House buying nightmare - buyers over offering and surveyors down valuing

BecsMags

I feel like I'm stuck in the middle of a nightmare house buying sandwich.

After years of thinking, we'd never be able to get a mortgage due to adverse credit, we bloody done it. Lack of houses in our area and a rush to get in before stamp duty has meant houses regularly going for over 25k of the guide price. We didn't want to get caught up in that. So when we had an offer accepted on a house for 380k which was on for 375 - 400k, happy days. A quick search on Zoopla showed house was worth 390k, we were feeling positive. But no, had the valuation report in today, valuing the house at 360k. We've been viewing properties enough in the past month or so, to know that even properties on for 350k are going for £375+ 

Stamp duty holiday and lack of houses on the market are pushing prices up and unknown future implications of covid, brexit etc are pushing valuations way done. We just feel so deflated at the moment. Unless you have fat deposit and can afford to pay over the odds, it feels like you have no chance. 

Anyone else having this problem?

Becs

justworriedabit

Hi OP

Sorry to hear about that but it is supply and damand. As the lenders know, prices may come down a bit after the stamp duty hols. The valuation is they want their money back should things go belly up, hence the valuation.

I hope it works out for you.

BecsMags

Thank you. 

Yes, definitely prices are going above what they are worth. Makes it so hard to buy as we only have 10% deposit, not much wiggle room. 

It may be worth us waiting a while, even though we'll miss out on stamp duty holiday. Otherwise, we could end up paying hundreds on valuations and being continual disappointed   

mortgage_noob

I'm  not sure which area you're looking in but £380k is a lot, can't you buy a smaller house so you have a lower LTV?

claneyuk

I'm a FTB - similar issue in that to secure property I had to offer higher. Come valuation - surprise surprise - was under purchase price. Agreed with vendor to meet halfway but it does mean parting with extra cash above the usual 10% deposit, which I completely understand is beyond most FTBs. 

NameUnavailable

Yes, I'm looking and have noticed that anything new to market is coming on at least 10% or more likely 20% more that recent sales of equivalent properties and some are even going under offer.

I'm also seeing lost just sticking, or eventually dropping in price but only by a small amount, and still sticking.

The banks are apparently trying to counter the Governments attempts to inflate the market but down valuing, which is essentially to protect the buyer - would you really want to get stuck in negative equity?!

I do think that there will be a cooling in the market in the coming months. Ideally i would like to hold on and see but am under pressure to find somewhere.

lookstraightahead

Yes it is all a bit strange. You would think that vendors realise this is going to happen and not keep pushing higher, and that buyers would walk away when it got silly.

The banks are being cautious and rightly so in my opinion. 

With just a 10% deposit I would go for something a lot less so that it decreases your loan to value. If you have about 38k maybe look at properties at £300k. 

We struggled to get a mortgage because we have a 'portfolio' of jobs rather than one full time one each so we had to go for a small mortgage. Glad we did.

AdrianC

Offer £380k, lender valuation £360k.

That's not a big difference at all - just over +/- 2.5% variation around a £370k centre.

Does it make a difference to the buyer's affordability?
If so, are you willing to reduce the agreed offer to a point they can still afford to buy?

Assuming they needed an ~85% LtV mortgage, about £325k, that would change it to 90% LtV - probably still proceedable.

BecsMags

Thanks all. We have 2 kids, boy and girl, so 3 bed is really only option. Also, they are both in nearby schools and as we both work they travel on public transport on their own to school, so moving further and cheaper can only be a plan c at the moment. 

We are on outskirts on London/Essex - crazy prices. There is pretty much nothing for 300k for 3 bed. The few 350k houses that we've seen have gone for over 375k, so stuck in the same loop. We could go in at 375, but then it will be down valued anyway. The house we offered on was up for 375-400, so we thought we were good to go with 380k. 

We are the buyer and unfortunately can't really go beyond our 10% deposit. Also, don't want to get caught up in paying way over the odds for something. 

We will find out today if the buyer wants to sell at 360k (everything crossed!) Otherwise back to the drawing board. It may be worth waiting until the stamp duty frenzy is over, we'll lose on stamp duty holiday but will hopefully get a more realistic price for a property. 

Thanks for all your comments. This has been a nightmare rollercoaster!

Becs

AdrianC

SDLT on a £380k property for a FTB will only be £4k after the holiday's over.

Your other option, of course, is to move a bit further out.

BecsMags

@AdrianC If this falls through, I think it will be worth waiting for the frenzy to die down. Don't want to get caught in a loop of paying for valuations and not getting a house. 

As we have kids that travel on buses to school, we can't move too far. Ashamed to admit I don't drive, so rely on public transport for schools and work. The eldest child coming into GSCE year, and son is under amazing SEN care at current school, moving schools is not really an option. 

Where we currently rent is great for us, so we are okay for the time being! 

Just waiting for that phone call to let us know the outcome!