Property valuation

FTBNow

Hi folks!

Looking for a bit of advice here...

As background, me and my partner had a bid accepted on a house: it was put up for £144,950 and we went up to £161,000 (this was due to a bidding war involving us and two other FTBs). It was still within our budget, and to be honest we fell so in love with the house that we were willing to pay it. We were told by the estate agents at the time that the house was put on the market for lower in the hope this would happen as the sellers were looking for a quick sale (due to finding a property) and the £144,950 tag would attract more interest - how true this is now and how much was estate agent jargon is beyond me.

Fast forward a month, and we've received the OK from Santander for a mortgage except for one factor: the property has been undervalued by £16,000 to - surprise surprise - £145,000. We phoned up the estate agent who said they'd do all they can, but when our MA phoned he was spun a yarn that there was a £160,000 cash buyer below us. How true this is I'm not sure - in my eyes if there was a cash buyer then the vendors would have gone with them for a quicker sale.

We've been told by the MA not to pay for an extra surveyor as the result would be the same, and also not to appeal as all recent sales in area have been around the £130,000-£140,000 mark.

We've written and posted a letter to the vendors, but we unfortunately just do not have the extra £16,000 to make up the difference sitting in the bank .

Has anyone else got experience and been in this situation? I sent a letter as I don't trust the estate agents as far as I can throw them.

spadoosh

Youre probably not in a good situation. If the bank wont lend you the additional money you have to find it yourself, if you cant, you cant offer that much for the property.

There might or might not be other buyers, i suspect you will find out for sure soon enough when the sellers realise youre not in a position to proceed, theyll either take the next offer and youll never see the house again (on RM) or it will be relisted, which suggest there are no other buyers.

Be wary of bidding more than asking price for properties. Its not too common for valuations to be given higher than what someone is asking for for a property, it can happen and the house could actually be worth £161,000 but then the lender doesnt want to take a risk when you might simply be an over excited buyer paying too much for a house, ie its not just them theyre covering although they are their priority.

FTBNow

To be honest it has happened to us with every property we've bidded on: this was our third, and every other one went £10k-£15k above the asking price (we ourselves would bid asking price).

spadoosh

Sounds like youre in a particularly active area, if similar houses have sold recently around the £130-140 mark though the valuations dont appear to be catching up with the demand.

Looking at cheaper houses probably wont be too effective as the valuations would generally stick around the asking prices so if theyre still going to offers over youll still need to find money to pay the difference.

Unfortunately it sounds like youll be waiting until either you find somewhere that the lender will match that valuation to or relying on few to no other bidders.

Properties that have been on the market longer tend to have less interest, they could be a traget but then theres normally a reason why theyve been on the market longer (ie overpriced or not desirable)

As depressing as my posts are, try not to be too disheartened, time to reflect on a very expensive purchase is rarely a bad thing. Getting a mortgage as big as the value of the house is normally always a bad thing.

FTBNow

Of course spadoosh: I can appreciate your posts entirely! As I said to my partner, there's a lesson to be learned about going so wild over the asking price (and getting drawn into a bidding war) when we can't make up the difference.

If the worst does happen, then this is a positive move as we're not getting dragged into a house where - if we do decide to sell later down the line - we'll be looking at negative equity on the mortgage. Naturally it's disappointing as we fell completely in love with it, but we have to look at this with a head as well as a heart.

Whatever happens it's a lesson to be learned. I've just heard back from the agent that the vendor won't accept £145,000 and he's persisting with the £160,000 cash buyer story - so we've offered £148,000 as we can stretch to £1,500 each extra but that's it.

FTBNow

So: further developments. We've bid £148,000 as we're willing to put in an extra £3,000 off our own back. It has since become clear from the agent that the cash buyer was a fib (as predicted) and they are in fact FTB's with an £80,000 deposit but no mortgage or mortgage in principle (which sets the sale back 2-3 weeks at least). The inclination of the husband (on the vendor side) is to go for us but he needs to speak to the wife and sleep on it - probably away from nagging agents!

One thing this has taught me is not to trust estate agents as far as I can throw them....

GoingOn30

So no cash buyer outs you in a stronger position but still be aware that if you put £3k in of your own money then you'll still be in negative equity for at least the first 6 months in the property, longer if price fall, longer if interest rates go up.
Never let the story of a cash buyer pressure you into overstretching yourself. It is so often just a story.

FTBNow

We were flat out refused on the £145,000 so used the £3,000 as a bargaining chip really. We knew the cash buyer was just a fallacy - as you say they often are - but our thoughts were this couple could get a mortgage with £60,000 deposit and then use the £20,000 to make up the rest (which is obviously up to them if they want negative equity in the house). That's to say if they're even able to get a mortgage at all.

Our MA has advised we go to the estate agent and ask what other properties in a 1 mile radius have recently sold for - as the agent also peddled the story that properties are going for £15,000-£20,000 above asking price regularly and companies doing the valuations can't keep up. It was eSurv who carried out ours.

kingstreet

Surveyors use comparables - the recent (last four months) sales of similar property in the vicinity (less than 0.5 miles) and you can see such property by using this;-

http://www.rightmove.co.uk/house-prices.html

FTBNow

I've had a little look: and it varies from £105,000 to £200,000 for a three bed semi! The last sale in the street we're looking at was £117,000 - but that was six years ago.

Not sure if it's worth appealing, or paying for another valuation.

FTBNow

Scratch that: we're barely talking over £140,000 in a 0.5 mile vicinity of the full postcode. Looks like the surveyors got it spot on.