Home Buyer Report valuation considerably lower than offer

Bingjamin

Hi all,

We have recently had an offer accepted on a flat for £270k initially listed at £325k and today we have had our Home Buyers report back from our surveyor who has staggeringly valued the flat at £235-240k.

Interestingly we have also had the lenders valuation through and they are happy to lend to us based on 270k. Obviously I want to ensure that the purchase is a sound investment, so would like some advise what the best course of action is?

I have gone back to the surveyor to get a better understanding to how he has got to this figure and await response. Another couple of thing to note from the surveyor report and others:
- Heating/ water system and electrics are very old and surveyor has advised that 10k investment may be needed to bring in gas to the building
- Another flat in the block is up for £325k currently and another sold for £294k in April.
- This flat I am buying was last sold for £284k in 2015.

Any ideas how there could be such a difference in valuation?

Thanks.

AdrianC

Your lender think it's worth £270k, and are happy to lend on that basis.


From the comparables, it sounds like it's your surveyor who's out of whack. Are the freeholder happy to have gas in the block? It wouldn't be the only gasless flat, by a long chalk. You don't need gas to update the heating and hot water.

Finchy2018

Homebuyer reports normally don't have a valuation on them, only building surveys. Is it definitely the valuation and not the insurance val for rebuild costs?

Thrugelmir

Bingjamin wrote: »

Obviously I want to ensure that the purchase is a sound investment, so would like some advise what the best course of action is?

What are you buying, an investment or a home?

jonnygee2

I'd wait for the surveyor to respond.

They may be out but also they may have good reasons. They must have relevant comparables to have come to that valuation.

How much do you know about the other flats eg specs and measurements?

Crashy_Time

Bingjamin wrote: »

Hi all,

We have recently had an offer accepted on a flat for £270k initially listed at £325k and today we have had our Home Buyers report back from our surveyor who has staggeringly valued the flat at £235-240k.

Interestingly we have also had the lenders valuation through and they are happy to lend to us based on 270k. Obviously I want to ensure that the purchase is a sound investment, so would like some advise what the best course of action is?

I have gone back to the surveyor to get a better understanding to how he has got to this figure and await response. Another couple of thing to note from the surveyor report and others:
- Heating/ water system and electrics are very old and surveyor has advised that 10k investment may be needed to bring in gas to the building
- Another flat in the block is up for £325k currently and another sold for £294k in April.
- This flat I am buying was last sold for £284k in 2015.

Any ideas how there could be such a difference in valuation?

Thanks.

Any chance of a link?

Davesnave

I too would wait for the surveyors advice, rather than listen to random thoughts of strangers on the internet.

Meanwhile, have you priced-up the sort of changes you'd want to make. Considering the restricted services and their age, other aspects will probably need an update too and kitchens/bathrooms aren't cheap, unless you do them yourself.

Bingjamin

Hi all,

We have finally received back the complete home buyers report from my surveyor. Following my input regarding previous house sales etc. his valuation initially went up to 260k via email and then eventually 250k on the actual report (20k lower the our offer and 15/20k above his initial suggestion). His main reasoning for this, as already outlined, is the state of the heating and electrical systems which he feels would require 10k worth of investment to bring up to date. I've done a little basic research and this seems to be more like 5k. Outside of this and the lease being needing renewing as it is currently 90 years (which we were aware of prior to offer), everything else in in order. He also states Brexit as a major factor, ive included what he has said below:

'As to value of Flat 7, your offer of £270k seems to be pitched at the market level in mid 2018. Thus in buying at that price you are effectively assuming that the "Brexit" outcome will not affect the value of Flat 7. That is not a call that is easy to assess at this precise moment as you will appreciate.'

Following this we are not not sure what to do. Essentially we love the flat and the area and felt (and still do feel) its a steal based on the other flats we have looked at. Is it a poor move to go ahead with the sale on the currently basis, essentially ignoring our surveyors opinion? As this will be our home, but we want also to leave us in good stead if we want to sell later down the line. It feels to me as he his now using the offer as a basis to shape his valuation i.e. 270, minus 10k for heating and electrics, minus 10k for lease renewal and on this basis I am not confident in his judgement.

Any advice would be greatly appreciated.

Apologies, as a new user I'm not allowed to post link in a reply.

Crashy_Time

Not sure how strangers on the internet are going to be able to give a better judgement? My opinion for what it is worth is buy it if you really really think you must have this flat, but don`t bank on a profit (or even being able to sell "down the line")

lisyloo

If this is for a home and you love it then go aware.
But as per crashes advice be aware of the risks that you may not see gains short term.
I would advise firstly to keep up repayments as that will buy you equity and help avoid negative equity.
You don’t have to upgrade immediately if it’s habitable and functional so plan and budget for improvements for when you are able to afford them (perhaps you could set aside a % of any overtime or bonuses you get - just an idea).
Also if you can overpay then consider it but don’t overlook also paying into your pensions, your employee and the tax man may have a great offers of free money so have some balance and don’t go all out and puteverything on the house.
Budget and plan including unforeseen repairs. Doesn’t have to be huge amounts but all will be better if you plan.

MERFE

Finchy2018 wrote: »

Homebuyer reports normally don't have a valuation on them, only building surveys. Is it definitely the valuation and not the insurance val for rebuild costs?

The one we got for the house we didn't buy had both the valuation and rebuild cost. We pulled out though as did the 2nd lot of buyers and the house is now listed for £6K less than we offered, 13K less than it was originally listed for.

OP only you can decide what this flat is worth to you, you have to weigh up all your options, how likely you are to find something else etc