Appeal Down-Valuation

Mo87

Hi,

To cut a long story short, we agreed to purchase a 3 bed town house at £252,950 which included the following;
3% gifted deposit
Stampt duty
Legal fee's
Flooring

Valuation was carried out on the 10th by Colleys (Via Halifax) who down-valued the property to £240,000. Report advised properties in the area sell between £225-245,000.
We went back to the developer asking them to drop the price, they wouldnt as the identical house type had most recently sold (April) at £249.950.

We agreed at £246,000 including the same incentives having been told by Halifax we could simply bridge the gap from their valuation to the purchase price, we were happy with that and a formal offer was made to us and received.
Today I have been told by Help to Buy they won't accept this as the purchase price cannot be over the mortgage valuation :shocked:
On this basis

I have spoken to My Broker / Halifax today and they have said the mortgage can be set back to 'working' and I can appeal the valuation. Now I need to get this £246,000 or as close to that as possible, any advice would be great.

shortcrust

I’m sure someone will have something helpful about the valuation in a bit but I’d be tempted to play chicken with the developers. They can see this is a genuine barrier to the sale. Are they really prepared to lose the sale for 6k?

Thrugelmir

shortcrust wrote: »

Are they really prepared to lose the sale for 6k?

Impacts the value of all the other properties that they are selling. Incentives are used to hide the true selling price. Smoke and mirrors marketing.

Thrugelmir

Mo87 wrote: »

they wouldnt as the identical house type had most recently sold (April) at £249.950.

What were the incentives though?

Possible that the surveyor would be aware.

Thrugelmir

Mo87 wrote: »

We agreed at £246,000 including the same incentives

The issue is that the developer is still giving you over £10k of incentives. Suggests that the property was indeed originally well overpriced.

Mo87

I went back to them today and suggested dropping to £240 and to wind back the £6000 of incentives by means of; stamp duty, legal fee's and deposit contribution so no actual cost for them.

To me it doest matter how the deal is structure, their admin etc. as long as it shows I have paid £240,000. In my opinion surely their is a cost for said incentives somewhere within the sale price of the property. Does anyone actually know how this is 'hidden' ?

They have come back and said no as the selling price and incentives are two separate entities, and they would not be prepared to drop the value to £240,000 as it would devalue other properties on the development. They have said I can find another lender (unable due to my circumstances see other thread), appeal or walk away from the deal.

I have a document from the developer to assist with my appeal form showing a property of identical type sold for the £249,950 they haven't disclosed to me the incentives, lender and who valued it etc. something which I will try to ascertain to assist in this matter.

TrickyDicky101

Mo87 wrote: »

I have a document from the developer to assist with my appeal form showing a property of identical type sold for the £249,950 they haven't disclosed to me the incentives, lender and who valued it etc. something which I will try to ascertain to assist in this matter.

Is that from the Land Registry or an internal developer's document? If the latter then it ain't worth the paper it's written on.

Thrugelmir

Mo87 wrote: »

They have come back and said no as the selling price and incentives are two separate entities, and they would not be prepared to drop the value to £240,000 as it would devalue other properties on the development.

As I said in post #3.

Mo87

Not sure what my chances of making any headway with my appeal are ... I have spent hours working on this. I have my 3 comparable.
So we agreed at £246,000 on this with our incentives included.

1. On our development an identical house sold in April at £249,950 - Unsure of the incentives offered at this stage and can't see it on the land register online, how often is this updated ? In the phase prior they sold at £229,950 which was in June/July last year. On the development they have about 6 different house types.

2. New property from another development, they don't offer town houses but have found a smaller property £240,000 offered incentives as standard; flooring, £500 legal fee's and stamp duty paid. Location is on a main road, and opposite another development plus it is a much larger development in comparison to where I want to buy. Property is circa 264 Sq ft smaller in accommodation space.

3. The property we are looking at is a Townhouse and I cannot find a single used property of similar spec/size/style within a 2 mile radius (Colleys said it has to be the same post code e.g. AL1) I have found a 'newer' old house built in 2013 sold 4 years on uplift from original sale price £227,950 sold for £257,950 in May of this year. Again a smaller house, interior reflective of age but is detached and has a single garage.

Fiesto88

I suppose it depends how flexible they are with their comparable evidence and time elapsed since purchase.

I'm worried my purchase might hit a stumbling block like this as we're buying a mid terrace that is substantially larger than any of the other houses in the street due to a large converted cellar (two rooms, opening onto the garden due to hillside side) and attic. It also has a much larger outdoor space than any of the other houses surrounding it. I can't really find any properties within a quarter mile radius that would compare to it but recent sale prices of more conventional terrace properties would scale up when looking at a £ per square metre comparison.

cjmillsnun

The problem you have is that you're receiving all these incentives. They have to be paid for, as they all cost £££.

Now they will be able to get a discount on the legal fees and the flooring, but the stamp duty is a fixed cost and the 3% deposit, whilst wooden dollars, will show on an accounting mechanism.

The developers want to make money and will put the cost (without discount) onto the sale price. This jacks the sale price up (and here I agree with Crashy) and creates a small bubble on the house prices locally as the higher reported price is registered with the Land Registry.

They understandably don't want to drop the house price too much as the Land Registry make that price public, but all they publish is the price paid for the property. They don't know what incentives are also paid.

The next punter comes along and says. But you sold the exact same property 3 months ago for %discounted price% and you want to charge me %non discounted price%. They walk away thinking they're being ripped off.

Colleys know how much the property (the actual building) is worth, and that is what they are basing their price on.