New Build - Mortgage valuation less than purchase price

mareen7

Hi Danz, if you don't mind me asking who is the builder and what area are you looking to buy? From my personal experience with Persimmon homes they were happy to throw £25k discount by paying my stamp duty or £12.5k discount of the property price. Some of my friends had equally same discounts with Taylor whimpy.

Personally, i would walk away if the valuation says the worth of the house is £320k and the build is not discounting you - this is especially you are using the recommended brokers.

The train station might be delayed and take longer than 2 years to complete or other factors might come into play in couple of year but i can see reasons for all 3 of your points. I was in similar position not too long back.

Danz123

mareen7 wrote: »

Hi Danz, if you don't mind me asking who is the builder and what area are you looking to buy? From my personal experience with Persimmon homes they were happy to throw £25k discount by paying my stamp duty or £12.5k discount of the property price. Some of my friends had equally same discounts with Taylor whimpy.

Personally, i would walk away if the valuation says the worth of the house is £320k and the build is not discounting you - this is especially you are using the recommended brokers.

The train station might be delayed and take longer than 2 years to complete or other factors might come into play in couple of year but i can see reasons for all 3 of your points. I was in similar position not too long back.

Hi Mareen, I don't feel comfortable in naming the builder just yet as we're working through the process still, but what I will say is that they are one of the biggest house builders in the country. The area is London so as you can imagine a £335k new build property I feel is a good deal given the quite frankly ridiculous house prices here.

Many thanks for sharing your personal experience, really useful and it will give me some good ideas about how I can best negotiate with them. I don't mind how they wish to structure the deal (e.g. stamp duty etc.), as long as it's fair and reasonable.

Did they offer you a discount straight away in response to the first down valuation, or did you have to get a second valuation before they made their offer?

craig88b

Could you give some more information such as which zone it's in and current commuting time, with the existing tube line, to say oxford circus? How are the service charges per year? The price definitely does seem low for 2 bed in London so I'm a bit curious as new builds usually go for a premium especially with HTB options.

Danz123

craig88b wrote: »

Could you give some more information such as which zone it's in and current commuting time, with the existing tube line, to say oxford circus? How are the service charges per year? The price definitely does seem low for 2 bed in London so I'm a bit curious as new builds usually go for a premium especially with HTB options.

Zone 4. About 45 mins to Oxford Circus. £150 p/m service charge. Seems like a good deal to me so would rather not walk away, and also for personal reasons it's a good area due to family/social connections.

mareen7

Danz, i didnt buy with persimmon. I was able to get the discount at reservation stage - i told them i wont commit till they do a deal - they were happy to do so. I went to both their uxbridge and harrow sites and Uxbridge sales handed me discounts on both house purchase and stamp duty. Harrow only did stamp duty.

kingstreet

mareen7 wrote: »

Personally, i would walk away if the valuation says the worth of the house is £320k and the build is not discounting you - this is especially you are using the recommended brokers.

Can you describe what you mean about the broker? Using a builder-introduced broker means you should be given a price reduction following a downvaluation? Why? The broker has no control over the pricing nor the valuation.

mareen7

I am not saying that - If i am in Danz's position i would go back to the sales house and argue that i am doing everything recommended to me (Use the broker and solicitors recommended by the developers) and the valuation is well below the premium price i would expect the sales team to match the valuation as courtesy or i would walk away.

New build developers do push the buyer to use their recommended people so that the deal can go smoothly and exchange contracts within the 28 days. If you use someone external they will not be listening to any issues you have.

This is just mine and few of my friend's personal experience.

Crashy_Time

Danz123 wrote: »

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.

HTB is designed specifically to get you to overpay. (or over-borrow more accurately) They don`t want the housing market to find it`s true level because the banks and developers would bear the brunt, although with the changing political landscape who knows if the Government might not just let the market pop to beat Corbyn to the punch, or scare people into a second ref. even? Either way you are still overpaying IMO.

westernpromise

Crashy_Time wrote: »

HTB is designed specifically to get you to overpay. (or over-borrow more accurately) They don`t want the housing market to find it`s true level because the banks and developers would bear the brunt, although with the changing political landscape who knows if the Government might not just let the market pop to beat Corbyn to the punch, or scare people into a second ref. even? Either way you are still overpaying IMO.

What a load of nonsensical crashtroll guff.

OP, be warned about Crashy. He's a troll. He sold to rent in 1996 because he thought prices were too high, and has rented a bedsit in Scotland for the last 23 years.

Here he is in a thread from this time last year. Someone was offering their house at £92k having been told by 3 estate agents that it would fetch about £90k. Crashy's insightful advice was to drop the price to £70k:
https://forums.moneysavingexpert.com/discussion/5861328/selling-house-no-viewings&page=3#47

The house can now be found on Zoopla as having sold for £90k not long after.

Danz123

Resolution!

After escalating to the builder about the surveyor’s down valuation they have agreed to bring down the purchase price from £335k to £320k. Result! And I have to give credit where it’s due to the builder, very impressed, as I was expecting significant resistance as £15k is not an insignificant amount of money. Quite surprised actually that the builder didn’t request a second valuation with the half chance that their full purchase price be met.

Given that my mortgage is approved subject to valuation, we should be out of the woods now and hopefully plain sailing from here. And thanks to the surveyor, we have saved ourselves £15k, will pay less stamp duty and have a smaller mortgage. :T