New Build-Lower than the purchase price.

pawymae

Hi Guys, 
Looking for some advice. 
My husband and I are first time buyers and have reserved new build property in Milton Keynes (3 bedrooms semi-detached) under Bovis costing us  £419,995.
The completion of the property will be on the 1st of September 2020. 
The mortgage offer has arrived with Natwest but somehow the valuation came out as  £400,000. 
Please can someone give me any advice on how much can I negotiate and what should be my next step? 
Thanks in advance. 

AdrianC

"Hello, Bovis? The valuation's come out low. Can we renegotiate, please?"

"No? Oh. Then I'm walking, bye."

Sachs

Bovis want to sell the house for as much as they possibly can, they think this number is £419k.
Nat West do not want to lend more on a property than its worth. They think the property is worth £400k.
Your options are:
A. follow Adrian's advice above.
B. Find a different lender who thinks the property is worth £419k.
C. Pay the additional £19k yourself on top of the down payment agreed with Nat West.

iampetesmith

This would be the same as if you bought an older house and it was down-valued. The options are to renegotiate, pay the difference, find a lender that will lend that amount or walk away.

Did you use a broker? They'll probably be able to find a lender that's not as harsh on valuations, especially with this being a new build and this must be quite a common problem as developers want top whack. You may be able to renegotiate, but Bovis will probably sell to someone else in the hope that their lender will value it higher.

pawymae

Thank you for your advice. Still waiting for them to call me back as I am firm that we are sticking with the lender valuation.
But somehow they are taking their time the deadline for our exchange of contract will be on the 17th of March. 
Hoping they will get enlighten about the current circumstance (e.g. Brexit and Ncov).

AdrianC

Sachs said:

Bovis want to sell the house for as much as they possibly can, they think this number is £419k.
Nat West do not want to lend more on a property than its worth. They think the property is worth £400k.
Your options are:
A. follow Adrian's advice above.
B. Find a different lender who thinks the property is worth £419k.
C. Pay the additional £19k yourself on top of the down payment agreed with Nat West.

'course, depending on the size of mortgage required, it may simply be a question of a different LtV.

£350k mortgage.
@ £419k, 83.5% LtV
@ £400k, 87.5% LtV

Assuming the lender are happy to go to that LtV for you, then there's no real difference except maybe a small increment in the interest rate.

pawymae said:

Hoping they will get enlighten about the current circumstance (e.g. Brexit and Ncov).

Mmm. Somehow, I think they may already be quite well aware of the near-four-year saga of Brexit, and COVID19 is hardly going to come as a surprise to them in the next 11 days, either.

Remember, this exchange deadline is a deadline for you - not for them. They're waiting for you to exchange contracts, else they're free to sell to somebody else...

pawymae

Hi Adrian, 
Called Bovis just now head office said 410k but I am still pushing it for 400k. 
I said to the agent if he were buying this house and the valuation came less, He would probably do the same. 
He said he understands my point and he will get in touch with me again soon if they hear anything from the head office. 
Fingers crossed. 

ElephantBoy57

pawymae said:

Called Bovis just now head office said 410k but I am still pushing it for 400k. 
I said to the agent if he were buying this house and the valuation came less, He would probably do the same. 
He said he understands my point and he will get in touch with me again soon if they hear anything from the head office.

I thought people paid a premium for new houses? If you have paid a deposit to secure the house, they may play for something very close to £410K

wesleyad

If you think about it, you would expect these value to be different. Bovis are valuing the house to sell right now. Natwest are not. They are placing a value on the house that they expect to achieve if they need to resell under a repossession. Clearly these are not the same.

Take an extreme example, I'm going to buy a brand new Bentley tomorrow for 200k. Would you promise to buy it off me in two years time for 200k? I highly doubt it. Of course cars depreciate massively and in theory houses can go up, but you get the idea.

pawymae

Hi Guys,
Good news Bovis did consider the price. 

Crashy_Time

Did they drop it the full amount?