Another house valuation less than the offer

n0deity

Hello.

We're buying a new home in the Bury area, and we're in a bit of a situation. We had an offer accepted at £210,000 (originally listed at £220,000) for a 3 bed semi detached that had fallen through twice before. After a (fairly rigorous) HomeBuyer report + valuation he has valued the property at £200,000 which is £10,000 under the accepted offer price.

I trust that the report is thorough and accurate. It contains detailed descriptions + photos of many different aspects of the house. The house (as we understood) requires fairly substantial renovation. However the report has highlighted defects with an end-of-life roof, a damp chimney stack that requires repointing/resealing, floor than needs levelling, dodgy toilet plumbing, windows blown etc etc. I have never seen so many stupid DIY decisions within one house and it has not been well maintained. It even has LED lights built into th coving in the bathroom, !!!!!!?! There's a lot to do, but the roof is the main concern. 

With this in mind we took this report to the Estate Agent and made it clear we were engaging tradesman to understand financial implications of the roof and windows mainly. We understand the additional work required would be around 4-7k to rectify the things we didn't know about. We did intend to attempt to negotiate up to 5k off the property and meet somewhere in the middle as this seemed logical. The Estate agent upon speaking to the seller quickly refused to entertain any type of reduction and wants the original £210,000. She also suggested that Chartered Surveyors only had access to the same methods everyone else does, thus dismissing his valuation as inaccurate. There are no identical houses in the surrounding streets that have sold at that value. There was another similar house 12 months ago that sold at £197,000 with a much better extension, and well renovated inside.

We have to this date spent £560 on the purchase for the report itself, and nothing else. At this stage our investment it not huge and we're considering abandoning the purchase. We do like the house, but overpaying potentially by 10k leaves a bitter taste.

Any suggestions - are they trying to take us for a ride and where do we go from here?

AskAsk

surveyors can undervalue a house as they tend to be on the conservative side.  you really have to value the house yourself.  it does sound like the property does need a lot of work.  i am surprised you state 4k to 7k to recitify the faults as they sound a lot more than that.  have you had quotes for the work or have you come up with that figure yourself?

only you can decide if you want to pay £210k for the house.  if you think it is over priced, then walk away.

AdrianC

If the vendor won't negotiate, then you have a simple choice...

Pay £210k... or walk away.

n0deity

AskAsk said:

surveyors can undervalue a house as they tend to be on the conservative side.  you really have to value the house yourself.  it does sound like the property does need a lot of work.  i am surprised you state 4k to 7k to recitify the faults as they sound a lot more than that.  have you had quotes for the work or have you come up with that figure yourself?

only you can decide if you want to pay £210k for the house.  if you think it is over priced, then walk away.

I understand that, but 10k is substantial. 4-7k is to cover the work that has come to our attention since the report, specifically the windows, roof tiles/underlay and chimney stack. The overall property needs 20-25k investment with me completing a fair amount of the work. We have had quotes on previous houses and had work completed for the same issues, so there is a basis to the projection. To clarify we are not asking the seller to remove the value of every item highlighted in the report. 

davidmcn

Bear in mind valuation isn't an exact science. Split the difference and you're talking about £205k +/- 2.4%, which is well within normal margins of error.

numbercruncher8

Would it be possible that the deal has broken down twice before over either valuation, or the large amount of works needed to be done? It sounds like many of these would not be picked up on an inspection.

If your final price was £235,000 for this house to fix things, how would that compare to paying £197,500 for the similar house with the better extension? 

If it's £25k costs plus your time it just doesn't sound worth it to me. Is this the house? 

n0deity

numbercruncher8 said:

Would it be possible that the deal has broken down twice before over either valuation, or the large amount of works needed to be done? It sounds like many of these would not be picked up on an inspection.

If your final price was £235,000 for this house to fix things, how would that compare to paying £197,500 for the similar house with the better extension? 

If it's £25k costs plus your time it just doesn't sound worth it to me. Is this the house? 

They won't disclose why the first deal fell through. Although timescale wise we believe this will have had a survey completed and then fallen through. The second fell through because they found a 'better house'. The 197k is a difficult comparison the house market has increased significantly in the area since that sold. I'd also say that the finish on that house was good, but not AS good as we would bring this house up to with 25k (this includes landscaping back and front, as well as the inside inc new kitchen and bathroom).

You're on to the same dilemma I've had with what we have offered. At £210,000 + £25,0000 we'd obviously have to sell at 235k+ to make any profit to make my efforts worthwhile. We do actually want to live in it so it's not purely a renovation project, but we could well sell in 3-5 years.

AskAsk

n0deity said:

AskAsk said:

surveyors can undervalue a house as they tend to be on the conservative side.  you really have to value the house yourself.  it does sound like the property does need a lot of work.  i am surprised you state 4k to 7k to recitify the faults as they sound a lot more than that.  have you had quotes for the work or have you come up with that figure yourself?

only you can decide if you want to pay £210k for the house.  if you think it is over priced, then walk away.

I understand that, but 10k is substantial. 4-7k is to cover the work that has come to our attention since the report, specifically the windows, roof tiles/underlay and chimney stack. The overall property needs 20-25k investment with me completing a fair amount of the work. We have had quotes on previous houses and had work completed for the same issues, so there is a basis to the projection. To clarify we are not asking the seller to remove the value of every item highlighted in the report. 

10k difference between the surveyor and the agreed price is actually only 5% difference, which isn't that much when it comes to property value.  property value can be very subjective so one person may pay a lot more than someone else depending on how much they want it or their circumstance.

as you are not happy with the vendor sticking to his guns, then walk away.  you know when a property is right for you and if you have doubts then it isn't.

AnotherJoe

Decide how much you would be happy to pay.

Make that offer via the EA, telling them it's your final offer, it "remains on the table" (so you aren't making any ultimatums which might annoy the vendor) and say you are going to look elsewhere. And do.  

numbercruncher8

n0deity said:

They won't disclose why the first deal fell through. Although timescale wise we believe this will have had a survey completed and then fallen through. The second fell through because they found a 'better house'. The 197k is a difficult comparison the house market has increased significantly in the area since that sold. I'd also say that the finish on that house was good, but not AS good as we would bring this house up to with 25k (this includes landscaping back and front, as well as the inside inc new kitchen and bathroom).

You're on to the same dilemma I've had with what we have offered. At £210,000 + £25,0000 we'd obviously have to sell at 235k+ to make any profit to make my efforts worthwhile. We do actually want to live in it so it's not purely a renovation project, but we could well sell in 3-5 years.

TBF I think I can understand. There isn't much in the price range, in the vicinity (within 1/2 mile). Much of the rest is SSTC. So it kind of is this or nothing, for now at least.

Maybe your own circumstances has an effect. For instance, if you don't urgently need to move, you could wait a bit, other houses might come on. If you're thinking of moving in 3-5 years, take the pessimistic scenario and assume that prices stay the same or a little less. Could you afford to sell for less than you have paid? There are threads on here where people cannot, and to all intents or purposes they are stuck.

Ultimately though your own feelings will probably be a better guide than anything on here.

[Deleted User]

I think this very much depends on alternatives as well. I agree with what others have said that it's actually not a massive difference. What kind of alternatives are there?
The property that we are currently purchasing was downvalued by £45k but that's actually under 10% differential and it's a very unique property so it's difficult to value. There is also a large list of 'needing to do' but we are planning on doing further work to the property so it's all stuff that would factor in anyway. We haven't negotiated it down because a) it's completely unique and we wouldn't find anything similar b) I think it's a difficult time to value any house and I'm not as concerned because we plan on being in the property for 7 years+ c) it doesn't affect our mortgage ltv and d) the property had had a lot of interest and I know they'd pick up another buyer very easily. 
If you feel you can pick up another property quite easily then go ahead but otherwise I don't think it would be enough of a difference to really concern me if I wanted the house and was already planning on making improvements.