The bank just undervalued our house!!!

steve866

Slithery said:

The valuer has priced it correctly. Both you and the EA's over-valued it - unfortunately it's just not worth as much as you thought it was.

I was oblivious to the prevalence of down valuing by surveyors before joining this forum, having never been affected by it, nor had anyone I know. i always thought a a house is worth whatever someone is willing to offer but clearly that is not the case.  

getmore4less

steve866 said:

Slithery said:

The valuer has priced it correctly. Both you and the EA's over-valued it - unfortunately it's just not worth as much as you thought it was.

I was oblivious to the prevalence of down valuing by surveyors before joining this forum, having never been affected by it, nor had anyone I know. i always thought a a house is worth whatever someone is willing to offer but clearly that is not the case.  

If you need a mortgage that the lender not you. 

AdrianC

steve866 said:
i always thought a a house is worth whatever someone is willing to offer but clearly that is not the case.  

Don't forget there's three people with an interest in the transaction...
The vendor.
The buyer.
The buyer's lender...

Obviously, they need to be satisfied that it's good security for their loan. And that's the job of the valuation.

Downvaluing doesn't mean "We won't lend at all at all". It just means "For the purposes of the security, we're viewing it as being £X worth, not the £Y you're actually paying".

So long as the buyer isn't hard up to the limit of their affordability, it's a non-issue.

Slithery

steve866 said:
i always thought a a house is worth whatever someone is willing to offer but clearly that is not the case.  

A house is worth what someone is willing and able to pay for it. Obviously if the buyer is planning to borrow a large amount of money then the person lending it to them has a say as well.

Tightaz

This is a common thing. We had this when we purchased our house and thankfully CV-19 helped us get the vendor back to the valuation.

As others have mentioned, EAs just want the listing... simple. They will do and say what they need to get you to sign up. “Promise the world, deliver an atlas” is a perfect analogy. What I find perplexing is what sellers don’t engage a surveyor before listing their property. That way you will know which EA is talking out of there backside and who is realistic and in touch with the market.

In your case I would say try to meet the buyer halfway. If the valuation price doesn’t work for you there are options.  

1. Pull out of the sale and wait it out. Be aware you could be back in this situation in a few weeks time with another buyer.
2. Lower your budget on what you are looking to buy, accept your current valuation and move on with it.

You are the vendor so you are in total control of what you do.  I wish you all the best, this will be the first hurdle of many during this process for you.

Mickey666

EmmaHampson said:

We have sold our house in a private sale for 80000 pounds. It was valued at 85-95000 by 4 different estate agents. The buyer got a basic valuation with HSBC. The person who valued our house was barely in the house and extremely rude and unprofessional. We had a bad feeling about him when he first called me at work. He undervalued our house to 75000.

You have to understand that a lender's valuation is not the same as a buyer's valuation.

The lender is only interested in your house as security for a mortgage - they don't want to live there!  If the borrower defaults on the mortgage and the house has to be repossessed and sold to recover the loan then the lender will want to sell it as quickly as possible, which means a lower price.

That's why the valuer wasn't in the house for very long - they didn't need to be because it doesn't take long to verify if the house is worth the lower value.  They won't care about a bit of peeling wallpaper or that it might need painting, or indeed if it is pristine condition, they just want to verify they could sell it quickly in case of default and recover their money. 

Thrugelmir

EmmaHampson said:

However our  mortgage advisor has advised us that a lot of banks (especially with 90% mortgages) have been undervaluing houses due to Covid-19. Surely this is wrong. 

If the buyer defaults on their mortgage then it's the lender that picks up the tab. Perhaps you've missed the news recently as to the scale of job losses that have been already announced. Going to be far more to come. The impact of Covid has yet to be fully felt. 

Mickey666

EmmaHampson said:

However our  mortgage advisor has advised us that a lot of banks (especially with 90% mortgages) have been undervaluing houses due to Covid-19. Surely this is wrong. The house we bought has not been affected by this as it went through a lot earlier.

They haven't been UNDER-valuing them, they've been RE-valuing them.  Covid-19 has disrupted the housing market (among other things) and if house sales slow down then it becomes more difficult for a lender to quickly recover their loan in cases of default.  So houses become LESS VALUABLE to them as far as security for a mortgage.

You can't argue with a lender about how much they are going to value your house as security for a loan, in the same way that you can't argue with a potential buyer that your house is really worth more than they're offering you.  It is what it is and all you can do is try to find another lender or another buyer.  What you can't do is force them to change their minds - it's called negotiation.

iampetesmith

This just means the buyer's bank will only lend 75k, the buyer can still buy your house but they'll have to either pay the difference with a bigger deposit or re-negotiate the price to 75k.

You can reject it if you really want more, but a new buyer will probably have the same problem when their lender comes round and values it the same. This means you'll either have to re-negotiate the price on the house you're buying, pay the difference with a bigger deposit or find another house that's cheaper.

Depending on how far along you are in the sale, your vendor might rather take a 5k reduction than start again with a new buyer anyway.

Crashy_Time

steve866 said:

Slithery said:

The valuer has priced it correctly. Both you and the EA's over-valued it - unfortunately it's just not worth as much as you thought it was.

I was oblivious to the prevalence of down valuing by surveyors before joining this forum, having never been affected by it, nor had anyone I know. i always thought a a house is worth whatever someone is willing to offer but clearly that is not the case.  

Cash buyer can offer whatever they like, everyone else offers what their lender feels comfortable with in the prevailing economic environment, valuations are obviously going to be on the cautious side going forward.