Valuation!!!

han2505

Well everything was going smoothly, was meant to be exchanging contracts last friday and we were waiting on the Valuation to be done.

Well the valuation person came out and he under valued the house by 5%. We found out that he was a bit annoyed as he hadnt told anyone he was there and so was kicked off site. BUT we also found out from him that he didnt like incentives with the new builds and as were getting our 5% deposit paid for us he had knocked it off. Can he do this?
He is now refusing to increase the price, so were having to get another valuation company out.

Has anyone been in this position before? what happens if it carrys on getting under-valued? Will we lose the house?

Just a bit worried as it's due for completion in 2 weeks.

Thanks

silvercar

He's valued it at what you are paying. The 5% deposit paid is just a builders way of making you feel you are getting a bargain.

han2505

Yeah but we are paying £124,995 and he has valued it at 5% less than that.

So the mortgage company wont lend us the money unless he increases it 5% more.

Plus we dont know how he found out we were getting our deposit paid.

silvercar

Are you paying 125k, with the builder paying a deposit of 6,250, leaving you to find 118,750? Or are you paying out 125k and the builders paying 6,579?

han2505

Were paying £124,995 and the builders are paying £6,579, and the house has been valued at £118,000

silvercar

Discuss this with the builder, ask him to justify why you are paying more than the value, see if they will offer to reduce the price. If they met you half way, could you come up with the difference?

I would guess that the valuer is nervous of house price falls and concerned that it would take a big jump in prices for your houe to go over the 125k stamp duty barrier. The valuer is looking to protect the mortgage lenders interest, I'd hazard a guess that you are looking for a high percentage mortgage, 95 or 100% even, and the lender needs to be sure his money was safe.

han2505

I guess so. If we had to then we could. Just that we have been waiting on this so long and then for this to happen it's killing us.

It's just that as it's a new build all the other houses on the same estate, which are exactly the same as ours, being built havent had this problem and they have been valued at the same as what there paying thats why were suspicious of why he has done it to ours and no one elses.

pinkshoes

han2505 wrote: »

Well the valuation person came out and he under valued the house by 5%. We found out that he was a bit annoyed as he hadnt told anyone he was

Thanks

He didn't undervalue it - he valued it, and he thinks it's worth less than you're wanting to pay.

If builder is paying 5% deposit, then house is probably overpriced to begin with, so you THINK you're getting a bargain.

You need to go back to the builder and say unless they reduce the price to £118k, then you're pulling out.

Getting a mortgage for more than 100% on a newbuild is daft, as there's not much you can do to a new property to increase the value, so you could end up with negative equity if prices don't rise.

han2505

I have already told them that i wont pay the difference if the value doesnt go up or the builders dont decrease the house as i refuse to start a new home in negative equity.

I'm just worried why our house, which is the same as the rest of the other houses is the only one being under valued???

Cazza

He would probably have been told by the developer that your deposit was being paid by them, either that or your borker (if you have one) would have disclosed it on the mortgage application form. If neither of these, he will be a local surveyor that knows, as a result of doing other surveys on other properties that the builder is currently offering 5% gifted deposit. You have to disclose the deposit to the mortgage company, you don't really have a choice, if the valuer hadn't found out the solicitors would have told the mortgage company and they would have gone back to the surveyor anyway.

Which mortgage company are you using?? The are some lenders who just do not like new build proerties (new build is my main area of business!) Did you do the mortgage yourself or did you use a broker? Did you use a broker reccomended by the builder??

Conrad

Most lenders are now ultra cautious on new builds and many now refuse to lend on them above 75% if at all.

Your situation is not unique, new build prices are tumbling - see my thread on bargain repos where flats are selling for £70,000 having been sold for £140,000 12 months ago.

There is in most areas an over supply of new build.

Cant you see this is ablessing in disguise. Get your mind right on this and you will make the right decision. YOU HOLD THE WHIP HAND NOT THE DEVELOPER.