Home Buying - Downvalue

Saver92

Good Evening,

Just looking for advice on a house purchase.

Both me and my partner have recently had an offer accepted on a house, our first one! - Exciting.

We have a 10% deposit and accept that it will need doing up, central heating and other minor decor.

The house was valued at £165k by the Estate Agent. There were several people who offered 165k (apparently!) and we had to offer a £1000 fee more to secure the property - The others only offered £500 more so indeed we had our offer accepted.. Already off to a costly start but the location / house was ideal for us!

We therefore bought it for £166k.

However, we are in the process with our Mortgage company and they have downvalued the house by 15k, too £150k. This seems as a huge downvalue although i'm new to this business. When i have asked they have stated it is simply due to the 'state' of the house and it needs work doing to modernise. I dont have a problem with this and agree it certainly does.

As a result we have gone back to the sellers (who are an equity release company) and hoping they will negotiate.

My Q's are -

- Is 15k downvalue on this a normal process? It gives us a nightmare situation as we can only now get a mortgage for 150k and make up the rest by ourselves. Can we not request more on the rationale for this?

- Generally - Do we find that negotiations are successful in circumstances like this, especaily condiering they are a equity relese company - I have never delt with this situation before and if i am honest don't know what they are!?

Any advice / insight would be appreacited. First time buyers- no wonder they say house buying is stressful! :rotfl::eek:

Thank you in advance.

BoGoF

Why would you want to pay more than the valuation company say it is worth? Unless you can provide evidence to show that it is undervalued (recent similar sales) then you either find the shortfall yourself or try and get seller to reduce.

The problem you have is that it is claimed there were several other close offers. If any of them are cash buyers and are still interested then you have a problem.

Bottom line, how much do you want this house - enough to be in possible negative equity?

davidmcn

Saver92 wrote: »

Can we not request more on the rationale for this?

Hold on - do you have a rationale for believing that it's worth £166k? Buyers always seem to think that surveyors have "downvalued" their dream property, never that they're the ones who have overvalued it.

No, the surveyor isn't likely to want to spend time chatting with you about how they came to that figure, but generally it will be based on evidence of recent sales of similar nearby properties.

The seller being an equity release company means that it's a lender recouping whatever it lent to the former residents - so at least there's the advantage that they will want a quick sale, and they will be entirely dispassionate about the process, rather than a seller with unrealistic ideas of how much their house is worth (or one with a minimum amount of debt to clear).

Saver92

BoGoF wrote: »

Why would you want to pay more than the valuation company say it is worth? Unless you can provide evidence to show that it is undervalued (recent similar sales) then you either find the shortfall yourself or try and get seller to reduce.

The problem you have is that it is claimed there were several other close offers. If any of them are cash buyers and are still interested then you have a problem.

Bottom line, how much do you want this house - enough to be in possible negative equity?

I wouldn’t want to pay more than what it’s worth. However, who is correct? The bank or estate agent? I imagine the estate agent up’s the price for the commission purposes? Hoping they are willing to reduce, not yet heard back from them!

Saver92

davidmcn wrote: »

Hold on - do you have a rationale for believing that it's worth £166k? Buyers always seem to think that surveyors have "downvalued" their dream property, never that they're the ones who have overvalued it.

No, the surveyor isn't likely to want to spend time chatting with you about how they came to that figure, but generally it will be based on evidence of recent sales of similar nearby properties.

The seller being an equity release company means that it's a lender recouping whatever it lent to the former residents - so at least there's the advantage that they will want a quick sale, and they will be entirely dispassionate about the process, rather than a seller with unrealistic ideas of how much their house is worth (or one with a minimum amount of debt to clear).

No rationale, just the estate agents valuation. I only believe they have downvalued it because it was priced at 165k and they’ve valued it as 150k. They may well be correct and that’s the exact convo I have had with the estate agent. Not that they were too pleased!

Thank you for your advice, that’s what I’m hoping for.. a quick yes and a sale from them as they’ll surly hit this hurdle again if our purchase doesn’t go through!

Thrugelmir

People buy property on emotion. Ticks all the boxes as a home for the foreseeable future. Therefore will offer what the property is worth to them. Even it means upping offers to see off rival bidders. What's a few grand when you've 25 plus years to repay borrowed money.

Whereas surveyors (representing the lender) are down to earth. The property has to provide suitable security for the mortgage advance. Totally different perspective. No emotion. Just hard facts.

If you wish to bid up a property. You need to have the funds to bridge the gap yourself. Not push the boundaries of the lenders wallet.