HSBC Valuation 15K under asking price

boldaslove

Hi all,

Hopefully this is the right board for this but I'll repost in the house buying forum if more appropriate. 

My partner and I are FTB and currently going through the mortgage application process with HSBC via a broker. We have just heard back about the valuation which was done earlier this week, and there are no queries but the bank has valued the house at 15K below the asking price. The broker advised that we might want to speak to the Estate Agent about reducing our offer. We have a Building Survey booked in next week so I'm tempted to wait for the results of that before we start thinking about negotiating, but a local lockdown has just been announced in our area so we don't know if that's going to go ahead as planned

To be honest we felt the asking price was fair, it is higher than other houses that have sold in the area but that particular row of houses haven't gone up for sale that often. I think the most recent sale was several years ago. We love the house and we're wanting to proceed with the sale as fast as possible for a variety of reasons. 

What would you do in this situation? We asked our broker why the difference in price and they advised it was probably due to the current climate as no specifics about the house were mentioned in the valuation report. We have a 55% LTV so is it going to cause issues with the mortgage if we decide we don't want to negotiate?

Many thanks in advance!

Thrugelmir

You can pay whatever you want for the property. The third party surveyors valuation will be based on current sales prices in the locality. The mortgage offer wil be based on the purchase price or the valuation which ever is the lower. 
£15k is a sizable sum that could be spent on refurbishing the property. 
What was your offer price? 

davidmcn

boldaslove said:

the bank has valued the house at 15K below the asking price...
We have a 55% LTV so is it going to cause issues with the mortgage if we decide we don't want to negotiate?

You'd need to tell us the price for us to answer that - we can't tell how significant £15k is. Makes a difference whether you're buying a £500k house or a £50k one. Valuation isn't an exact science, and £15k may be within normal margin of error.

boldaslove

Thank you for your replies, yeah I did think that difference could be put to good use as we need to buy a lot of furniture! The asking price was £200k and the valuation was at £185k

chillicheesedog

Was in the same boat in December. Asking price was 215, we negotiated down to 210. Valuation came back as 195, so 15k under what we were going to pay.
Long story short, seller didn't budge and the sale fell through. That valuation was done by Halifax. The home buyers report listed damp and rot in the attic plus a house in the same row sold for that amount so sure it was based on that. 
We were very gutted at the time but are now in a process of buying a much better house so glad it didn't work out back then.

You can try and dispute it but don't think there's a lot of success usually. If price can't be lowered and you can't make up the difference, just know that there are other houses in the future that will probably work out. Sorry it's bad news. 

Edited to add the EA managed to sell the property several months later and apparently at original asking price where buyers got a mortgage so it is subjective.

RelievedSheff

As you have such a big deposit it really won't make much difference to you if you are happy to pay the original offer price, they will just base your mortgage offer on the valuation price and adjust the LTV to suit.

You can use this as leverage though to go back to the vendors and ask for a price reduction. You might not get the full £15k off but you might get something.

boldaslove

This is what I was wondering - is the bank now going to adjust the amount they'll offer to us based on this valuation? Our broker seemed to think it wouldn't affect us but this seems to the contrary?

In your opinions, would you start discussing this with the EA now or wait until we've had our own survey done? We've had word back that it's still going ahead as planned and we've been told we should be getting word of our mortgage offer around the same time. Is it best to go in armed with them all at once? Thanks again, you've all been really helpful!

RelievedSheff

As you are at such a low LTV they shouldn't reduce the amount that they will offer.

davidmcn

It makes your LTV 59.5% rather than 55%, which I presume the bank won't be bothered about. Up to you whether you want to quibble about the price.

boldaslove

Thank you both, that is reassuring! 

Tilly111213

I had same - 40k down valuation. It’s an uncertain market and is happening a lot. I love the house and have low LTV like you - it increased the interest rate from 1.47 to 1.84 but has not affected what we are borrowing. I decided not to negotiate with vendor as they have already reduced price and I feel my offer is pretty much bang on for the house. I wouldn’t worry too much. For me challenging the valuation would have massively held
up the process.