Undervalued by a lot

wazza99

Can you help me understand whats gone wrong here, we had 3 estate agents come, all valued within 130-135k (mid terrace). Had 12 viewings on 1st day and 3 full price offers same day. Things proceeded but now the buyer has informed us their valuation survey (level 1) says 120k max. How can the estate agent be 15k out ? we expected perhaps a little bit mayby 5k max. I know in house buying 15k isnt a high amount but in this instance its around 11% reduction.

Ps you may see my other thread over a chimney issue but even with that repaired they are saying 120k max, they have highlighted no other issues.

Otb21

This is a really common issue that is happening frequently during the last 18 months or so. Estate agents can overvalue homes, they are not RICS property surveyors and rely on the same information that you or I can to value a house (but as a seller you expect them to get it right given their day to day experience). 

We were recently purchasing a house which was down valued by the lender's valuer by 105k...the estate agent barely said a word it was almost like they were expecting it to happen. As buyers we understood we were paying a small premium due to competition and lack of properties in the area we're buying in but even we were shocked when it was valued over a hundred grand less. 

Your best bet would be to take a look at land registry sold prices and this may help you justify either way. If you can find comparable properties sold at 135k then you may be able to use these to ask the surveyor to reconsider. You may want to push this to your estate agent too, ask them for the comparable properties they have sold which allowed them to come up with your valuation pre-sale. Best of luck!

wazza99

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

user1977

wazza99 said:

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

This is overvaluing rather than undervaluing. EAs (anecdotally) do it a lot to get your business, then let you down at a later stage when you realise you won't get the price they were shouting about.

csgohan4

I would take what EA say with a pinch of salt. Remember they set high valuation to get your business as the vendor is just focusing on the £££. 

As above EA are not RICS accredited why would you take their word for it regarding valuation?

you have little choice to either wait or drop the price

Thrugelmir

Have you seen the report? 

Otb21

wazza99 said:

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

Completely agree, it's a horrible position to be in as both a buyer and a seller. Perhaps a conversation with your buyer might be something to consider too if meeting in the middle is something on the cards for you both. 

I'm not sure if it's worth noting the fact that at 120k (unsure of your buyers position if they are fist time buyers or second property buyers etc) they could no longer be liable to pay stamp duty on the purchase which is further savings for them. Perhaps just something to remember if they seem unwilling to compromise on the price. 

csgohan4

Otb21 said:

wazza99 said:

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

Completely agree, it's a horrible position to be in as both a buyer and a seller. Perhaps a conversation with your buyer might be something to consider too if meeting in the middle is something on the cards for you both. 

I'm not sure if it's worth noting the fact that at 120k (unsure of your buyers position if they are fist time buyers or second property buyers etc) they could no longer be liable to pay stamp duty on the purchase which is further savings for them. Perhaps just something to remember if they seem unwilling to compromise on the price. 

Meeting in the middle could mean they go up a LTV bracket which is not something I would not be willing to do. Stamp duty paid, has nothing to do with the vendor using that as a carrot over something they have no control seems a bit cheap. 

Bottom line is, the house is overvalued and the lender will not move. 

wazza99

user1977 said:

wazza99 said:

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

This is overvaluing rather than undervaluing. EAs (anecdotally) do it a lot to get your business, then let you down at a later stage when you realise you won't get the price they were shouting about.

Yes we tried to avoid this by getting 3...but that seems to have failed us.

wazza99

Thrugelmir said:

Have you seen the report? 

No we dont have the report as it was the buyers mortgage valuation surveyor but we are on good terms with the buyer and she does communicate freely , she did send the extract where it said 120k after essential repairs (ie chimney)

Otb21

csgohan4 said:

Otb21 said:

wazza99 said:

Thanks, we just feel let down by the estate agent (s) for getting it so wrong, their fees were £1800 (paid on sale) so not cheap and in return i'd expect some sort of professionalism and realistic pricing. Like yourself we expected a bit of undervaluing but not so much.

Completely agree, it's a horrible position to be in as both a buyer and a seller. Perhaps a conversation with your buyer might be something to consider too if meeting in the middle is something on the cards for you both. 

I'm not sure if it's worth noting the fact that at 120k (unsure of your buyers position if they are fist time buyers or second property buyers etc) they could no longer be liable to pay stamp duty on the purchase which is further savings for them. Perhaps just something to remember if they seem unwilling to compromise on the price. 

Meeting in the middle could mean they go up a LTV bracket which is not something I would not be willing to do. Stamp duty paid, has nothing to do with the vendor using that as a carrot over something they have no control seems a bit cheap. 

Bottom line is, the house is overvalued and the lender will not move. 

Agreed, I just meant that it is worth remembering that if they are unable to come to a new agreement with the buyer. 

The LTV is a valid consideration, our down valuation changed our LTV bracket and interest rate etc too but the purchase has since fallen through. Unfortunately, though, it is a sellers market and I think buyers and sellers are required to make compromises depending on onward circumstances, urgency to purchase somewhere, etc. 

Problem starts with estate agents who wipe their hands of any wrongdoing once the seller has signed their contract.