Down Valuation from Santander

dmp1980

Hi
We saw a house in mid-July that went on the market Saturday afternoon for £460k, and arranged a viewing for next day. We lived the house and called to make an offer 9am Monday morning of full asking. We were told they had already received an offer of full asking that morning.

Needless to say - it went to full and final bids by close of play on the Tuesday. We felt that we had seen similar houses priced much higher that we had viewed and offered on, and went in a £500k. We felt that if the property had been listed at this price we would have offered this for it. We were successful and have proceeded to purchase and our decision in principal from Santander was in excess of £800k.

After nearly 7 weeks, our MA has come back and said Santander have approved your loan no problem, but the valuation has come back at £450k (£10k below the agents list price). 

Our options now as far as I can tell are to:
a) walk away
b) pay £41.5k extra as deposit (difference between what Santander will lend at 85% LTV at their valuation and our offer)
c) try and negotiate a lower price from the vendor

Extremely frustrating as we believe the house to be worth at least what we have offered and actually felt that the agent had underpriced it originally. There are comparable homes on the estate, however it is described as a highly sought after executive estate - and as such, there have only been 9 sales since they have been built in 1997 across 31 houses, and only 1 of the same spec. We are buying ours from the original owners. The only other house of the same spec sold for £417k in 2017, so I don’t think an appeal would be successful based on immediate area comparisons.

Thoughts appreciated, we are fortunate in being able to consider the £41.k extra deposit, however would like to understand options without being confrontational with the vendor. The agents are also the ones acting on The sale of our property so they ideally need to assist to not potentially lose 2 sales here.

we could move to another mortgage company - but which one? And there still appears to be a 5-7 week timeline at present to get to the same stage.

Thoughts appreciated!

csgohan4

I would try C first, but up to them if they want to reduce by that much, but otherwise walk away if your not able to stump that extra in. It might be overpriced? or the valuer is being overly cautious in this climate

numbercruncher8

Depending on the strength of the other bids a re-negotiation may not be that successful. The risk being you then get declined and it goes to someone else.

Not sure what has changed really if you do value the property at that much. Unless of course, you intend to sell in a few years (in which case future buyers may run into the same problem), or that the extra £40k is really difficult to come up with in cash (but with an £800k 85% mortgage, earnings have to be high).

Going to another lender may give exactly the same result and give the impression that you're having buyers remorse.

If you really like it, the valuation stacks up and you can afford it, I don't see the problem.

Scotbot

I would try to renegotiate the price,  other bidders are likely to have the same issue wirh lenders and you don't know how much they bid or how big a deposit thay can afford. The question is how much to go back in at, if you went in at £450 I suspect you will lose it. I would probably start at 470

AdrianC

Yes, they will lend YOU £800k. That's not the issue. They are unwilling to lend more than 85% of the value of the property under current conditions. Most lenders are taking this stance.

They view the value as £450k, because that's where their surveyor reports that his expert local opinion places the value.
The maximum they will lend against that property is £382,500.

You are free to pay £800k for it, if you wish. But they still won't lend more than £382,500 against it.

Scotbot

The house may be worth 500k today but with prices forecast to drop what will it be worth a year from now? BoE has forecast a 16% drop . Whilst surveyors are supposed to value a house based on todays price I suspect many working for commercial lenders are valuing on the conservative side  to account for any price fall.  if you switch lenders they will see the original asking price. I will eat my hat if it is valued any higher 

Crashy_Time

AdrianC said:

Yes, they will lend YOU £800k. That's not the issue. They are unwilling to lend more than 85% of the value of the property under current conditions. Most lenders are taking this stance.

They view the value as £450k, because that's where their surveyor reports that his expert local opinion places the value.
The maximum they will lend against that property is £382,500.

You are free to pay £800k for it, if you wish. But they still won't lend more than £382,500 against it.

£800k? Going by the 2017 price it is probably worth 400k if that.

iwb100

I mean why not ring the EA and float that your valuation is lower and therefore you can’t afford the agreed price. Worth seeing what happens. If seller won’t budge it’s then whether you want to spend the money on it. A house’s value is purely what someone is prepared to pay. Ultimately you went higher to secure the house. Your mortgage company don’t pay premiums to help you secure the house you want. So don’t confuse their value with your value.