In process of buying a Shared ownership flat - any scope to negotiating price?

Clare1384

chalky_white_2 said:

The Housing Association has no input as to the 'market value'.   This is determined by an independent surveyor paid for by the Seller.   The Valuation will only last for 3 months, though it can be extended for an additional 3 months, after which a new valuation will need to be obtained.   Only if a new valuation is prepared would the price change accordingly.
Do bear in mind that you will need to have a new mortgage offer issued for the new purchase price (and borrowing, as necessary).   This may also impact the Seller's onward purchase, if the value is lower and they have insufficient equity to purchase.
SO is a fantastic scheme.   As with any property, rented, privately owned or otherwise, there can be issues.   But these issues are not solely because of it being SO. 

Hi, thanks for shining some light into this.
Is it possible for the extend the valuation after it expired 3 months ago? I was told by a survey company that SO valuation has to use sold properties value, which I am not sure how true that is. If that's the case, does that mean a crash/significant down market does not affect SO properties as long as nothing was sold recently? 

chalky_white_2

Clare1384 said:

Hi, thanks for shining some light into this.
Is it possible for the extend the valuation after it expired 3 months ago? I was told by a survey company that SO valuation has to use sold properties value, which I am not sure how true that is. If that's the case, does that mean a crash/significant down market does not affect SO properties as long as nothing was sold recently? 

A valuation would technically become incorrect immediately. Arbitrarily, the figure provided is accepted for a period of 3 months, with the ability to extend this for an additional 3 months. A housing association could accept an additional extension, though this would likely be contrary to its charitable obligations. After six months a new valuation would likely be needed.
As to how it is valued, this is determined by a RICS surveyor and will factor in various things from the property's age, location, condition. This will partly come from comparative figures of sales of other similar properties, where available.

amandacat

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

Clare1384

amandacat said:

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

Hi Amandacat, 
Is it true that RICs valuer can only base on prices house have sold for recently and not properties in the same development/block that have been on the market for 6 months with price reductions in the last few months? London properties that have been on the market for the last 6 months have dropped in value. Any suggestions on renegotiate without sounding mean?
Thank you!

Home2011

chalky_white_2 said:

Clare1384 said:

Hi, thanks for shining some light into this.
Is it possible for the extend the valuation after it expired 3 months ago? I was told by a survey company that SO valuation has to use sold properties value, which I am not sure how true that is. If that's the case, does that mean a crash/significant down market does not affect SO properties as long as nothing was sold recently? 

A valuation would technically become incorrect immediately. Arbitrarily, the figure provided is accepted for a period of 3 months, with the ability to extend this for an additional 3 months. A housing association could accept an additional extension, though this would likely be contrary to its charitable obligations. After six months a new valuation would likely be needed.
As to how it is valued, this is determined by a RICS surveyor and will factor in various things from the property's age, location, condition. This will partly come from comparative figures of sales of other similar properties, where available.

What exactly do you mean by 'this would likely be contrary to its charitable obligations'? It is this charitable status of housing associations that we find most intriguing in the current situation when selling theee properties, which are obviously overpriced? What is the justification? Is it the case of simply passing on the responsibility to surveyors, who might or might not be reluctant to address the reality?
For example if there are no recent sales and no comparable properties for sale, is it all down to a particular surveyor's thinking? In which case what prevents a seller from asking valuation from many and choosing the  highest?
Shouldn't we then have the same right as a buyer?
I mean why is it acceptable to have such a big difference to what is acceptable in the 'normal' property market and in shared ownership one?

Home2011

amandacat said:

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

If that valuation was already extended once, and it's now also expired surely they would need a new valuation? Or not? And what about the valuation that mortgage company does? My understanding from search is that when it comes to SO they mostly go with whatever is the price. In fact ours even says that it should not be relied on in respect to the value of the property? What is the point of it one might wonder?

Clare1384

Home2011 said:

amandacat said:

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

If that valuation was already extended once, and it's now also expired surely they would need a new valuation? Or not? And what about the valuation that mortgage company does? My understanding from search is that when it comes to SO they mostly go with whatever is the price. In fact ours even says that it should not be relied on in respect to the value of the property? What is the point of it one might wonder?

Your search came back saying it should not be relied on for the property's value? I share the same concerns as you about the valuation, can they extend it after it has expired? Not sure if my previous question was clear but surely valuation should not be solely based on recent properties sold prices but also the market rates, which is downward at the moment?

Home2011

Clare1384 said:

Home2011 said:

amandacat said:

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

If that valuation was already extended once, and it's now also expired surely they would need a new valuation? Or not? And what about the valuation that mortgage company does? My understanding from search is that when it comes to SO they mostly go with whatever is the price. In fact ours even says that it should not be relied on in respect to the value of the property? What is the point of it one might wonder?

Your search came back saying it should not be relied on for the property's value? I share the same concerns as you about the valuation, can they extend it after it has expired? Not sure if my previous question was clear but surely valuation should not be solely based on recent properties sold prices but also the market rates, which is downward at the moment?

Sorry to confuse - I just read that sentence and I wasn't very clear.
I was referring to valuation for mortgage purposes, which surveyors conduct when instructed by the lender after mortgage application. Well ours came with added note about 'not guaranteeing the price is a fair value', which we thought was really weird. But we did a bit of search on the topic and learned that this wasn't unusual - apparently when such valuations are done in relation to Shared ownership property surveyors seem to go with whatever is the set selling price, as they assume the housing association has set a fair market price?! To us that seems very wrong, after all what is the point of valuation, but the valuation we got from our lender most definitely follows that premise. What worries us is that this 'fair market value' we're supposed to be paying might have been fair 5-6 month ago (if that!) but it sure does not seem so at present!
Did you check the valuation from your lender? Does it say anything along those lines?
Btw I could not agree more on your conclusion about the valuations, especially when there is no reliable data about recent sales, or when there weren't any recent sales?! How is the value determined? When you look up some of the properties on share to buy and compare the prices of resale properties they often make no sense at all. I've seen the resale flats with higher price tags than freehold houses with a large garden just around the corner. Makes no sense...
 I would be very curious to hear from surveyors here about criteria for valuation in general, but especially in this present time? 

Clare1384

Home2011 said:

Clare1384 said:

Home2011 said:

amandacat said:

The housing association will have asked for proof of the RICs valuation being renewed. The thing is no one knows what is happening with price changes amid the current situation yet as the housing market has only just opened again so while people predict price decreases, this is currently a prediction so the RICs valuer can’t base on predictions, only the prices house have sold for recently. Chances are if you pull out, it will be valued and placed back on the market at the same rate. You may lose the property so you need to decide how much you want it. 

If that valuation was already extended once, and it's now also expired surely they would need a new valuation? Or not? And what about the valuation that mortgage company does? My understanding from search is that when it comes to SO they mostly go with whatever is the price. In fact ours even says that it should not be relied on in respect to the value of the property? What is the point of it one might wonder?

Your search came back saying it should not be relied on for the property's value? I share the same concerns as you about the valuation, can they extend it after it has expired? Not sure if my previous question was clear but surely valuation should not be solely based on recent properties sold prices but also the market rates, which is downward at the moment?

Sorry to confuse - I just read that sentence and I wasn't very clear.
I was referring to valuation for mortgage purposes, which surveyors conduct when instructed by the lender after mortgage application. Well ours came with added note about 'not guaranteeing the price is a fair value', which we thought was really weird. But we did a bit of search on the topic and learned that this wasn't unusual - apparently when such valuations are done in relation to Shared ownership property surveyors seem to go with whatever is the set selling price, as they assume the housing association has set a fair market price?! To us that seems very wrong, after all what is the point of valuation, but the valuation we got from our lender most definitely follows that premise. What worries us is that this 'fair market value' we're supposed to be paying might have been fair 5-6 month ago (if that!) but it sure does not seem so at present!
Did you check the valuation from your lender? Does it say anything along those lines?
Btw I could not agree more on your conclusion about the valuations, especially when there is no reliable data about recent sales, or when there weren't any recent sales?! How is the value determined? When you look up some of the properties on share to buy and compare the prices of resale properties they often make no sense at all. I've seen the resale flats with higher price tags than freehold houses with a large garden just around the corner. Makes no sense...
 I would be very curious to hear from surveyors here about criteria for valuation in general, but especially in this present time? 

Thanks for the clarification, my lender did not share the mortgage valuation with me, I didn't know they can share that information with me. 
I reached out to a surveying firm last week and they said SO properties rely solely on previously sold prices for valuation. This sounds bizarre to me if it's true as per our conclusion above. SO properties are meant to help people get on the ladder, not rip them off and unfair if we go into negative equity because of how SO properties are valued, or do they simply not get undervalued ever? 
Did you speak to your lender about your concern and ask for revaluation? I think if you are buying a small amount of share (25%) and take a 5% hit, it might still worth proceeding for a long term home and staircase when the value drops. Here comes the recurring question - will the valuation ever drop if they are based off recent sold prices?
Hope I am making sense...

insider293

At the moment SO properties are flooding the market, especially in London as people look to move out of the city with long term working from home arrangements. Brand new new-build flats reserved before Covid are coming back onto the market after buyers cancelled. Especially in London, it used to be a lottery to get these flats as there was so much demand, but thats changed.

 A lot of Housing Associations are failing to sell SO resale properties and they are going to Estate Agents. The prices are set by surveyors are based on completed sales, so even if you see a similar flat in the same block  that has just sold for much lower, it will not affect new valuations, until contacts are exchanged. 

New builds were always ridiculously overpriced considering the paper thin walls and often questionable build quality. Developers will be forced to offer deals and discounts, but the may still struggle with all the potential crash predictions.
SO is very complicated right now. Housing Associations make zero effort to help vendors trying to sell their properties as they have nothing to lose and can continue to collect rent and charges at the pre-Covid prices.