Independent survey valuation lower than mortgage valuation

alice_1991

I'm a first time buyer and have had an offer accepted on a one bed flat at £158k. Had my mortgage offer through and they also valued it at £158k. Then I had an independent RICS survey done and it was valued at £150k.

Should I make a new offer to the sellers of £150k? I'm putting my life savings into this flat and don't want to pay more than its worth - and £8k i seems like a big difference for such a small flat - particularly as the housing market seems a bit all over the place at the moment. 

Any advice?

greatcrested

No. You agreed a price, not stick by your promise.

Valuations are not gospel. There is no 'right' valuation, just opinions.

You were happy to pay 158. Your mortgage lender is happy with that too, and will lend you the money.

alice_1991

greatcrested said:

No. You agreed a price, not stick by your promise.

I didn't make any promises. I made an offer and ive now received new information that the flat isn't worth what I thought it was. 

My concern is that if I stick to that now, it could leave me in negative equity if the RICS valuation turns out to be right.

Surely I'm not the only person this has happened to. What do people normally do in this situation?

tink_1983

What did the survey say to reduce the value ?
If there is work to be done potentially you have wiggle room.
But  also these reports are always worst case scenario and one persons view. 
The bank valued it and are content so I'd not fret unless there was alot of work needed 

greatcrested

alice_1991 said:

greatcrested said:

No. You agreed a price, not stick by your promise.

I didn't make any promises. I made an offer and ive now received new information that the flat isn't worth what I thought it was.

have had an offer accepted

Price offered/price accepted. What is that if not a promise to buy/sell at the price agreed. We can debate semantics, but if you now change your offer you are going back on that agreement.

if I stick to that now, it could leave me in negative equity if the RICS valuation turns out to be right.

and if property prices soar when the pandemic is brought under control, or now that Brexit is resolved, you'll be quids in. Future property prices are always an unknown. Because of the nature of property sales there is always an element of uncertainty till Contracts are Exchnged, and hence trust in the other party's sincerity is required. By going back on your (promise? offer? agreed price? whatever) you call that trust into doubt and show yourself to be a woman of straw.

davidmcn

Valuation isn't an exact science. Split the difference and it's £154k +/- 2.6%, which is well within normal margins of error. Obviously that works both ways, but I wouldn't focus too much on £158k being the "wrong" price.

CSL0183

So you have one valuation at £158k and one at £150k. 

Why would you reduce your offer to £150k when there’s two valuations there? Do you think that would be fair to go with your low valuation rather than their high valuation? You’re right and they’re wrong? 

The valuations are based upon one persons opinion, it’s not an exact science. I think what most people would do with two valuations would be to get in the middle of both of them. In this case at £154k. However what would happen if a 3rd valuation come in at £165k then you would be back at your £158k? 

I think as you have offered £158k and the bank have valued it at £158k then the 2nd valuation is just another opinion but that doesn’t mean that it’s the right one. 

onylon

RICS surveyers tend to be conservative in their valuations. I'm looking at property in Scotland at the moment where the seller has to provide a home buyers survey including a valuation. A typical offer at the moment would be the RICS valuation plus 5 to 10%.

You can use the survery to try and negotiate the price down but you might find yourself with no discount and a hostile seller who wont be willing to do you any favours later. Did the survey dig up any issues that would strengthen your argument?

AdrianC

There have been five opinions so far as to value...
1. The EA's opinion, which the vendor used to set the asking price.
2. The vendor's opinion, which started off at the asking price and finished up at the offer they accepted.
3. Your opinion, the amount you offered.
4. The lender's surveyor's opinion.
5. Your surveyor's opinion.

Three of those agree - £158k.
One of them is 5% lower - £150k.

Who is to say any one of them is more or less accurate than any of the others?

lookstraightahead

The question is, what did the valuation say? New roof? Damp? Dodgy walls? Maintenance stuff over the next 3-5 years? 
Sometimes it's worth renegotiating - if you need a a new roof immediately for example - but other stuff is just what you would expect as a homeowner.

i agree valuations are all over the place. So you need to think long term, and whether it is worth that value to you.

SMR710

And this is exactly why I would never view a FTB as a preferred buyer.. £8k over 25 years (assuming it's a 25 yr mortgage) with a 2% interest rate is £27 a month.
If the valuation came back at +8k would you be offering to pay more? Nope! 
Plus the bank valuation agrees with your offer. If you go back now to renegotiate for the sake of ~£27 a month and have it agreed by the vendor, then you will have to inform the bank and wait for them to issue a new mortgage offer for the lower amount.