HOUSE SURVEY V MARKET VALUE DON’T GET IT 😣

Robbo66

Estate agents don't and cant give a valuation they do market appraisals, the only people that can give a valuation are surveyors. 

Caz3121

Moneyravingexpert said:

. 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. 

mortgages are based on valuation or sale price, whichever is lower
if property sold for £300k and valued at £300k then 90% mortgage of £270k leaves £30k needed as deposit
if property sold for £300k and valued at £275k then 90% mortgage of £247.5k leaves £52.5k needed as deposit
not everyone has access to that extra bundle of cash

Moneyravingexpert

silvercar said:

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.

Hi there the EA valued around 310-325 which confused me. It seems a huge drop! We agreed the 300k as we felt that was a fair reflection on our property. 

Moneyravingexpert

eidand said:

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

Thanks for your reply. This is what I wondered. The property I have just put an offer in their survey was under what the EA valuation price was but I took it. If I didn’t someone else would have bought it for sure. It was only slight difference - I always thought they were always different these valuations but now I’m now so sure! Thanks for your help. 

Moneyravingexpert

thearchitect said:

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.

I’m not sure what my brain isn’t getting you know. I thought let’s say I was a buyer and loved this house at 300k I know I’d need a 10% deposit as a minimum which mean I need 270k. I then thought as long as the valuation was over this and says it’s worth that all good and well. I’m being too simple here. 

The odd thing is houses in this area (semi detached I’m detached with Double garage and all that jazz) have been selling recently for over 300k. There is a uniqueness about this house for sure but what someone sees as one thing someone else may see as different. I don’t want to be difficult but I just want what’s fair and I always thought you’d have to get some market valuations take an average from that (I went under this) deduct the mortgage, any deposits we paid and voila that leaves equity figure.

since booking in some more up to date EA valuations they said they’d never market the house at 275k it’s all so confusing. 

Moneyravingexpert

eidand said:

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

So why wouldn’t we all just go from what the lenders are asking for? The EA’s said these are often different. Thanks for your reply! 

Moneyravingexpert

yvmilne said:

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.

Maybe we should get another survey done - maybe I am deluded I just see what houses have gone for recently and they’re actually a lot higher than that. Why wouldn’t anyone just go straight to valuation by a surveyor then rather than use estate agents?  Thanks so much for your help! 

Moneyravingexpert

AdrianC said:

"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.

But ultimately even if the top 2 agree it’s the 3rd one that has the clout? 

eidand

Moneyravingexpert said:

eidand said:

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

So why wouldn’t we all just go from what the lenders are asking for? The EA’s said these are often different. Thanks for your reply! 

Because we don't know what the lender will value it at. 
First stage is to get an offer. To get an offer you need to have a value in mind that you're happy with. Sometimes sellers ( myself included ) have to readjust their expectations depending on overall situation. This is why, for example, I called 3 EAs, asked them to give me a valuation and I took an average of that.

Once you start looking at the market in your area, look at what's sold, their state, location etc then you are starting to have a good idea of what something is worth.

If the bank, later comes and says, sorry we think your property is worth  X not your X + 25k, then you have a choice to make. Many people, especially now, won't be able to cover the high deposits plus whatever they need to pay over a bank's evaluation, so at that point you, as a seller, have a choice to make. Drop it to match the evaluation or keep trying to sell for more, to someone who can afford it.

It's not simple at all, basically.

AdrianC

Moneyravingexpert said:

AdrianC said:

"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.

But ultimately even if the top 2 agree it’s the 3rd one that has the clout? 

Of course, because they're the ones lending you the money, and wanting to now the property is good security for it...

Caz3121 said:

Moneyravingexpert said:

. 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. 

mortgages are based on valuation or sale price, whichever is lower
if property sold for £300k and valued at £300k then 90% mortgage of £270k leaves £30k needed as deposit
if property sold for £300k and valued at £275k then 90% mortgage of £247.5k leaves £52.5k needed as deposit
not everyone has access to that extra bundle of cash

But, of course, that only applies to FTBs right up against the limit of their affordability.

If the buyer of this £300k property that's been downvalued to £275k is only looking for a £200k mortgage, whether equity from a chained sale or whatever, then they can still borrow that £200k quite happily... It's just that the bank will view it as 73% LtV against £275k instead of 67% against £300k. And that'll probably make zero difference to the interest rate they'll charge.