We've been down-valued by more than anyone expected. What can we do?

RS2OOO

Slithery said:

RS2OOO said:

That said, I didn't care about the rewireable fuse board, I saw the simplicity as a positive.

And a negative?

I was neutral on that aspect. 

Gavin83

It's also worth noting if someone has significant equity or a large deposit a down valuation is less likely anyway.

HotPantsCruiser

Right, do all banks do that?

lookstraightahead

Deedoodee said:

propertyhunter said:

lookstraightahead said:

That I agree with. But those without a chain and with the finances won't give 'maximum' price (by that I mean a silly amount). If more vendors didn't accept silly amounts then they are more likely to sell, rather than the short term excitement of "loadsamoney" only to be disappointed.

You'd think. But the buyer who won the sealed bids of a house recently went 35k over and was a no chain buyer. I think if the location is hot, people are prepared to do anything to secure their 'dream home.' I'm currently in this predicament - no chain, large deposit - am thinking how much over to bid. I think now is an important time to put yourself ahead by saying you've got a big deposit and aren't likely to have a downvaluation scupper the transaction. 

I’ve been saying that with all my offers (60% deposit) but the EAs don’t seem interested at all. With each offer I’ve said lack of chain, large deposit but it all seems to be about the final (largest) offer value.

It worked for us - and accepted an offer under asking.

They did have a house they wanted though, they worked in very stressful jobs and just wanted it done. Some people don't have the luxury of time to faff around.

I think EAs are missing a trick. They maybe don't understand beyond their fee. 

propertyhunter

lookstraightahead said:

Deedoodee said:

propertyhunter said:

lookstraightahead said:

That I agree with. But those without a chain and with the finances won't give 'maximum' price (by that I mean a silly amount). If more vendors didn't accept silly amounts then they are more likely to sell, rather than the short term excitement of "loadsamoney" only to be disappointed.

You'd think. But the buyer who won the sealed bids of a house recently went 35k over and was a no chain buyer. I think if the location is hot, people are prepared to do anything to secure their 'dream home.' I'm currently in this predicament - no chain, large deposit - am thinking how much over to bid. I think now is an important time to put yourself ahead by saying you've got a big deposit and aren't likely to have a downvaluation scupper the transaction. 

I’ve been saying that with all my offers (60% deposit) but the EAs don’t seem interested at all. With each offer I’ve said lack of chain, large deposit but it all seems to be about the final (largest) offer value.

It worked for us - and accepted an offer under asking.

They did have a house they wanted though, they worked in very stressful jobs and just wanted it done. Some people don't have the luxury of time to faff around.

I think EAs are missing a trick. They maybe don't understand beyond their fee. 

That's the other thing to consider -  the seller's position. Probate and no chain sales means the seller wants the highest price - and so those being able to proceed quickly suddenly find themselves competing against everyone else based on price alone. 

newsgroupmonkey_

michael1234 said:

Sounds to me like that mortgage provider doesn't want to lend as their applicant would be taking on too much risk and/or the risk of a bubble. I know from lending on bridging loans (different market but similar principles) that RICS are a waste of time and will come up with a figure based on whoever is paying them asks them to come up with. 

If I was the OP I would remarket immediately while we're still in a seller's market and check more carefully their financial position before proceeding.

I think you're being a bit harsh on RICS and valuations.

Valuations are generally done on what's called comparables or "comps" (I know you know that, but others may not).

These comparables aren't on wild prices that Estate Agents are asking, but recently sold prices (Within the last 6 months).

So if similar properties to OPs have all been selling of late at £170k, then the valuation will almost certainly come in at £170k unless there's something very different.

If the comparables were based on Estate Agent's asking prices, then they could easily manipulate the market by adding £20k on the top of all asking prices and everyone would get their mortgage approved.

Banks are rightly wary of being manipulated. There is clearly going to be some give and take for a valuation (for instance, if the comps are £170k, but the offer price is £172k, the surveyor would probably OK that). But being 15% out isn't going to cut it.

On the flip side, if people keep paying the £196k, then the comps will become £196k and the surveyor will value it this way.

You can't blame banks. Interest rates are about to start shooting up if inflation is anything to do with it. The banks don't want to get into repossession wars. That helps no-one.

HotPantsCruiser

KDuffy said:

Hi everyone and happy new year.

We're currently in the throes of selling our property (and buying another). Everything was smooth thus far. We had our 2-bed property valued by Purple Bricks at 170-180k.

This was fair enough considering surrounding area pricing although obviously we would have prefferred the top end of that... and that's what we got!

We had 5 offers in one day- all OVER budget by quite a margin. Eventually we settled on some first time buyers we liked- their offer was a wonderful £196k. We were elated that the couple we preferred had put in a competitive offer with the others (we even had an offer higher still), but we took it with a grain of salt. Every bit of advice out there tells you to expect a down-value and so we did. We looked into our next house on the basis that we might lose some of this profit.

Anyway fast forward almost 2 months and the buyers had a homebuyers survey performed by their lender. The house is in great repair and has new roofing, a new bathroom etc, no problems with the property itself- but the surveyor 'looked into other sales around the area' and concluded that our house was worth £170k. Quite a down-value and very disheartening for all involved.

So with this in mind, we're wondering what we could do- appeal it? Gently push the buyers to get a second opinion from a different lender? Try to negotiate the difference with our next purchase to prevent a delay in their chain? Is it possible to shop around for our own valuation on our property and present that to the buyer's lender?

Any help greatly appreciated... It wasn't too stressful until it was!

Thanks,

Have they come back with another offer?

Mark_Michalowski

I'm currently in the middle of selling my house in Leeds...

Up for sale at the start of August for £180k, and within a fortnight, and 15 viewings, the offers had shot up to £200k! I went with a very nice-seeming couple who assured both me and my EA that, should the property be downvalued by their mortgage company, that they had the money to fund any shortfall.

Sure enough, the mortgage valuation came back at £180k - and suddenly the sellers shook their heads sadly and said "Oh noes! Downvalued to £180k - that's all we can afford!"

++bangs head against table++

Finally agreed on £187,500 - but now, following electric and gas surveys (gas was fine, electics showed - as I expected - rewiring needed doing) they're demanding a further £6k reduction for the rewiring (which the actual company that did the survey told me, as the guys left the house, would be "Around three and a half grand".)

So we're still at the negotiating stage. It feels like they've decided they only want to pay £180k - the amount of mortgage they can get - and are hunting around for anything else they can use to force me to lower the price to that figure.

Meanwhile, the seller of the house I've offered on - and which I went for, based on being able to get £200k for mine - is getting irritated about the lack of movement. Quite understandably.

It feels a bit too late to remarket the house, or return to the bidders who didn't quite make it, and still complete on my purchase; and yet I can't afford the move without some financial problems if I sell for less than £190k.

I understand that some FTBs don't consider the implications of a downvaluation, but mine were fully aware of it. And that feels like dishonesty, not naivety.

Ho hum... hope things sort themselves out OK for you

Mxx

jenni_fer

Mark_Michalowski said:

I'm currently in the middle of selling my house in Leeds...

Up for sale at the start of August for £180k, and within a fortnight, and 15 viewings, the offers had shot up to £200k! I went with a very nice-seeming couple who assured both me and my EA that, should the property be downvalued by their mortgage company, that they had the money to fund any shortfall.

Sure enough, the mortgage valuation came back at £180k - and suddenly the sellers shook their heads sadly and said "Oh noes! Downvalued to £180k - that's all we can afford!"

++bangs head against table++

Finally agreed on £187,500 - but now, following electric and gas surveys (gas was fine, electics showed - as I expected - rewiring needed doing) they're demanding a further £6k reduction for the rewiring (which the actual company that did the survey told me, as the guys left the house, would be "Around three and a half grand".)

So we're still at the negotiating stage. It feels like they've decided they only want to pay £180k - the amount of mortgage they can get - and are hunting around for anything else they can use to force me to lower the price to that figure.

Meanwhile, the seller of the house I've offered on - and which I went for, based on being able to get £200k for mine - is getting irritated about the lack of movement. Quite understandably.

It feels a bit too late to remarket the house, or return to the bidders who didn't quite make it, and still complete on my purchase; and yet I can't afford the move without some financial problems if I sell for less than £190k.

I understand that some FTBs don't consider the implications of a downvaluation, but mine were fully aware of it. And that feels like dishonesty, not naivety.

Ho hum... hope things sort themselves out OK for you

Mxx

How frustrating, it's such a minefield.
I hope you get some resolution soon.

BikingBud

lookstraightahead said:

jenni_fer said:

Ramouth said:

There are a huge number of buyers between the extremes of cash buyer and full mortgage buyer.  For people with higher deposits a down valuation changes their LTV, but as long as it doesn’t tip them into a different mortgage rate bracket, it won’t matter much.

Some people will prioritise getting the best value when buying and will not pay more than the valuation (or will not be in a position to choose).  Others will prioritise a particular house or location and will be willing to outbid others in order to secure what they want (and have the cash to do so).  It takes all types to make the world go around.

I think this is the bit that gets missed. The bank doesn't say "We think it's worth £20k less so we'll lend you £20k less" The bank says "We think the value is £180k not £200k and therefore that's the value we'll use for our LTV calculations".
If you are trying to borrow every penny to the top LTV bracket based on the higher value then yes of course that is a problem, if you are in the same LTV bracket as a result then the bank will still give you everything you have asked for.

Our new buyers have told us their deposit, if that's true, they will be in the same LTV band whether the valuation comes back at asking price or their higher offer.

But how long have you been trying to move for?

if it makes no difference paying over, what difference does it make getting under? 

I would say vendors want to get over so that THEY don't have to pay over (don't want a higher mortgage).

The winners of course are those who sell higher and buy lower, rather than the rest of the chain who are just servicing their  finances.

The winners are the banks! Always have been! Always will be!

Anybody that thinks differently is only kidding themselves.