? A valuation of 110k or 126k or something in between?

If the valuation comes back less than your offer then you are within your rights to review your previous price and offer less. Having said that, whatever the valuation you have the right to offer less anyway. What led you to offer 16k more than the average? Does that house have something the others doesn't (an extension or better position for example)?

Thanks for your reply. Sorry I meant ok as in it comes back what i offered for it at 126k. I'll have no choice but to offer whatever the valuation is as i don't have any extra cash to make up the difference. The house was on the market at offers over 125k but i always suspected that particular estate agent overprices properties anyway!

Couple of things about the house that are slightly different, this one has a new roof and boiler, but at the same time some of the other properties had been recently decorated and had new kitchens installed.

02346631

booksurr wrote: »

you are showing all the signs of FTB nerves. If this house meets your needs at this time and you can afford to pay what you have offered then buy the thing and have done with it. You are buying somewhere to live in, yes it is handy if you make a financial gain in the future but if all you want is certainty of a financial return then find a different investment rather than a place in which you can live your life for the next x years

I suspect you are probably right about FTB nerves to a certain extent! I was just shocked when i saw the sold prices of properties nearby, i probably should've checked that before i made an offer rather than just check the general area. I'm new to this game though i suppose!

My main concern about the valuation isn't so much a profit in future it's more the LTV when it comes to remortgaging. If it's very overpriced now i might be setting myself up for a tough period when my fixed rate ends in 3 years. Especially if prices stagnate or fall due to brexit uncertainty. I'm on 95% mortgage currently so i'm not on the best rate (4.15%). One reassuring thing is the house is in Manchester where prices are continuing to rise.

02346631

walwyn1978 wrote: »

I'm intrigued as to why this house was on at more money than those in the street?

I wish i had an answer for this! The area i'm buying in is picking up at the moment as a good FTB area so prices have definitely increased. I think the estate agent has probably valued it based on the wider area and not what other properties on the same street have gone for really.

JP1978

I am suprised that you have offered well over what other houses in that street go for - anything special in the house compared to the others that make it worth it? Corner plot, end of street, not over looked, good views?

When we bought our current house as FTB's we put an offer in over the asking price (Scotland) and was well over the price others had gone for but it was an end of terrace, larger garden, not over looked, cul de sac, has a good outlook to the rear.

02346631

JP1978 wrote: »

I am suprised that you have offered well over what other houses in that street go for - anything special in the house compared to the others that make it worth it? Corner plot, end of street, not over looked, good views?

A degree of naivety on my behalf really. Trusting an estate agents valuation and not checking prices on the same street. This is why i'm now at the hands of the mortgage valuation somewhat so wanted to know how trustworthy that was. The only main difference i can see in this house really is it has a slightly larger kitchen/diner than some of the others and a new roof. They are victorian terraces so some of them look like they'd be due a change fairly soon. Not sure it's anything that warrants such a higher amount.

I think if it comes in at 126k (which i now doubt) i'll probably try to lower my offer, stating the prices of houses on the street. At the mercy of the owner then really, i suspect they'd put it back on the market tbh.

G_M

Since you have clearly researched the market well in your area, both the street where you are buying and the surrounding streets, I am bemused by why you offered so much more than your research led you to believe it was worth.

At the end of the day, if you are willing and able to pay 126K because that is the property you want, then that is what it is worth.

However a mortgage lender may feel the property does not provide sufficient security for the loan being requested.