Independent survey valuation lower than mortgage valuation

numbercruncher8

Bank valuations may not be that vigorous - often they could just drive by and not go in, satisfied that the place exists enough to protect their lending. They work for the interests of the lender.

A survey you commissioned is as vigorous as you paid for - they do go in and check things and provide justification for their findings. They work for your interests.

More credence should be given to the latter, that is for sure. Where it may cause you problems is that reducing an offer may see you lose out on the deal - it depends how much you want it.

Further there is not enough detail to show why, there could be some very good reasons. For instance, if it is a block of homogenous flats and £150k is the ceiling price and several have sold for that, then £150k could be quite accurate. Or if there is something majorly wrong that needs fixing.

If you don't feel great about the housing market where you are, why not wait? Your own gut feeling about a property you know a bit about is certainly going to beat a load of strangers who know nothing about it.

The stuff about 'you promised' is quite nonsense I'm afraid and cuts both ways. There is a specific word for sellers who renege on a 'promise' to get a better price for themselves, gazumping. The equivalent gazundering I think describes someone who reduces because they know the seller is committed, not because their valuation came in at less.

alice_1991

lookstraightahead said:

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.

There was a problem highlighted in the survey around a problem with the roof meaning damp was coming into the bedroom. However when I went to view the flat the first time, the estate agent mentioned the seller had just paid a a few thousand in contribution to some work that needed doing on the roof (it's leasehold) but that it hadn't been completed yet. I've asked for more information about that but likely won't find out until next week. If it turns out this is an issue that is getting fixed I'd be happy to leave my offer as is but if it turns out there's ongoing problems with the roof I would be tempted to renegotiate.

I might not have the world's biggest budget and £8k might not seem like that much to a lot of people but I've worked really hard for over 10 years to save for this and can't afford to lose money on it. That's why I'm being cautious and asking for advice!

Caz3121

alice_1991 said:

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. 

you also have information that shows it is worth what you thought it was
If you are unsure, consider whether you want to proceed with the purchase or walk away. Maybe it it not the right property for you...my daughter is currently buying in Scotland and is paying £35k over the home report valuation (a lot of interest in the property and went to sealed bids) As it will be their family home for many years and a good price in comparison to similar sized properties they were happy to stretch. (given all the offers were a minimum of £25k over valuation you could maybe argue that the valuation was too low)

Chandler85

@alice_1991 I think you have answered the question at least.  Requiring roof work (which is causing damp) has meant they have reduced the valuation (the lender valuation won't know this).  Once you get the hopefully good news, that the vendor has paid for the work and the problem should be being fixed and when, then the other valuation seems correct.

If they cannot prove the work is going on and when, or that it has been paid for, tell them the RICS survey came back at 150k, because of the damp and the roof needing repair.  So you want to lower your offer to take that into account.

Good luck

alice_1991

numbercruncher8 said:

Further there is not enough detail to show why, there could be some very good reasons. For instance, if it is a block of homogenous flats and £150k is the ceiling price and several have sold for that, then £150k could be quite accurate. Or if there is something majorly wrong that needs fixing.

If you don't feel great about the housing market where you are, why not wait? Your own gut feeling about a property you know a bit about is certainly going to beat a load of strangers who know nothing about it.

The stuff about 'you promised' is quite nonsense I'm afraid and cuts both ways. There is a specific word for sellers who renege on a 'promise' to get a better price for themselves, gazumping. The equivalent gazundering I think describes someone who reduces because they know the seller is committed, not because their valuation came in at less.

It is a block of flats - but a nice conversion of an old building that was carried out 5 years ago. However the area directly around it is mostly houses and nothing comparable so it makes it difficult to tell how much it's worth or if there's a 'ceiling' price. One other one bed flat in the block sold for £152k in October 2019 (bought for £138k in 2015 -the same price my seller paid for theirs in 2015) but all the others in the block were bought pretty much straight away after the conversion so no way of truly knowing how much they're worth now.

There are two other one bed flats in the block that are up for sale - one has been on the market for about 6 months and recently was reduced from £165k to £160k (but comes with a parking space). The other was put on the market at the start of December at £160k (no parking space). Both of these are at the front of the building which I wouldn't consider due to the traffic noise so I wonder if that's why they've struggled to find buyers - but it could also be because the asking price is too high. Who knows! 

GDB2222

I don’t agree with the argument that you have promised, so you have a moral obligation to go ahead at the agreed price. That agreement was clearly on the basis that the valuation stacked up. So, if you do back out or renegotiate, you need feel no guilt at all.

 I don’t know what will happen to property prices generally, but small flats are more vulnerable to a drop than other types of property. It looks like we are heading for a second lockdown, and that’ll be difficult in a small flat.

lookstraightahead

SMR710 said:

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.

The £27 per month is immaterial if the survey shows something that needs fixing now and they do the have the spare income. This is why a structural survey is often so important. As it's such a little amount, maybe then vendor can pay it or they can meet half way.

GDB2222

As it’s such a small amount, surely some of the people here can chip in a few thou?

paul82uk

You are free to negotiate as much as you want albeit may delay the process or annoy sellers (that’s their problem)

in this instance you are talking about 5% difference which is £8k if this a quick flip that may play a part in you decision but if the flat is the right fit and there is nothing major from the RICS survey then you could lose the property.

if there is something stand out on the RICS survey (not cosmetic) flag that not the valuation difference and work around the estimate for a fix based on that. You have fresh evidence now which you was unaware of if you had previously known about this would it have altered your offer?

Crashy_Time

Definitely drop your offer price, how many other offers did they get?