Mortgage valuation has come back less than our offer, how to approach it?

mattyprice4004

jimmyjammy001 said:

The estate agent and vendors have over valued their property and are likely just being greedy, they need to realise house prices are coming down, no doubt they've inflated it due to the stamp duty holiday, the next buyers will just have the same problem when it comes to the bank valuation. The sellers need to understand that. 

Well that's simply not true in many areas.

Crashy_Time

AdrianC said:

All valuations are just an individual's opinion.

The vendor asked an EA for their opinion on the value.
Between them, they came up with a figure they agreed on, and put it on the ad. That figure was £680k.
You viewed the property, and came up with a figure you liked. £660k. The vendor agreed on that figure with you, and the offer was accepted.
Now your lender has asked a surveyor for their opinion of a good lender-security value. They've come up with £620k.

Three different numbers, three different purposes. And, yes, there's £60k between them... But if you work on the agreed offer price, they're only -6% to +3%.

~5% isn't a bad margin for variation, is it?

Without a link we can`t tell, but I`m thinking the house was bought for well South of 600k not that long ago?

Thrugelmir

AC78 said:

So, do you think I should face into it now, rather than wait for my survey? 

Do you want to overpay for the property? 

MysteryMe

I would advise the EA of the situation and that you will make a decision based on the findings of your surveyor next week. This gives the EA time to speak to the vendor to prepare them for a revision in offer and also think of a work around. If they are buying another property they may be able to negotiate a lower price from their vendor.  If you really want this property then you will need to negotiate and the best way to negotiate is to keep it professional and friendly.  It may be that your vendor has a bottom line under which they can't move and this may be above the mortgage company valuation. If this is the case only you can decide whether you still wish to proceed or not. It is your money and your life. Hope it works out for you.

RTC87

I was recently in the situation with a similar situation albeit the down valuation was to the tune of £20,000. When trying to negotiate they originally refused, so we walked away. Fast forward 5 days later and the EA is on the phone hoping we can do a deal. In the end we agreed to overpay £5,000 with them accepting the £15,000 decrease to what was originally agreed. 

We were happy with that as it is a home we will hopefully be in for many years, but it was absolute most we would overpay. If we were moving to a home thinking we may move again 5 years later, I wouldn't be keen to overpay at all in that situation.

It comes down to what is the house worth to you. If you plan on staying there it less important as I see it.

Crashy_Time

Chances are the seller is expecting this, they probably had their own valuation done and decided to chance it, hoping someone would "fall in love" with the property. Call their bluff, make them reduce.

MysteryMe

I don't think it's productive and certainly isn't helpful to the OP to be making scenarios up in one's head.  The only people who knows whether the vendor's are chancing it / being greedy or any other name calling one wants to indulge in are the vendor and estate agent and as they are unlikely to be posting on this thread to confirm either way it's best to stick to what facts are known and offer advice based on them.

iampetesmith

This happens a lot now, it happened to us when we bought ours but the difference was only 5k. All it means is the lender doesn't think it's worth the amount you're asking to borrow, so basically your options are this:

1. Pay a bigger deposit to cover the difference, so that the lender only has to lend the amount they're willing to

2. Re-negotiate the price with the vendor to what the lender have valued the property as

3. Walk away and find somewhere else

Usually option 2 works, but with the size of the difference you might have to meet them in the middle and pay a bigger deposit anyway. They'll probably realise that another buyer will have the same problem when they get to the valuation, so they might be willing to negotiate because of this. If not, then the only other option is to walk away.

hannah021

I wouldnt have instructed a surveyor, 60k is a lot of money even if it looks small in %

your bank said 620, take it up with the EA to reduce the price or leave.

what would you do if your surveyor says 660?

AC78

hannah021 said:

I wouldnt have instructed a surveyor, 60k is a lot of money even if it looks small in %

your bank said 620, take it up with the EA to reduce the price or leave.

what would you do if your surveyor says 660?

I guess this is the conundrum right, they could value it higher than the lender has, there is more peace of mind/feeling of being slightly less exposed if that was to happen. 
I booked my surveyor as there was a fairly long waiting time at that moment, but i am can cancel without losing any money, should i choose to do that.
Lots of sound advice on here, I will speak to the vendor, need to decide whether to just do it after my own survey comes back.