Undervalued by a lot

Thrugelmir

wazza99 said:

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)

What has your EA said in response? 

wazza99

Thrugelmir said:

wazza99 said:

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)

What has your EA said in response? 

We're making contact today. This all occurred last night.

TXC

Otb21 said:

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. 

Surely it's only a sellers market as long as buyers continue to let it be. If all buyers held firm on bank valuations this would soon change.

london21

Can you request a copy pf the report

some valuations are more generous than others.

The EA don't always get the valuation perfectly. 

Otb21

TXC said:

Otb21 said:

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. 

Surely it's only a sellers market as long as buyers continue to let it be. If all buyers held firm on bank valuations this would soon change.

Agreed, it would.  But when there are 20 plus viewings for each property and everyone is putting an offer in and competing to win then sellers know they won't have difficulty selling to someone else who might be in a better position. We've had estate agents either ignore us when we asked for justification on the price before putting an offer in. Another one said it doesn't matter because they have so many cash buyers at the moment so it all depends on how much you want the property and not what it is actually worth. 

Plus, add to that the fact that many areas are seeing unprecedented property shortages, then buyers are also up against supply and demand. Holding firm on a down valuation is going to get you nowhere if the seller needs the cash for their onward purchase and they are being told by EA's that they've got many other buyers who would be willing to pay the difference. 

It would be nice to think buyers could collectively hold firm on bank valuations, but in-practice, it isn't happening. 

Elliott.T123

wazza99 said:

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.

I want to make it clear I am not an estate agent or anything before I get accused!

I would argue that you received 3 full asking price offers on the first day, the estate agents have not failed you and they have not over priced the house, if they had people would not be willing to buy it at that level. I would say the estate agents have done a great job for you there. Would you be happier if they had got you an offer at £120k and then you found out a week later someone round the corner had sold their house for £135k because a buyer was happy to make up the difference in valuation?

What has happened is that the Surveyor and by association the buyers mortgage provider have decided that they are not comfortable with the level of risk at that price. 

The issue you have is that house prices have risen significantly recently and surveyors and mortgage providers are not yet comfortable with the new prices for numerous reasons including doubt that these prices will last and also the information they use to come up with valuations being outdated in a market with fast rising prices.

Depending on the buyers you have 2 main choices, negotiate a price drop or stick with the price they offered and move onto the next buyer and see if they are happy to make up the difference.

Snookie12cat

Depending on the buyers you have 2 main choices, negotiate a price drop or stick with the price they offered and move onto the next buyer and see if they are happy to make up the difference.

or move onto the next buyer and see if the valuation comes in different. It can change, just because a different surveyor has looked at it. 

eidand

I assume you have done your own diligence on what price you could achieve in your area regardless of what the EAs said.

If you feel strongly that your house is worth what you are asking then maybe you should hold firm, ask your buyer to go with another mortgage provider or simply put it back on the market and sell to someone else, then see what happens.

The fact that you had a lot of offers suggests your EAs were correct, so no need to panic or accuse them of anything.

Gavin83

Why is there always the assumption that EAs are wrong on the valuation and surveyors are right? Both have knowledge of the local area, know what other houses are selling for and in many cases EAs see more of the house than surveyors do as often surveyors do nothing more than drive past the house, or even just look at it online. You could argue that EAs have the motivation to overvalue and this is a fair argument but similarly you could argue that surveyors have the motivation to undervalue. It's not uncommon for lenders to be willing to value the house higher if the buyer is putting in more capital and therefore this makes a bit of a mockery of the valuation anyway. I can understand lenders being cautious at the moment but they certainly don't set the property value.

I'd suggest the least biased valuation would be the surveyor hired by the buyer themselves as they don't have any external pressures to value it differently.

So what is the true value of a house? I'd suggest it's no different to any other consumer item and the price is set by the buyers. If you won't pay more than your lender values it at and other buyers are then you are likely to struggle to find a house. Also if a seller is getting a lot less than they expect they might decide the right course of action is to pull their house off the market until lenders get less twitchy. This will then lead to less housing stock being available, competition increasing and making it even less likely for those sticking to lender valuations to secure a property.

The property market is unique in how valuations work. I suspect the reality is in a lot of cases the house is actually worth somewhere between what the EA values it at and what the lender values it at.

wazza99

Ok thanks folks, i think plan is we will go back to the 1st buyer and suggest the option of seeking a new mortgage/valuation, as we are not prepared to sell at 120k, the buyer has said they do not have any additional funds bar the mortgage. As we had strong viewings and offers, if the 1st buyer doesn't want to retry we will move onto the next buyer. Perhaps then the outcome of the 2nd round will clarify things. If it again comes in at around 120 well there we have it.....but perhaps the 2nd buyer is in a dirrent situation or has a more lenient lender.