Survey undervalued first home by £15,000

davidmcn

FTB_Help said:

Alicefisk1235 said:

I understand that my mortgage lender thinks it’s valued correctly however as mentioned above this survey was a lot more detailed. They would be valuing it this much for no reason surely? 

From my understanding your lender is happy to lend you £74k (you have £15k deposit?) If this is the case then maybe your lender valued the property around £74k too which is why they were happy to lend you £74k, i think this is how lenders valuation work, i.e they will lend you the amount they think its worth (valued at £74k so they lend you £74k), i might be wrong, so anyone with more info please correct me.

Lenders are not lending anybody 100% of property values at the moment, so whatever they valued it at must have been above £74k.

saajan_12

FTB_Help said:

Alicefisk1235 said:

I understand that my mortgage lender thinks it’s valued correctly however as mentioned above this survey was a lot more detailed. They would be valuing it this much for no reason surely? 

From my understanding your lender is happy to lend you £74k (you have £15k deposit?) If this is the case then maybe your lender valued the property around £74k too which is why they were happy to lend you £74k, i think this is how lenders valuation work, i.e they will lend you the amount they think its worth (valued at £74k so they lend you £74k), i might be wrong, so anyone with more info please correct me. Do you know how much your lender valued the property at?

No, the point of a property as security is they can repossess it if you don't keep up payments. If they lend you 74k, they have to recover the 74k + repossession costs + few months of missed interest payments while they chase and evict you.. hence needing a buffer of 10-15% 

Back in the days of 100% mortgages, the sentiment was that prices were booming so fast, that within a few months the property value would increase so they would have a buffer to cover the above. 

Tracet74

newsgroupmonkey_ said:

Just had a chat with the Missus (she's in the game). Firstly, your Homebuyers report should be in a certain format - to be undervalued that much, there would be at least one red condition rating on it. Could be something like electrics, gas or whatever.

Also, to put into context, a surveyor is expected to do 6 mortgage vals a day or 2 homebuyers, so a mortgage valuation is likely to be a "lovely, thank you" type looky round. A homebuyers, the surveyor will open the electric cupboard (and see whatever horrors lie beneath). They'll possibly inspect cupboards and so on.

However.......... your Dad is also partly right. If you've instructed a local independent surveyor, they will value down. They can't take the risk. Whereas one of the "big four" are more likely to take the risk that the place is worth what you're paying for it. Nearly 20% difference is huge though.

I know someone else asked, but what does the homebuyers report actually say?

Sorry but I need to disagree.  You can have a property which is in perfectly acceptable condition but the purchase price is not supported by the surveyor.  Every single HomeBuyer Report I've seen (thousands!!) have Condition Rating 3's, purely because of the health and safety risk within Services.  This does not have an impact on value.

Crashy_Time

saajan_12 said:

FTB_Help said:

Alicefisk1235 said:

I understand that my mortgage lender thinks it’s valued correctly however as mentioned above this survey was a lot more detailed. They would be valuing it this much for no reason surely? 

From my understanding your lender is happy to lend you £74k (you have £15k deposit?) If this is the case then maybe your lender valued the property around £74k too which is why they were happy to lend you £74k, i think this is how lenders valuation work, i.e they will lend you the amount they think its worth (valued at £74k so they lend you £74k), i might be wrong, so anyone with more info please correct me. Do you know how much your lender valued the property at?

No, the point of a property as security is they can repossess it if you don't keep up payments. If they lend you 74k, they have to recover the 74k + repossession costs + few months of missed interest payments while they chase and evict you.. hence needing a buffer of 10-15% 

Back in the days of 100% mortgages, the sentiment was that prices were booming so fast, that within a few months the property value would increase so they would have a buffer to cover the above. 

Yes, sentiment now though is the total opposite I would say.

newsgroupmonkey_

Tracet74 said:

Sorry but I need to disagree.  You can have a property which is in perfectly acceptable condition but the purchase price is not supported by the surveyor.  Every single HomeBuyer Report I've seen (thousands!!) have Condition Rating 3's, purely because of the health and safety risk within Services.  This does not have an impact on value.

OK, what I said was the basics.

This could be a whole afternoon's conversation about what the bank are willing to lend on based on the property value vs what a homebuyers might suggest things that you need to do to bring up to 21st century standards and what the actual value of the house could be.

But then this is why there are 2 differences in opinion - much like yours and hers (and yes, she's also seen thousands and works for most of the big lenders).

KathysBoy

I spoke to four surveyors in the West Midlands on Monday, and three of them told me that they were not doing valuations on Homebuyer reports at the moment. 

I think this is a fairly recent change, as I had a Homebuyers report about a month ago, which included a valuation. Interestingly the value on the Report was the agreed price whereas the mortgage valuation (desktop, with review by local surveyor) was about 6% below. Unfortunately the deal fell through vendor  illness.

Crashy_Time

davidmcn said:

Is this the £89k one you were talking about on your previous thread? If you're convinced that it's worth that much, you might first want a chat with your surveyor about why they think you're paying 20% over the odds.

Are we able to see a link to the house?

[Deleted User]

Thank you all for your input! 

I know a few of you are asking if there was anything in the report to say why the valuation was so low and honestly there wasn’t. No reds and the other recommendations were minor. 

Also I have emailed the guy a number of times asking for more information on this and he’d no reply. Bad choice Of company by me I think haha! 

I’ve had the vendors survey and they’ve valued it at £90,000 and it was a physical valuation 

im planning on keeping the house in the long run as a renal for years to come so I’m hoping it won’t matter so much by that point. 

Thanks again all 

Crashy_Time

You are buying it as a rental?

[Deleted User]

Crashy_Time said:

You are buying it as a rental?

No