What should I do with bank "Down valuation"?

amsjrt

Hi guys,

I am currently in the process of mortgage application, and my lender, Natwest has completed the mortgage valuation and it came out £65k below the agreed purchase price of £920k, i.e. "down valuation" of £65k. I am really surprised with this.

Can I check if anyone has any experience with bank "down valuation" and is this common? I suspect it is possible as bank valuation is generally more prudent, but I am surprised that the gap is so large at £65k. Again is this level of gap common?

I really like the house and with current house prices growth last year and this, it is really difficult to know what is a fair price.

I spoke to my mortgage broker and he said it is difficult to appeal against the bank valuation. I went back to the vendor but he refuses to reduce anything and insist that it is a fair price. 

What should I do now? Many thanks for any advice.

 

Alter_ego

Not much you can do really. Either make up he difference or look elsewhere.

Thrugelmir

amsjrt said:

but I am surprised that the gap is so large at £65k. Again is this level of gap common?



 

Expressed as 7% ,  doesn't appear anywhere near as large.  Have you had an opportunity to speak to the surveyor? 

[Deleted User]

Why did you decide to pay £920k?  Because the estate agent said it was worth that?  or did you have recently comparable data to make your decision. 

Ultimately the banks surveyor is a qualified surveyor, estate agent is a sales person.  

If you have got comparable data that backs up why you offered £920k then possibly an appeal might be allowed.  If you dont then some random person might have just saved you £65k

user1977

£65k is "large" in most contexts, but not when talking about a very expensive house. Assuming the "real" answer is halfway between the figures, it's £887,500 +/- 3.7%. Which is within the normal margin of error for valuations, so not necessarily all that significant.

amsjrt

Thrugelmir said:

amsjrt said:

but I am surprised that the gap is so large at £65k. Again is this level of gap common?



 

Expressed as 7% ,  doesn't appear anywhere near as large.  Have you had an opportunity to speak to the surveyor? 

Thanks. So in terms of %, what is the normal range of the gap? I still think 7% is large. Do you mean I can speak to the bank appointed surveyor? I did not know if I can speak to the surveyor.

amsjrt

Deleted_User said:

Why did you decide to pay £920k?  Because the estate agent said it was worth that?  or did you have recently comparable data to make your decision. 

Ultimately the banks surveyor is a qualified surveyor, estate agent is a sales person.  

If you have got comparable data that backs up why you offered £920k then possibly an appeal might be allowed.  If you dont then some random person might have just saved you £65k

To be honest, this is basically based on what is the asking price and what we can afford. There is none (or very few) similar properties advertised in the past 1-2 months, so I am not sure if it is over-priced or not. So I don't have any comparable data to justify this figure. I was expecting that the asking price is fair to certain extent. 

I did try to find comparable properties and maybe there is 2-3 properties within 0.25 miles of similar properties, 2 are in the region of £700k to £800k and one in the region of £900k+. I am wondering if this is due to lack of comparable properties?? 

amsjrt

user1977 said:

£65k is "large" in most contexts, but not when talking about a very expensive house. Assuming the "real" answer is halfway between the figures, it's £887,500 +/- 3.7%. Which is within the normal margin of error for valuations, so not necessarily all that significant.

In terms of % difference, what is the normal margin of error for valuation? I read in some articles that a lot of down valuations are roughly £5k to £10k on average. So assuming this is based on average UK property price of £250k, this is £20k to £40k for a £1m property. Here I am seeing £65k, so this looks larger than expected?? 

julicorn

You have a few options really:

- Stick with the original price (either by making up the additional money from your own savings, or by accepting a higher LTV from your lender)
- Negotiate a reduction based on the valuation (the vendor might be willing to meet you somewhere between the two figures, or they might not)
- Walk away

Perhaps less likely to succeed:
- Dispute the valuation, by providing evidence of sales (not just listings, transactions that have gone through in the recent past)
- Go to a different lender who uses a different valuation company, and try your luck again. 

amsjrt

Thanks for all the advice received so far, I have actually instructed a (level 3) structural survey plus a valuation of the property last week. I have now got the survey report and it is giving a private guide price of £780k to £850k, plus some potential issues/repairs recommendations for the property.

Now I am really puzzled as we now have 2 qualified surveyors and one is giving £855k (bank surveyor) and one is £780k to £850k (level 3 structural survey), so this implies the property is over priced, correct?

With recent property price growth, do you think the surveyor has taken that into consideration, as I think I struggled to find similar property in the area within, say 0.25 miles. The reason is that most of the properties transacted are semi-D but the property I am buying is a Detached, with extensive loft conversion. My question is whether Surveyor could be undervaluing this property?

 

Thrugelmir

amsjrt said:

Now I am really puzzled as we now have 2 qualified surveyors and one is giving £855k (bank surveyor) and one is £780k to £850k (level 3 structural survey), so this implies the property is over priced, correct?



 

You have offered too much it seems. Given there's only a £5k discrepancy between the surveyors.