FTB in a panic: Lender down-valued property by several thousand. How do I renegotiate price?

PirateSwan

Hi property peeps

Jumpy / red-faced FTB here

I'm looking for some advice on the down-valuing of a property I offered on a few weeks back

My lender has down-valued it at £7k less than the price I offered (and had accepted). (Backstory: it went to sealed bids. I am at a low ebb life wise and fell for all of the EA's selling tactics when making my bid. Properties are slipping out of affordability reach where I live, so panicked and offered the outer limits of what I can afford. £7k is a huge amount for me as my wage isn't fantastic)

I am totally kicking myself and am also worried if the down valuation will go against me in the future. I have read that when I come out of my fixed rate mortgage then a down valuation could work against me when I apply for a new fixed rate mortgage for the house.

Has anyone ever renegotiated after a down valuation? And If so, what sort of facts / figures did you put forward to support your case?

Buyers, how did you go about it? What did you say to the EA / vendor? And what was the outcome for you?

Sellers: Have you accepted a down valuation and what prompted you to make the decision?

I'd be eternally grateful for any advice anyone can give me. 

Thanks in advance.

P

canaldumidi

Ring the EA, tell him of the down valuation (and offer topass him a copy of the lender's valuation if required) and say as a result you will have to reduce your offer to £X.

EA will tell seller. Seller will think about it and either agree, or refuse.

If seller agrees, inform your conveyancer, in writing, of the new price.

If seller refuses, decide whether to

* find another property

* try to negotiate the price eg midway between original and valuation prices, or

* agree the original price and find extra cash yourself.

TheJP

You can ask the seller if they would consider reducing in line with the valuation however the seller could go back to one of the other interest parties and ask if they want to proceed. Maybe start looking for other properties while you wait to hear back from the seller.

Crashy_Time

PirateSwan said:

Hi property peeps

Jumpy / red-faced FTB here

I'm looking for some advice on the down-valuing of a property I offered on a few weeks back

My lender has down-valued it at £7k less than the price I offered (and had accepted). (Backstory: it went to sealed bids. I am at a low ebb life wise and fell for all of the EA's selling tactics when making my bid. Properties are slipping out of affordability reach where I live, so panicked and offered the outer limits of what I can afford. £7k is a huge amount for me as my wage isn't fantastic)

I am totally kicking myself and am also worried if the down valuation will go against me in the future. I have read that when I come out of my fixed rate mortgage then a down valuation could work against me when I apply for a new fixed rate mortgage for the house.

Has anyone ever renegotiated after a down valuation? And If so, what sort of facts / figures did you put forward to support your case?

Buyers, how did you go about it? What did you say to the EA / vendor? And what was the outcome for you?

Sellers: Have you accepted a down valuation and what prompted you to make the decision?

I'd be eternally grateful for any advice anyone can give me. 

Thanks in advance.

P

Are you sure you should be buying a property, what happens when you get a large repair bill? The good news is that when mortgage rates rise houses are going to get cheaper, you should just wait IMO, or alternatively drop your offer by 10k citing "market conditions".

theoretica

Given the valuation and how much the bank will now lend you can you afford the agreed price?  If you can't, it is an absolutely straightforward thing to tell the seller - you are really sorry, you simply can't afford the agreed price now given the valuation.  If you can afford it, but no longer want to in the light of the new information you will need to explain the new information and work out at what price point you would walk away from the property.

Crashy_Time

Basically the seller will get the same news whoever buys it probably, so just tell them soon it is going to be 10k less of an offer and keep viewing properties.

lookstraightahead

Op, you've done nothing wrong. You offered with the assumption that the house would be worth the amount you offered. The bank isn't happy taking that risk. I wouldn't be happy buying it for more than it's worth, so personally iv the vendor won't accept it, look for something else.

If the next purchasers need a mortgage the vendors will find themselves in the same position.

that's why vendors and buyers need to be realistic about prices.

canaldumidi

Crashy_Time said:

Basically the seller will get the same news whoever buys it probably, so just tell them soon it is going to be 10k less of an offer and keep viewing properties.

not necesarily.

Valuation is not an exact science and different surveyors, for different lenders might value it differently.

Plus if a buyer has a low LTV application eg only borrowing 50% of purchase price, then many Valuers will simply value at purchase price as this clearly covers the mortgage lender's risk.

Not to mention cash buyers.....

So the next buyer might not have the same problem at all.

PirateSwan

Dear all, thank you so much for your speedy replies. I really appreciate you taking the time and trouble to put together your responses. This whole thing is a stress fest and a half so it's reassuring to read what other people have to say about the issue.

Thrugelmir

canaldumidi said:

Crashy_Time said:

Basically the seller will get the same news whoever buys it probably, so just tell them soon it is going to be 10k less of an offer and keep viewing properties.

Plus if a buyer has a low LTV application eg only borrowing 50% of purchase price, then many Valuers will simply value at purchase price as this clearly covers the mortgage lender's risk.

Valuer values the property nothing more nothing less. If the valuer downvalues. Then it is up to the purchaser to fund the difference. The mortgage will be based on the valuation. 

ele_91

Thrugelmir said:

canaldumidi said:

Crashy_Time said:

Basically the seller will get the same news whoever buys it probably, so just tell them soon it is going to be 10k less of an offer and keep viewing properties.

Plus if a buyer has a low LTV application eg only borrowing 50% of purchase price, then many Valuers will simply value at purchase price as this clearly covers the mortgage lender's risk.

Valuer values the property nothing more nothing less. If the valuer downvalues. Then it is up to the purchaser to fund the difference. The mortgage will be based on the valuation. 

If the buyer has a low LTV the mortgage lender will probably do a desktop valuation which will most likely vary from a physical survey.