New Build - Mortgage valuation less than purchase price

Thrugelmir

What parking facility are you buying that's worth £15k?

SunnyCat

The valuation isn't just a step in the mortgage process, it also gives you an independent idea of how much the house is worth. Do consider that piece of information...

Given a choice of A. going back to the builder to renegotiate - given that you've just received a good argument, and B. trying for a new valuation, possibly at your cost, I don't see why anyone would be going for the latter.

Danz123

What parking facility are you buying that's worth £15k?

Not all residents will have access to parking, so you have to pay for the privilege if you do want a space.

I have a car and my work depends on it so don't have much choice. From what I've seen this is not too uncommon in the London/South East areas as local authorities provide builders conditional planning permission in terms of parking spaces to be made available, as they want more people on public transport.

Danz123

Good advice all, many thanks. Will keep this thread updated until the point of resolution.

kingstreet

SunnyCat wrote: »

The valuation isn't just a step in the mortgage process, it also gives you an independent idea of how much the house is worth. Do consider that piece of information...

Given a choice of A. going back to the builder to renegotiate - given that you've just received a good argument, and B. trying for a new valuation, possibly at your cost, I don't see why anyone would be going for the latter.

At this time of year, locum surveyors often come to unfamiliar areas when covering colleague holidays and you can sometimes find a site where property has "valued-up" for months is suddenly hit with a one-off downvaluation.

Unfortunately, a builder won't just chuck away £15k or more on the twenty-fifth sale on a site just because the usual Esurv/Countrywide bloke was in Malllorca.

The purchaser has the prerogative to walk away if they feel the property is not worth what they agreed to pay for it; but a builder is unlikely to back down on the basis of a single valuation among many others by someone from a different area. If they get another valuation by another surveyor they will normally take this much more seriously and be more willing to accept there is an adjustment needed for future sales.

Danz123

Given a choice of A. going back to the builder to renegotiate - given that you've just received a good argument, and B. trying for a new valuation, possibly at your cost, I don't see why anyone would be going for the latter.

If the builder opts for a second valuation that should be coming from their pocket and not mine?

ethank

Was going to reply - but I think Kingstreet has given you the correct response.

kingstreet wrote: »

As a newbuild specialist broker our job is to act on our client's instructions.

When you get a downvaluation, you first establish if an appeal might be successful. You gather comparables to put to the surveyor. If there are none, you are unlikely to be successful.

If the client wishes to renegotiate with the builder, that is their choice and we will await the outcome. Sometimes the price is reduced, other times the builder will offer to pay for another valuation, or for a new valuation with a new lender. If the client chooses one of these options, we will do what is necessary to reach their desired outcome as quickly as possible.

However we cannot influence the pricing decision in any way. That will be entirely between builder and purchaser.

A builder might be an introducer but our responsibility is to our client alone.

Danz123

Update.

Surveyor has come back and confirmed his down valuation - £320k instead of £335k. He clarified that the £320k includes the parking facility. So not good news in terms of progression of the mortgage, but will give me some ammunition to go back to the builder to try and get them to adjust their pricing. Not expecting an easy ride...

I also really hope that they won't ask us to apply to a different lender, as I'm worried about the additional checks on my credit file which could impact our success on a second attempt, and there is no guarantee that the second surveyor will agree with their original asking price either.

Crashy_Time

Danz123 wrote: »

Update.

Surveyor has come back and confirmed his down valuation - £320k instead of £335k. He clarified that the £320k includes the parking facility. So not good news in terms of progression of the mortgage, but will give me some ammunition to go back to the builder to try and get them to adjust their pricing. Not expecting an easy ride...

I also really hope that they won't ask us to apply to a different lender, as I'm worried about the additional checks on my credit file which could impact our success on a second attempt, and there is no guarantee that the second surveyor will agree with their original asking price either.

Why are you so keen to overpay for this house?

Danz123

Crashy_Time wrote: »

Why are you so keen to overpay for this house?

I'm not keen to overpay for the house. I also thought that the original valuation was reasonable, given that it's in a high demand area and within our budget. A new train station is also being built within a few minutes walk of the property, which when completed in 2 years, should have a positive impact on local property values and be a good investment in the long run.

Having said that, I don't want to pay more than what's it's worth. However:

• There is a shortage of new builds in the area we're looking at
• I wouldn't be using the HTB scheme if I had lots of other options available
• We're currently paying a high rent and therefore building no equity whatsoever in the meantime

So it makes perfect sense to try and negotiate with the builder to make this work (at hopefully £320k, touch wood) rather than simply walk away.