New build undervalued by 17%??

Cal90

Last month I decided to take the plunge and go for a new build property in Birmingham. Everything looked good until the valuation came back yesterday! 

The property is up for £234,000 and the valuation has come back at £200,000! 

I’m a little bit concerned that this sort of difference is a little abnormal; I wondered if anyone had any experience with this sort of valuation difference? 

There is an option for Persimmon to challenge the valuation. I have no idea how much success they will have trying to persuade someone they were wrong by that much. 

Any advice appreciated. 

jamielutz1987

@Cal90 As per my broker, valuation appeals almost never work. He might be wrong though.

It may be a good opportunity to negotiate a discount?

getmore4less

Pretty normal to have new builds overpriced, lenders not so keen now to lend at those levels.
Why would you want to even consider supporting a new valuation?
If you still want the place go with £200k or even less

Cal90

I thought that might be the case, I guess unless persimmon can prove everything else sold is at the value they’re up for? 

The next question is, how likely are a house builder to knock that sort of money off a house? I can imagine a few thousand but £34k would seem excessive. 

smc103

I always think new builds are overpriced to make up for all the help to buy schemes and shared ownerships. They think they can charge what they want because it's the only way a lot of people can get on the ladder. 

jamielutz1987

@Cal90 It's hard to say. When is the development due to complete?

Anecdotally, I've heard that developers are currently bending over backwards to get deals through, but that would of course differ across sites/regions/etc.

ec9wrr

Also, they’re likely to have this problem with anyone they sell to who has a mortgage. Which means they’re really limiting their market. I’d reduce your offer down to the valuation. 

jackieblack

Apologies for pedantry, but your prospective purchase was undervalued by just over 14.5%, not 17%

I realise that doesn’t change your problem though 😳

Cal90

Oh wow, that’s atrocious maths from myself! I accidentally used the 200,000 as the reference figure 😅 I’m due marks for my working though right? 

To answer the questions

Plot is due for completion in December.. So some time to go, it’s been obvious to me during the lockdown that sales on the site have slowed. Since I reserved mine a month ago, no others have been taken off the site advertising which plots are available. 

I will speak to the builder next week to see if the challenge fails (assuming they will challenge) if the price will reflect the valuation. 

It’s frustrating that there are no house sale prices to reference on the land registry website! 

Thrugelmir

Cal90 said:

It’s frustrating that there are no house sale prices to reference on the land registry website! 

Unfortunately the time lag in reporting can make them redundant. 

getmore4less

Always best to think overpriced rather than undervalue

That makes 17% right.