house down valued - confused

green_pea_2

Hi all,
I'm new here, nice to meet everyone
So me and my partner are buying our first home. We had an offer accepted at 202K, asking price was 200K so we offered 2K over asking as the property was quite popular - they had something like 20 viewings a day booked. It's a 1930s mid-terrace in a great location, and in good condition. Really cute inside, lovely garden (landscaped professionally just two weeks ago), although no new kitchen or bathroom - I'd say they're roughly 10 years old.

The bank's surveyor went in today and we literally just got a ring now that the house has been down valued by 15K. Apparently, a few properties in the immediate vicinity sold in the last couple months for cheaper (around 185-190K) or those that sold for the same asking price as ours but had much better specs (new boiler, new kitchen, new bathroom, front garden turned into drive etc). We couldn't have guessed about the prices, as we went by sold prices of a few years ago, and the price increase seemed fair given that we're in a competitive area in "buoyant market" as the EAs put it, and all those similar properties in the vicinity were advertised for the same asking price, at 200K (obviously with them having sold in the last 2 months, we can't know how much they actually went for)

The same surveyor is also doing our Homebuyers Report and will turn that around next Monday. I had a chat with them today and they were very professional and thorough, explained everything to me very clearly, and in fact they explained they have plenty of comparison data to be sure that their valuation is in fact correct. So we're now stuck thinking about it with my partner. 

What I'm really confused about is this - in a fictional ideal world where the vendors would indeed knock 15K off the price (LOL! unlikely), would that be on top of anything sinister highlighted in the Homebuyers? Apologies if I'm asking something really stupid. What I'm asking is could I use the Homebuyers (when I see it) to discuss price reduction with the vendors, or is this science fiction on my end?

The way I understood this is that the surveyor is saying that the market value is actually at 187K (edited), according to them - so I'm looking at it now as this is the starting point of negotiations. Now, if the house also needs a new roof and damp course, is it science fiction to think that I could negotiate an additional discount?

I'm stuck in anxious overthinking mode, because I'm thinking that essentially the Homebuyers will be useless to me even if it all comes back red - as the vendors will be freaking out because of the valuation anyway.

I still don't know whether I explained this properly... Hopefully we can have a useful chat and I can understand this a bit more. Many thanks!

user1977

Both the surveyors have valued the house in its current condition, so no, it's not really legitimate to take that value and then knock even more off it to fix the problems they've found.

Crashy_Time

green_pea_2 said:

Hi all,
I'm new here, nice to meet everyone
So me and my partner are buying our first home. We had an offer accepted at 202K, asking price was 200K so we offered 2K over asking as the property was quite popular - they had something like 20 viewings a day booked. It's a 1930s mid-terrace in a great location, and in good condition. Really cute inside, lovely garden (landscaped professionally just two weeks ago), although no new kitchen or bathroom - I'd say they're roughly 10 years old.

The bank's surveyor went in today and we literally just got a ring now that the house has been down valued by 15K. Apparently, a few properties in the immediate vicinity sold in the last couple months for cheaper (around 185-190K) or those that sold for the same asking price as ours but had much better specs (new boiler, new kitchen, new bathroom, front garden turned into drive etc). We couldn't have guessed about the prices, as we went by sold prices of a few years ago, and the price increase seemed fair given that we're in a competitive area in "buoyant market" as the EAs put it, and all those similar properties in the vicinity were advertised for the same asking price, at 200K (obviously with them having sold in the last 2 months, we can't know how much they actually went for)

The same surveyor is also doing our Homebuyers Report and will turn that around next Monday. I had a chat with them today and they were very professional and thorough, explained everything to me very clearly, and in fact they explained they have plenty of comparison data to be sure that their valuation is in fact correct. So we're now stuck thinking about it with my partner. 

What I'm really confused about is this - in a fictional ideal world where the vendors would indeed knock 15K off the price (LOL! unlikely), would that be on top of anything sinister highlighted in the Homebuyers? Apologies if I'm asking something really stupid. What I'm asking is could I use the Homebuyers (when I see it) to discuss price reduction with the vendors, or is this science fiction on my end?

The way I understood this is that the surveyor is saying that the market value is actually at 200K, according to them - so I'm looking at it now as this is the starting point of negotiations. Now, if the house also needs a new roof and damp course, is it science fiction to think that I could negotiate an additional discount?

I'm stuck in anxious overthinking mode, because I'm thinking that essentially the Homebuyers will be useless to me even if it all comes back red - as the vendors will be freaking out because of the valuation anyway.

I still don't know whether I explained this properly... Hopefully we can have a useful chat and I can understand this a bit more. Many thanks!

Not if they have down-valued (or in reality, valued) it at 15k less? What the seller would like for it is nether here nor there to your lender.

hazyjo

Surely it's been valued at £187k not £200k? Or did you mean EA when you said surveyor?

I'd be far more likely to drop the price as a result of a down-valuation than a survey. Use it and try. Do you have the cash to make up the difference if they won't drop or will only agree to drop a percentage?

green_pea_2

Crashy_Time said:

green_pea_2 said:

Hi all,
I'm new here, nice to meet everyone
So me and my partner are buying our first home. We had an offer accepted at 202K, asking price was 200K so we offered 2K over asking as the property was quite popular - they had something like 20 viewings a day booked. It's a 1930s mid-terrace in a great location, and in good condition. Really cute inside, lovely garden (landscaped professionally just two weeks ago), although no new kitchen or bathroom - I'd say they're roughly 10 years old.

The bank's surveyor went in today and we literally just got a ring now that the house has been down valued by 15K. Apparently, a few properties in the immediate vicinity sold in the last couple months for cheaper (around 185-190K) or those that sold for the same asking price as ours but had much better specs (new boiler, new kitchen, new bathroom, front garden turned into drive etc). We couldn't have guessed about the prices, as we went by sold prices of a few years ago, and the price increase seemed fair given that we're in a competitive area in "buoyant market" as the EAs put it, and all those similar properties in the vicinity were advertised for the same asking price, at 200K (obviously with them having sold in the last 2 months, we can't know how much they actually went for)

The same surveyor is also doing our Homebuyers Report and will turn that around next Monday. I had a chat with them today and they were very professional and thorough, explained everything to me very clearly, and in fact they explained they have plenty of comparison data to be sure that their valuation is in fact correct. So we're now stuck thinking about it with my partner. 

What I'm really confused about is this - in a fictional ideal world where the vendors would indeed knock 15K off the price (LOL! unlikely), would that be on top of anything sinister highlighted in the Homebuyers? Apologies if I'm asking something really stupid. What I'm asking is could I use the Homebuyers (when I see it) to discuss price reduction with the vendors, or is this science fiction on my end?

The way I understood this is that the surveyor is saying that the market value is actually at 200K, according to them - so I'm looking at it now as this is the starting point of negotiations. Now, if the house also needs a new roof and damp course, is it science fiction to think that I could negotiate an additional discount?

I'm stuck in anxious overthinking mode, because I'm thinking that essentially the Homebuyers will be useless to me even if it all comes back red - as the vendors will be freaking out because of the valuation anyway.

I still don't know whether I explained this properly... Hopefully we can have a useful chat and I can understand this a bit more. Many thanks!

Not if they have down-valued (or in reality, valued) it at 15k less? What the seller would like for it is nether here nor there to your lender.

Oops sorry, the part of my post that you have formatted in bold should obviously read "187K"

Sorry, head spinning after all this!

green_pea_2

user1977 said:

Both the surveyors have valued the house in its current condition, so no, it's not really legitimate to take that value and then knock even more off it to fix the problems they've found.

Oh right, ok, thanks for explaining. 

green_pea_2

hazyjo said:

Surely it's been valued at £187k not £200k? Or did you mean EA when you said surveyor?

I'd be far more likely to drop the price as a result of a down-valuation than a survey. Use it and try. Do you have the cash to make up the difference if they won't drop or will only agree to drop a percentage?

We do have some cash yes, but I'm not inclined to pump my savings into this purchase. Doesn't seem like a very wise move, both in the short and in the longer term. I feel for the vendors as they'll have trusted the EAs optimistic valuation and they may need the full amount. I'm thinking it's unlikely they'll drop significantly. I'm an empath so I'm feeling very bad as they're in a chain (we are renting), but there's no way I'm pumping my savings into this purchase - especially if a surveyor has explained they have plenty of very recent comparable data to show we're definitely overpaying. Ugh

ele_91

It’s very common to get a down valuation when prices are rapidly rising. In the eyes of the lender, if you default on the loan, they need to be certain they will recoup their money when they have to sell it. This is why they are very cautious especially if you have a small deposit.

Your options are to ask the vendor to reduce to the full amount (unlikely IMO), meet them halfway with your savings or walk away. They will most likely find a new buyer quickly if what you say is true. Buyers with larger deposits will probably find they can get the loan to cover the full asking price so I doubt the property is unsellable. 

green_pea_2

ele_91 said:

It’s very common to get a down valuation when prices are rapidly rising. In the eyes of the lender, if you default on the loan, they need to be certain they will recoup their money when they have to sell it. This is why they are very cautious especially if you have a small deposit.

Your options are to ask the vendor to reduce to the full amount (unlikely IMO), meet them halfway with your savings or walk away. They will most likely find a new buyer quickly if what you say is true. Buyers with larger deposits will probably find they can get the loan to cover the full asking price so I doubt the property is unsellable. 

We have a 15% deposit, which hopefully isn't considered small! Our bank described us as the perfect candidates and application was approved within 13 hours or so. So I'd say we're definitely not a risky mortgage. 

No, property definitely isn't unsellable, it's a cute home. Not cute enough for us to pay a significant shortfall from our pockets, but maybe someone else will. Unlikely though as it's a small starter home, so my guess is that the other prospective buyers could even have 5% deposits, and less savings. Anyway that's guesswork.

The EA even said we weren't the highest bidders, but we were the best candidates with our strong DIP. Oh well. It is what it is. 

AdrianC

So you've offered £202k, with 85% LtV - £171.7k - mortgage.

The lender's going to view that as just under 92% LtV. Will they lend you that much?

Redwino222

I can give you a sellers perspective.  I am selling to first time buyers and had a lot of offers on my house.  Theirs wasn’t the highest but I wanted a quick sale so I went with them.  I feel they got a good price. 

 I was clear with the estate agent that should their mortgage valuation come in as lower I would not drop the price - I viewed this as their problem not mine.  They could either make up the difference or I would move on to another buyer.  

The valuation was actually fine - in fact the guy who came out told me is was a very good deal (which made me feel a bit crap😂😂).

certianly try and negotiate, but be prepared for them to say they won’t drop it - or won’t drop it by the full amount. 

The banks valuation really only impacts people who have a small deposit.  It is the downside of selling to first time buyers.  The upside is they are chain free.