Mortgage valuation back and downvalued by 50k... yes 50k

Crashy_Time

Some people might be willing, but increasingly it looks like there lenders are not?

Crashy_Time

RogerBareford said:

Hodge58 said:

In the current climate this is the old story of the man with the Penny black stamp. Only 2 of these in the world valued at 2 million each. He bought the other one and burnt it. Everyone asked why would you do that. Because the only one left is mins and now worth 6 million. In the recent rush for property it has left a shortage and people will pay more but only because there is a shortage and not because it is worth more. Look at local prices from 3 years ago and plot a line up and you will see it peak like Epsteins heartbeat in a chicken ranch.

Property is only worth as much as people will pay for it. So if people are willing to pay more because there is not enough supply to meet demand then that makes it worth that amount.

And depending on the original asking price this could be something to freak out about or nothing at all?

dunstonh

Estate agents frequently add upto 15% to the likely value because they expect under offers to bring it back to the more realistic value.   However, in a growth market, they know they can hold out because someone will be just around the corner. 

If they are in no hurry to sell, then they probably will find someone to match the price.    Whatever they are buying will likely follow a similar increase.  So, it can be false economy if you are upsizing.   Although it can work.   The property we bought dropped 15% from the initial asking price.  They were hoping for a London buyer and priced it very high.  When it didnt happen, they started dropping it each quarter using the offers over method.    We bought it for less than the offers over price because at that time, they had been waiting over 2 years to sell and were getting desperate.   Since then the property value has gone up 40% and thanks to coronavirus, we would have no problem getting a London buyer, if we wanted to sell.   Right place, right time vs wrong place, wrong time.  A lot of it down to luck.

Crashy_Time

firstbuyer said:

Title says it all really, after a little cry (the journey just to get here has been a long winded process) I need to put my sensible hat on.

We did our research, we do not feel like we overpayed in comparison to other properties in the area. Never been in this situation before, but we do not have 50k laying around to put in and get to what we need!

I have absolutely no idea what to do, how could I go back to the vendor and ask for a 50k reduction as it's not been valued at full price? Like, I know I'd tell my seller to sling their hooks and remarket as it's a lot of money . Has anyone been in this situation with a significant downvalue?

What are the best next steps forward? I've asked for a call back from my broker and the EA.


EA Marketing price 425-450
Accepted Offer 440
Valuation 390

Yes, looks like they are total kite flyers, look for another property if they won`t drop the price IMO.

Crashy_Time

TXC said:

I had this happen recently, the valuation came back at around £25k under offer price - about 14%, and considerably below even the marketed OIEO price. I did offer 7k additional cash but the seller did not accept.

I was not willing to move lenders for a couple of reasons:

1. We weren't talking negligible amounts, if the valuation had been 5k or so out (and I wasn't able to plug the difference as I am) I probably would have looked at other lenders, but £25k pointed to a fundamental discrepancy and I would have been highly surprised if another lender had been able to get meaningfully closer to the amount. Especially because, as stated earlier, providers tend to use the same valuers between them.

2. My offer was with a large international bank with whom I've been a customer for 15 years, so I am inclined to trust their judgement more than I would a smaller building society or sole mortgage provider, and absolutely more than the EA/Seller.

3. The mortgage I had secured was the most favourable rate I could find in the market for my position, and I was approved. - I didn't and still don't see why I should take a rate increase, along with jumping through hoops by way of yet another mortgage application/interview, to secure a house because the seller's ambitions do not match the independent valuation.

The seller has now re-"sold stc" the property to the next highest bidder, its my view that we'll see it back on the market again just after christmas due to another down valuation - this is a typical FTB home and  first time buyers with a lot of cash to overpay are few and far between.

There seems to be a considerable increase in downvaluations at the moment which i can only see as a good thing, sellers and EAs both need to be brought back down to reality regarding just how much they can expect to sell for.

OP - the bank has done you a favour, paying 50k over valuation for a house doesn;t feel like the smartest move, but you need to do whats best for you.

The seller probably won't budge immediately because a climbdown by 50k from expectation to reality is mentaly very large. But unless they can secure a cash buyer (who likely will want to pay under valuation for the ease of cash anyway) they're goign to have to manage their expectations.

Good points.

firstbuyer

As an update, house 3 valuation returned today at 435 which was what we offered!

Took advice from here and offered under asking price on this one, seems to have finally worked.

Third time lucky!