Mortgage valued house lower than agreed price - what to do next?

sophreeves

Hi,

We're in the process of buying a house - it was advertised for £330k, sellers accepted our offer of £316k, but our mortgage company has valued it at £295k.  We're not in the position to produce the extra cash (nor do we want to overpay for a house).  

I understand we could try renegotiate the agreed price (the sellers are getting a divorce and want out - we have no chain) - can this be done based purely on the mortgage's valuation?  Our mortgage advisor suggested we get a separate valuation (at an additional cost) to back up the renegotiation as he reckons the estate agent will argue that 'the mortgage company would say that'.  What are other peoples experiences with this?  I obviously don't want to spend more on another valuation if its not necessary and likewise if the mortgage company say no, they say no.

Our mortgage advisor did say if the separate valuation was significantly higher than the mortgage companies, we could use this to appeal their decision - has anyone successfully done this? 

Any advice appreciated! 

london21

Yes you can use the valuation to renegotiate. Nothing to lose by asking.

 

If the seller does not accept the lower valuation price and you do not have the extra cash to cover the shortfall, you will either have to look for another property or try another lender.

 

Personally if they do not accept the valuation price and no extra funds, will look for another property.

user1977

Presumably you had already done your own research about prices, rather than just working from the asking price? What made you think it was worth £316k?

Crashy_Time

Good question.

Brie

Mortgage valuations aren't always correct. 

One was done on MiL's flat for a buyer and the response was the price wasn't right for a new build block of flats.  MiL's flat was in a converted Victorian vicarage.  The person doing the valuation didn't know the difference and had the wrong address - the block of flats was the building next door.

NameUnavailable

Your options are, 1) renegotiate - it's probably unlikely the vendors will reduce that much, have you got funds to make up the difference? 2) ask your broker to find another lender - you may have to pay the new lenders valuation fee but if option 1 doesn't work for you then this is really the only other one for you. 3) withdraw and look for another property.

I very much doubt that the current lender will agree to accept a different valuation, they have used their surveyors and they aren't going to admit to being wrong, rather it's their surveyors opinion which may well differ from another surveyors but they will just claim the other valuation is wrong.

Crashy_Time

Chances are that in this climate the next valuation will still be a "down-valuation"?

lookstraightahead

If the vendors refuse it's highly likely that if they sold to someone else the same would happen again.

It's whether the vendors believe their house isn't worth as much as they think it is. 

Personally I would just let them know you can't afford to fill the gap.

Crashy_Time

Just politely let them know that it is overpriced.

Sunsaru

Without knowing the particulars about the house and comparables in the area the only advice I can give is to either try and renegotiate (maybe meet in the middle if you can) or walk. 

Of course you can try another lender or two if you think the house is worth it but I think you may already be overpaying.

NameUnavailable

lookstraightahead said:

If the vendors refuse it's highly likely that if they sold to someone else the same would happen again.

True, but it will probably have to happen a few times before they decide to accept the reality of the situation, or they just stay put and take it back off the market.