BTL valuation

ohdarn

Hello everyone, I've yet another question.
A landlord is attempting to purchase our property and their lender has arranged a valuation of our property for Tuesday. It's with a company called Pinnacle Surveyors (whose online reviews seem to consist almost entirely of people who've had their property downvalued).
They're probably the same but is there a difference between a normal valuation and a buy-to-let valuation. I only ask as the person that was booking it mentioned it was a BTL valuation rather than a standard one?
And also, do they use SSTC properties to base the value against or completed properties only?
This parts a lengthly but incase you're interested, the reason I'm asking is because I'm just trying to gauge the likely hood of our property being downvalued. It's been over five months since we accepted our buyers offer for our property. They offered the asking price on the condition that we took it off the market that day (we had a bunch of viewings lined up for the next day).
The estate agent told us they'd got their mortgage sorted at about the same time as our mortgage offer came through for the property we are trying to buy. Because at the time (during a lockdown) we had our vendors valuation done remotely we'd thought the one for our property would have been done remotely (big mistake).
Anyhoo, fast forward to now and our buyer has been pushing for an exchange date and chasing their solicitors. Finally after much chasing, we've managed to get everything ready, enquiries received and answered, contracts signed and ready to sort an exchange date.......then our estate agent rings to tell us that our buyer hasn't actually got a mortgage offer yet and they still need to do a valuation.
Thing is, if it gets downvalued from the asking price, we can't move to meet it. We just don't have any more money left. So if it is downvalued, I don't know what to do. Part of me suspects it's a ploy to get the house for a cheaper price at the last minute because all the coveyancing work has been done and the assumption is we'd be less likely to back out now, but that would be, frankly, evil.
But I'm not sure why else it's taken this long to the buyer to get their mortgage offer in place?
The part where I ask about the value being based on SSTC properties vs completed properties is because the houses around us often get sold at auction. We're in a grid of terraced houses here and quite a few go for auction. Unfortunately the auction ones go for quite a bit less than those sold normally. There's only one regular sale in the past six months, the rest are lower valued auctioned ones (as far as I'm aware).
But when ours went up for sale, there were quite a few being sold through estate agents and al are around our price or higher and have sold. But none of them are showing up on Zoopla as completed yet, still only SSTC. So I worry they won't be counted when the valuer does their comparison.
Sorry for the long post, if I'm honest I just needed to write it down because at the end of this incredibly long and stressful journey, there's a giant mountain to climb and I really worried we aren't going to make it.
It's feels like we've been competing in an arduous hurdles race and then just before we cross the finish line someone's shot us.
Cheers.

davidmcn

The only difference a "BTL valuation" will have is that it will assess the market rent for the property.
Otherwise not much point fretting about the result. 

ohdarn

Thanks, the rentals in this area are usually about £550 per month. Why do they work out the rental income, is it to let the buyer know or does the lender need to know it for some reason?
As much as I'd like to though, unfortunately I don't think I can stop fretting.
If it goes wrong we'll lose several hundred pounds, we'll have to let down our vendor who's been super nice through the whole thing, we'll have to try and get the kids back into their previous school because we moved them to the new school at the start of the new year term (because everyone told us we'd be completed in mid-january) and we'll have to buy all our furniture again because we've sold everything as the vendor was leaving us his stuff.
Not to mention we'll be stuck in the area we absolutely despise for who knows how long.
Are valuers open to begging or bribery?

[Deleted User]

ohdarn said:

Thanks, the rentals in this area are usually about £550 per month. Why do they work out the rental income, is it to let the buyer know or does the lender need to know it for some reason?
As much as I'd like to though, unfortunately I don't think I can stop fretting.
If it goes wrong we'll lose several hundred pounds, we'll have to let down our vendor who's been super nice through the whole thing, we'll have to try and get the kids back into their previous school because we moved them to the new school at the start of the new year term (because everyone told us we'd be completed in mid-january) and we'll have to buy all our furniture again because we've sold everything as the vendor was leaving us his stuff.
Not to mention we'll be stuck in the area we absolutely despise for who knows how long.
Are valuers open to begging or bribery?

BTL mortgages usually require the rent to be 125%+ of the mortgage payments so that’ll be why it’s part of the valuation. 

ohdarn

Thanks for the clarification.
Bonus question:
If the property is downvalued, but the value is still higher than the bank is lending, is it still an issue?
As an example, if the house is bought for £100k but the valuer says it's worth £90k, but the bank is only lending £50k and the rest is the buyers deposit. Does the bank still insist on having the price dropped by £10k?
I'd guess they probably still do but it seems counter intuitive to me.

[Deleted User]

ohdarn said:

Thanks for the clarification.
Bonus question:
If the property is downvalued, but the value is still higher than the bank is lending, is it still an issue?
As an example, if the house is bought for £100k but the valuer says it's worth £90k, but the bank is only lending £50k and the rest is the buyers deposit. Does the bank still insist on having the price dropped by £10k?
I'd guess they probably still do but it seems counter intuitive to me.

The lender doesn’t insist on the price being dropped but the buyer might. If the shoe were on the other foot would you pay £100k for a property valued at £90k especially if it’s an investment property? 

The valuation would impact the buyer’s LTV and deposit. Taking your example further say I had £25k as a deposit then that would give me a 75% LTV if the property had been valued at £100k. However, the property has only been valued at £90k and as a BTL investor I can only borrow a maximum of 75% LTV which means I need a deposit of £22,500, the lender will allow me to borrow £67,500, leaving me with a £10k shortfall if I wanted to continue purchase a property valued at £90k for £100k. I'd still have £2.5k left from my original £25k deposit (£25,000 - £22,500) so that means I'd need to raid my piggy bank for an extra £7.5k.

ohdarn

Thanks for the explanation, I see how the deposit part works now.
Fingers crossed for tomorrow that it's valued at the asking price.
I'd feel a bit more confident if we didn't have rooms piled high with cardboard boxes.

ProDave

If your buyer waits this long to tell you he has not even got a mortgage offer yet, I would be putting it back on the market personally.

dimbo61

I can't understand why " your " estate agents stopped you from showing other potential buyers from viewing your home ?
Does it need a fair amount of work doing to bring it up to standard ? 
Rewire, new kitchen/bathroom, ñew uPVC double glazed windows ? Building work ?
The BTL investor has spent little so far without even a valuation after 5 months so don't be surprised if they try and drop the price at the last minute.
I would make it crystal clear to your estate agents that you won't entertain one penny off the price and the Estate agents will get Nothing if the sale falls through.
He wants your house for a reason.

[Deleted User]

BTL rental coverage is why the valuer needs to assess the rent. 

Its usually either 145% or 125% of the mortgage payments if rates were around 5.5%.   They use this to calculate the borrowing amount.  Loads of different ways of calculating it through, the above is just an example.  

For instance if you were buying a property for £150k and putting down a 25% deposit you would be borrowing £112,500

£112,500 *145% * 5.5% = £8972
£8972 /12 = £747.   

To get that mortgage on that calculation then a rent of at least £747/month would need to be on the valuation. 

Again there are loads of different ways of calculating that figure.  Some lenders might only need half the rent for the same borrowing amount (but with higher rates as bigger risk). Others might need more.  

ohdarn

ProDave said:

If your buyer waits this long to tell you he has not even got a mortgage offer yet, I would be putting it back on the market personally.

It's bizarre because like I mentioned, the buyer wanted to talk about completion dates and when we told him that we were waiting for his solicitor to send back enquiries he apologised for the delay and got onto his solicitor (this was all relayed through the estate agent).
Then they spring this on us.
The problem is that we're nearly at (or would be if it weren't for this) the point of exchange and it's been five months already, I'm not sure our vendors patience would stretch to waiting to find another buyer. Plus we're all packed up and ready to go, boxes everywhere, so the house doesn't look quite as good as it should.