Mortgage valuation 28k lower than buying price

housebuyerARGH

Thanks everybody, its definitely food for thought. We really like the house and want to be in there for the long haul, we dont want to lose the house so will most likely proceed as is, however this is just initial instinct. Our mortgage broker came back to us this afternoon to say their own research against other properties in the area also conflicted against what the mortgage survey had valued the house at but said they were unlikely to get this successfully changed if we were to appeal.

[Deleted User]

Crashy_Time said:

ashe said:

In terms of negotiating power, it won’t give you much because everyone is in the same situation. Yes, you could walk away, but you’re unable to go view alternative properties and you won’t be able to get surveys done on them for peace of mind. Not like you can claim to have another property in your back pocket that is oven ready. If someone came to me now I’d be giving a negotiation short thrift. 

Where would you find another buyer?

It's quite possible that the 'other buyer' has lost their job, been furloughed, lacks a 25 or 40% deposit.

AdrianC

Chumy said:

I would go back and renegotiate with the seller.
Consider the below points:
1. It will affect your interest rate
2. You will be worse off in the nearer future
3. If it was a newbuild, Would u go back to the developer and renegotiate?
4. How much did the seller pay for the property? Is seller selling at a loss? I doubt it.
5. Can you afford a 2nd valuation? Seeing as you don't trust the current one.

Well, hold on...

1. The difference between 61% and 66% LtV is unlikely to be significant.
2. How?
3. It isn't.
4. Why does it make the slightest difference?
5. He's had two. One agreed with the offer.

stehouk

Estate agents always list houses for more than they are worth in order to test the market, often reducing them after a few weeks, (sales tactics) in the past i have had houses undervalued by the lender (they are protecting themselves) i have always gone with the lenders valuation and used it to negotiate the price down, i have always been prepared to walk away if we couldn't come to an agreement, i wouldn't be in a rush to overpay for the property at this time, i would stall using the lenders valuation and the lockdown as bargaining chips.
I suppose it all depends on how much you need the property.

numbercruncher8

If there is nothing in comparison, on what basis would the mortgage broker know how to base a valuation?
Would their vested interest mean that they would prefer the deal to continue or fall through?
Personally I would put as much credence on what they are saying as if an estate agent said it was the right value.
If there was a commercial relationship between the surveyors and estate agent it may be the case that the lenders valuation is the least biased and should be given the most weight.
But if you're intending to be there for a long time, really like it, and can afford it, it is less of an issue.

Crashy_Time

stehouk said:

Estate agents always list houses for more than they are worth in order to test the market, often reducing them after a few weeks, (sales tactics) in the past i have had houses undervalued by the lender (they are protecting themselves) i have always gone with the lenders valuation and used it to negotiate the price down, i have always been prepared to walk away if we couldn't come to an agreement, i wouldn't be in a rush to overpay for the property at this time, i would stall using the lenders valuation and the lockdown as bargaining chips.
I suppose it all depends on how much you need the property.

Good advice.

jimmyjammy001

brett19852010 said:

Crashy_Time said:

ashe said:

In terms of negotiating power, it won’t give you much because everyone is in the same situation. Yes, you could walk away, but you’re unable to go view alternative properties and you won’t be able to get surveys done on them for peace of mind. Not like you can claim to have another property in your back pocket that is oven ready. If someone came to me now I’d be giving a negotiation short thrift. 

Where would you find another buyer?

It's quite possible that the 'other buyer' has lost their job, been furloughed, lacks a 25 or 40% deposit.

A few good points for renegotiating with there, the price will have to come down anyways if they were to re list due to people loosing their jobs and unable to get a mortgage. Plus you have a high deposit so more likely to get a mortgage than others with low deposits. 

cgk1

At the start of a global depression - too many alarm bells for me. 

benson1980

For most houses, science can be applied to valuing a property, unless it is unique/in the middle of nowhere with no comparibles at all. That said, my experience with valuations by surveyors is that whilst it's essentially someones full time occupation, they are covering such a wide area and do it to a timescale that it is rarely based on the full facts, or comparisons by spending time trawling through all relevant sold prices. The person who valued our current house when we were buying gave a value of what they thought it was worth with the work we were planning to do, but it was essentially 'finger in the air', which was a mile off, proved by a recent sale of a neighbouring property. All the evidence was already there, as this neighbouring property had sold around 6 years ago, and you could simply extrapolate the value based upon market rises. They didn't do this. As much as estate agents are sometimes maligned for overpricing, they do tend to spend more time doing this and understand the local market, again as said above.

I'd just do your own research- and stick to a price you think is reasonable in a stalling market, if as you indicate it isn't an issue for mortgage purposes due to size of deposit. That said I'd still try and use it as a bargaining tool, but I think the vendor/estate agent would want some direct evidence as to why it is worth the reduced figure, and I'm not convinced a surveyors valuation for reasons above on its own, without any rationale, would cut the mustard.

Hodge58

You say you have had a Homebuyers carried out, but I assume that this was a different surveyor. It is unusual to down value by that much when you have a 39% deposit. Usually the lenders surveyor will err on the cautious side when it 85 % plus LTV.
So I would be tempted to re negotiate as i do believe there will be a house price drop as unemployment kicks in. In the good ol US of A they have 10million now registered for unemployment and our figures will be out shortly.