Mortgage valuation £20k lower than agreed price

Emma96

My partner and I are first time buyers and have had an offer accepted on a property with agreed price of £340,000 (asking price was £335,000). However, our mortgage valuation has just come back as £320,000 (one some repair work has been done).

The surveyor who completed our Homebuyers report (independently of mortgage valuation) has said if he did a valuation for us, it would likely be a similar value and as most surveyors use the same industry software, there's not much point trying another mortgage lender as we're likely to get the same valuation back.

We currently see our options as:
- as vendor to renegotiate the price based on the survey (surely any other buyer needing mortgage would hit same problem?) and if not then walk away
- Fork out the additional £20k (we can't really afford to do this - especially as the property needs quite a lot of repairs in the near future)
- Change our mortgage to 10% deposit rather than 15% deposit to free up some more cash to cover the £20k (we don't really want to do this as it will increase our monthly costs and leave less for repairs, and don't want to end up paying loads for a house that surveyors say isn't worth it - although we were happy with the original agreed price but this was based on us being able to get a mortgage for that price!)

NB. We were in the process of buying a house last year but had to pull out due to right of way/survey results, etc so really want to avoid losing £1k for solicitors, survey and mortgage fees yet again in the space of 9 months!!

Any thoughts or advice? Do you think we have a good reason to renegotiate the price?

Crashy_Time

Yes. Tell them to take it or leave it, no point stretching yourselves in this economic climate, have you seen how many stores/businesses are in trouble!

ashe

What is the justification for the reduced value, is it work that needs to be done/condition of the house, or is it similar properties/area?

Either way I would be raising this with the vendor and stating that the house has not met the valuation. Option 2 & 3 may be your only options in reality depending on the vendor but I would not go straight in with them. Go with option 1, as you say any other buyer likely to have a similar experience but it can depend on the valuers used as some notoriously under value (I think Countrywide are well known from this from posts on here?) but certainly go with that option first then you know if its viable or not.

Emma96

I believe it's been based on condition and sales of similar properties in the area.

Great thanks, think we'll give option 1 a go first and see what happens. The vendor is keen to move quickly and already has a place to go to so hopefully she'll want to avoid us walking away as much as we do!

Thrugelmir

Emma96 wrote: »

My partner and I are first time buyers and have had an offer accepted on a property with agreed price of £340,000 (asking price was £335,000).

Why did you end up offering over the guide price?

Crashy_Time

Just blame the snow.....


https://www.nationwide.co.uk/-/media/MainSite/documents/about/house-price-index/2018/Feb_2018.pdf

ashe

Just ignore the post above, everyone else does.

AdrianC

Your lender were happy to lend 90% of what they believed was a £340k value, £306k.
But £306k is nearly 96% of what they are now told is a £320k value. That puts the mortgage into a very different risk category for them. 90% LtV against a £320k property is £288k - except if you insist on paying £340k for a house that your lender thinks is worth £320k, that means you have to put £52k equity into the deal, rather than the £34k you thought.

Crashy_Time

The 320k is after repair work, so it is actually worth even less than that? Only a link will show how much you are truly overpaying though

Crashy_Time

ashe wrote: »

Just ignore the post above, everyone else does.

Really? Would have thought most of the regulars on here were glued to NW house price data

ACG

I do not agree with that "if one surveyor values it at x so will another".

5-6 months ago we did a case with Nationwide which was downvalued by £10k, we then went to Natwest and it valued up fine.

I have no idea whether or not the value is correct and there is no harm in trying to work it to your advantage but you might find a buyer expecting x and being told it will be £20k less than x makes them think about their options (ie another buyer, not selling at all etc).