Help! Property valued 50k less than offer!!

Crashy_Time

hellomoto123 said:

Hi everyone

New here, just wanted to know if any of you had similar experience.
I made an offer on a property which was advertised £425k , there was 6 offers and we were selected by the vendors, we offered 428k.
However we had a valuation back from the lender and homevuyers report, he said the place is only worth 375k. He said 2 semi detached homes on the same road sold at around 390k last year. The property we are buying is terraced which needs lots of work and he reckons around 25k worth of work.

We really like the property and its the 4th home we put an offer on. Do we walk away, 50k is alot for the vendor to accept losing. Would you accept losing 50k for your property?  The property tried to sell 2 years ago, but didn't sell due to subsidence which she fixed and has certificates for.

I think you answered your own question there, but be cautious, are you sure 50k is enough of a discount for this house?

BikingBud

hellomoto123 said:

Hi everyone

New here, just wanted to know if any of you had similar experience.
I made an offer on a property which was advertised £425k , there was 6 offers and we were selected by the vendors, we offered 428k.
However we had a valuation back from the lender and homevuyers report, he said the place is only worth 375k. He said 2 semi detached homes on the same road sold at around 390k last year. The property we are buying is terraced which needs lots of work and he reckons around 25k worth of work.

We really like the property and its the 4th home we put an offer on. Do we walk away, 50k is alot for the vendor to accept losing. Would you accept losing 50k for your property?  The property tried to sell 2 years ago, but didn't sell due to subsidence which she fixed and has certificates for.

Is the vendor really losing 50K?
Did they pay £425K and anything below that means they have lost hard cash, or is it just time for a reality check? They perceived it should raise at least £425k you offered more as you felt the need to buy and had FOMO but professionals have suggested £50K less.
It's all up to you and what you think it is worth, do you keep feeding the monster or follow the professional advice?

So they tried selling at the same price, £425K, 2 yrs ago? With an accepted subsidence problem, seems their aspirations are some way from reality!

AdrianC

hellomoto123 said:

AdrianC said:

You thought it was worth £425k. What changed?

Do you have enough equity that you can still afford to purchase with the LtV of your mortgage based on £375k?

Yes, whats changed is we won't be able to get the mortgage due to the low valuation

Not at all, or just not enough? How much equity do you have?

Let's say you were looking at a £300k mortgage against £425k offer. That's a tad over 70% LtV.
At £375k valuation, you would almost certainly still be able to borrow £300k - but the lender would simply view it as 80% LtV.

and then potentially end up in negative equity

Negative equity is where you owe more than the property is worth. Not below what you paid...
That is very, VERY unlikely...
What are the chances, in my assumed example above, of the value falling to below £300k?

Of course, if you needed an 85% LtV mortgage at £425k, £360k borrowed, the lender will view that as 96% LtV... So long as you're borrowing less than £320k, 85% at £375k, you should be fine.

Remember - there's three people's opinions of the value so far.
Two agreed on £425k. You and the vendor.
The third disagrees, and says £375k - unfortunately, he's the lender's valuer.

Crashy_Time

AdrianC said:

hellomoto123 said:

AdrianC said:

You thought it was worth £425k. What changed?

Do you have enough equity that you can still afford to purchase with the LtV of your mortgage based on £375k?

Yes, whats changed is we won't be able to get the mortgage due to the low valuation

Not at all, or just not enough? How much equity do you have?

Let's say you were looking at a £300k mortgage against £425k offer. That's a tad over 70% LtV.
At £375k valuation, you would almost certainly still be able to borrow £300k - but the lender would simply view it as 80% LtV.

and then potentially end up in negative equity

Negative equity is where you owe more than the property is worth. Not below what you paid...
That is very, VERY unlikely...
What are the chances, in my assumed example above, of the value falling to below £300k?

Of course, if you needed an 85% LtV mortgage at £425k, £360k borrowed, the lender will view that as 96% LtV... So long as you're borrowing less than £320k, 85% at £375k, you should be fine.

Remember - there's three people's opinions of the value so far.
Two agreed on £425k. You and the vendor.
The third disagrees, and says £375k - unfortunately, he's the lender's valuer.

And he makes the market, the other two opinions are just noise.

Crashy_Time

BikingBud said:

hellomoto123 said:

Hi everyone

New here, just wanted to know if any of you had similar experience.
I made an offer on a property which was advertised £425k , there was 6 offers and we were selected by the vendors, we offered 428k.
However we had a valuation back from the lender and homevuyers report, he said the place is only worth 375k. He said 2 semi detached homes on the same road sold at around 390k last year. The property we are buying is terraced which needs lots of work and he reckons around 25k worth of work.

We really like the property and its the 4th home we put an offer on. Do we walk away, 50k is alot for the vendor to accept losing. Would you accept losing 50k for your property?  The property tried to sell 2 years ago, but didn't sell due to subsidence which she fixed and has certificates for.

Is the vendor really losing 50K?
Did they pay £425K and anything below that means they have lost hard cash, or is it just time for a reality check? They perceived it should raise at least £425k you offered more as you felt the need to buy and had FOMO but professionals have suggested £50K less.
It's all up to you and what you think it is worth, do you keep feeding the monster or follow the professional advice?

So they tried selling at the same price, £425K, 2 yrs ago? With an accepted subsidence problem, seems their aspirations are some way from reality!

Yes, certainly does seem that way.

Mutton_Geoff

hellomoto123 said:

The property tried to sell 2 years ago, but didn't sell due to subsidence which she fixed and has certificates for.

And how do you think the vendor chose the firm to do the work? The one with the best reputation for quality of work or the lowest price? I would walk away.

numbercruncher8

If you're going to sell in a few years and negative equity is a fear then you should stay away from paying £50k above a valuation.
If you post a link to it, or even a similar house in the vicinity you may get better help; it's impossible to really say whether you're over or under paying without that information.

Crashy_Time

Yes, without links it is impossible to give you the help you need.

GDB2222

It’s been a frustrating experience so far, trying to buy a home. We can all see that. But paying £50k over the odds is a poor life choice.

You have had a lucky escape. Or maybe not a lucky escape. Just a surveyor doing the job you paid him to do.

[Deleted User]

@AdrianC, would you seriously continue the purchase of a property at the original offer price when the mortgage valuation came in at £50k less based on recent sold prices of two much more desirable properties? I wouldn’t. 

@hellomoto123, do you know that you can view recent sold prices yourself online? Perhaps that something you should do before making any more offers. Also, if a property has been on the market for a long time at a certain price and isn’t selling it means the vendors are asking more than it’s worth.