HOUSE SURVEY V MARKET VALUE DON’T GET IT 😣

Moneyravingexpert

Hi there! Are there any experts or someone with knowledge out there who can tell me what I should be looking at re settlement when it comes to house valuation versus market valuation?

I do have a thread I started in a different post but the part I don’t get is what I should be looking at. 

Market value I reckon we could get the price we’d put it up for if we sold. BUT the valuation of the house was less than what we think the market value is.

Does this happen often and why wouldn’t we just sell from the house value rather than market value? why would anyone bother asking market value? 

davidmcn

It would make more sense if you just continued your existing thread rather than start a new one.

Moneyravingexpert

😂 sorry David you’re probably right! 

I just need to understand what happens if a house Is valued at 300k yet the house valuation from a lender was 275k then does that mean people wouldn’t consider paying 300k for a property. 

I’m trying to come to a settlement figure with my ex who wants to stay in the property. I got x3 EA valuations and we agreed on the figure for settlement. That was scuppered when the valuation came in at 275k so I said let’s sell then. 

He is saying nobody would pay 300k for a house that’s valued at 275k. I explained if someone paid the 10% deposit that means they’d need to borrow £270k which actually falls within the value of what the house is valued at. 

He says that’s not the case. So I need to know when coming to an agreement should I would from the house valuation Versus the market valuation. 

Thanks! 

Processinginfo

If I was buying a house the EA/Vendors valued at 300K and the bank/RCIS valuation came back at 275K it would definitely cause me to re-think and go back to the negotiating table. Unless there's something so unique about the property that it would emotionally be worth a 25K premium I wouldn't really spend that much extra. Would you?

ThePants999

There is no single "value" for a house - it's worth what someone will pay for it. Your EA valuations are guesses as to what other people will pay for it. The lender's valuation is another guess as to what other people will pay for it.

However, the lender trusts their own valuer - so if the valuer says £275K then the lender will consider the house to be worth £275K. Someone trying to borrow £270K would, as far as that lender is concerned, be asking for a 98% mortgage, which they won't do. So chances are, nobody WOULD pay £300K for it, though that's not a certainty. So if you're just trying to reach agreement on what the house is worth, the lender's valuation is a good one to use.

silvercar

EA valuations are generally inflated as the EA wants your business. They also allow for offers to be below the marketed price. So a house on the market at £300k may well get initial offers around the £280k mark. I don't see that much difference between an EA saying £300 and a valuer saying 275.
Any mortgage would be based on the 275, so a 90% mortgage wouldn't be 90% of 300 as you seem to think, but 90% of 275.

thearchitect

A valuer undertakes a comparison with similar properties in the market area and sets out what he, or she, would consider to be a fair market price.  There is an RICS methodology for that, hence suggesting it is a best guess is a little unfair.

Just because one individual is willing to pay above that price does not mean that the higher figure is a fair market rate - they may have had particular reasons for bidding at that rate.  If they (or their mortgage provider) has to sell later, the market rate is a more prudent figure.

yvmilne

We had this - buyers lender downvalued our house by £10k from our own RICS survey and we had to drop the price or lose the buyer.

AdrianC

"Market value" is an opinion.

There are three here.

1. Vendor.
2. Buyer.
3. Surveyor for the lender.

1 and 2 have clearly agreed - because the offer has been accepted.

Thrugelmir

Surveyor for the lender has the benefit of ascertaining exactly what comparable current selling prices are.  

eidand

in the end it's the bank's valuation that will matter because not many will cover the difference with their cash.