Down valuing of property

Lisalou1219

Hi. I have just been told that the mortgage lender of the person buying my property have valued my house at 15k less that the offer I have accepted.. the valuation from the estate agency was between 10-20k more than the mortgage company valuation.. so I accepted an offer middle of the road.. 

Does anyone have any advice as to what I can do?? I can’t afford to take 15k less and am really annoyed that a valuation can be done without anyone visiting the property…? 

user1977

Do you have evidence that it's worth the agreed price? Is there a good reason why a visit would have made a difference to their opinion?

Lisalou1219

I don’t know what they go on and what evidence can help? It’s the first time I have sold a house and cannot understand how anyone can put a price on something without first looking at it? 

Redwino222

Did you have other offers on the property?  Is your buyer a first time buyer with a small deposit? 

Your buyer agreed a price.  If they now can’t afford that price because they have a small deposit then you need to decide whether to put the house back on the market or accept a lower price.

however don’t automatically take this on as your problem.  I was clear with my estate agent that I wanted a buyer with a decent deposit because when they bid the house up they were responsible for honouring that price.

There is a trend of people relying on bank valuations to negotiate lower prices - which is unfair on other people who would have been able to pay more but were bid out

Lisalou1219

Thanks. I did have other offers and he’s not a ftb.. I will go back and see what the estate agency says. 

I received an offer 5k above the one I accepted but went for this due to situation.. 
so frustrating 

AdrianC

It may not be an issue.

What proportion of the value is that £15k, and what is their mortgage LtV?

Let's say it's a £300k property, and they're looking at a £240k mortgage.
That's 80%, right?
No, because the lender are viewing it as a £285k property, so 83% LtV.

If they're happy to lend to 85%, there is no functional difference at all, except perhaps a slightly higher interest rate.

If, otoh, your buyer was already at the max they could borrow, they may be stuffed. They can ask for you to reduce the agreed price. You do not have to agree.

lookstraightahead

The valued doesn't need to really see the property - it's based on others around 'like' it. Things like interior decoration, new kitchens etc aren't usually taken into consideration.

as above, the important issue here is what LTV it is and whether the buyer is willing to pay over what it has been valued at.

it's happening a lot.

lookstraightahead

Lisalou1219 said:

Thanks. I did have other offers and he’s not a ftb.. I will go back and see what the estate agency says. 

I received an offer 5k above the one I accepted but went for this due to situation.. 
so frustrating 

Surely that would have been worse? 

lookstraightahead

Redwino222 said:

Did you have other offers on the property?  Is your butter a first time buyer with a small deposit? 

Your buyer agreed a price.  If they now can’t afford that price because they have a small deposit then you need to decide whether to put the house back on the market or accept a lower price.

however don’t automatically take this on as your problem.  I was clear with my estate agent that I wanted a buyer with a decent deposit because when they bid the house up they were responsible for honouring that price.

There is a trend of people relying on bank valuations to negotiate lower prices - which is unfair on other people who would have been able to pay more but were bid out

I don't know whether there's a trend of people relying on it, I think it's more a case that people get twitchy if the bank thinks their house is worth less.

pretamang

you could ask them to try again with a different lender - I did this when I was buying; the first valuation was almost 20% under the price we agreed but the 2nd valued it all the full offer price.

However different lenders often use the same valuers so it could well come out the same (or lower), therefore the buyer might not want to try this as they have to pay another valuation fee.

nicmyles

If you're confident in how you have priced the property, relative to recent sold prices on similar properties in the area, then it's for your buyer to figure out what impact the down-valuation has on their offer to you, and for you to make a decision about how far down you're prepared to move.

Other option is go back to your other offers, or back on the market. But it's up to you how hard you think it will be to find another buyer and how likely you think the problem is to repeat. If the same thing happens again, you may need to accept your valuation is too high for mortgage lenders.

All of this costs you time, of course, and you may feel there is a number below the current offer at which you'd be prepared to do a deal to avoid the hassle.

This happened to me as a buyer - I dropped my offer to the bank valuation and the vendor declined the offer. But after a couple of weeks of failing to find another buyer, they came back to me and we settled on £5k above the bank valuation - I had to make up the difference from savings (worth it in the long run as I was confident in the market over the short-term).