Does a Down Valuation matter?

yellowpollycat

We're moving and have been offered a mortgage within 2 days (we need less than 30%).  However the valuation on the offer is £100k less than the asking price (I thought it was a typo!).  Apparently it was an AVR - automated and completed online.  We're happy with the price we've offered and it is comparable with others on in the area.  It also hasn't made any difference to the interest rate we're paying.  If we accept the offer, accepting this valuation, will it come to bite us at some time in the future?  Or should we request a physical valuation?

JJR45

yellowpollycat said:

If we accept the offer, accepting this valuation, will it come to bite us at some time in the future?  Or should we request a physical valuation?

Only if found to be correct when you sell in the future. But if you are confident you are not overpaying it should be fine.
Get a valuation done with your building survey to be sure. If both come out around the same I personally  would be worried (unless it was a £1m+ house)

user1977

The lender's valuation can't "bite" you, it's just a bit of information used by the lender for their own purposes. Entirely up to you whether you're comfortable with your own assessment of the value or want to instruct your own valuation.

GDB2222

It won't bite you, but it would make me wonder whether I was over-paying. In your position, I would want to pay for a surveyor to value the property for my own benefit. With a 30% mortgage, the lender doesn't care either way.

Crashy_Time

GDB2222 said:

It won't bite you, but it would make me wonder whether I was over-paying. In your position, I would want to pay for a surveyor to value the property for my own benefit. With a 30% mortgage, the lender doesn't care either way.

Exactly, so with more skin in the game would they have "down-valued" even more? I think you need to be careful not to overpay for this house.

RelievedSheff

With so much equity the down valuation really doesn't matter. It is a paperwork exercise for the lenders.

If you are happy with the price you have agreed then there is no reason you can't proceed.

lookstraightahead

Do you know why they valued it so differently? 

Crashy_Time

RelievedSheff said:

With so much equity the down valuation really doesn't matter. It is a paperwork exercise for the lenders.

If you are happy with the price you have agreed then there is no reason you can't proceed.

Really? You should just throw money away because you have some?

yellowpollycat

lookstraightahead said:

Do you know why they valued it so differently? 

No - the Yopa valuation puts it at 30K below based on postcode and price bought.  However, it has been modernised to a very high spec over the last 10 years by the owners.  HSBC have refused to complete a physical survey as it won't affect the mortgage offer.

Crashy_Time

How is the seller reacting to the 100k value drop?

Thrugelmir

yellowpollycat said:

lookstraightahead said:

Do you know why they valued it so differently? 

However, it has been modernised to a very high spec over the last 10 years by the owners. 

Expensive fittings, fixtures and finishes are a personal choice. Doesn't necessarily add value. When some 20% alone of the expenditure is accounted for by VAT.