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

BikingBud

Gavin83 said:

TXC said:

HotPantsCruiser said:

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.

How would you do that?

True. I could say that I have plans from family, friends etc to plug any overage, doesn't make it true! sadly. I suppose even if someoen does have a lot of cash sitting in an account they're not obliged to use it to plug a downvalue so I don't know what even ascertaining that would change. 

There’s a key difference. A FTB (or more specifically anyone at the limit of their affordability) can’t afford a down valuation. Someone with the money will choose not to pay it. Or maybe they’ll decide they are willing to pay it. Once they see their dream home and emotions take over who knows what they’ll pay.

I know as a vendor I’d rather sell to someone who does have the choice than someone who doesn’t.

For a lot of people with limited cash, houses are beyond the limit of affordability. They cannot afford the over-inflated price and have resorted to any means possible to try and secure a home. 

Is that so wrong?

BikingBud

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

Revise your offer due to reduced equity to pass up the chain, keep your cost to change the same.

If that realism is passed up the chain it will put the brakes on the rampant and unsustainable price increases.

All happy then.

Mark_Michalowski

I've tried that, BikingBud - but the seller isn't willing to drop the price, and says that if I'm no longer able to pay what we agreed on, then he's going to have to put the house back on the market. He's at the very end of the chain, with no desperate rush to sell, so - short of calling his bluff and probably losing the house, I'm stuck.

Mxx

lookstraightahead

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

You need to be selling for what the house is worth, and buying within your budget. Unfortunately the EA and marketing strategies have made you think you can afford more.

act as though you will get £180k. Otherwise you will be going round in circles. 

Gavin83

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

Your mistake was continuing with the sale. Considering the dishonesty at play here you should have gone back to the other offers as soon as the down valuation came in and they refused to meet their offer.

You are where you are though and it’s up to you if you continue. Given it sounds like you’ll lose your onward purchase regardless I feel you’ve nothing to lose by starting again with another buyer but it’s up to you.

Gavin83

BikingBud said:

Gavin83 said:

TXC said:

HotPantsCruiser said:

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.

How would you do that?

True. I could say that I have plans from family, friends etc to plug any overage, doesn't make it true! sadly. I suppose even if someoen does have a lot of cash sitting in an account they're not obliged to use it to plug a downvalue so I don't know what even ascertaining that would change. 

There’s a key difference. A FTB (or more specifically anyone at the limit of their affordability) can’t afford a down valuation. Someone with the money will choose not to pay it. Or maybe they’ll decide they are willing to pay it. Once they see their dream home and emotions take over who knows what they’ll pay.

I know as a vendor I’d rather sell to someone who does have the choice than someone who doesn’t.

For a lot of people with limited cash, houses are beyond the limit of affordability. They cannot afford the over-inflated price and have resorted to any means possible to try and secure a home. 

Is that so wrong?

I’m wondering if you’ve quoted the wrong post as what you’ve written doesn’t seem to correspond to what I’ve said.

However if you’re asking me whether it’s wrong for buyer to over offer, knowing full well they’ll never be able to pay it and hoping the vendor will have no choice but to agree to a reduction then my answer is yes, it’s wrong.

Mark_Michalowski

Yes, Gavin83, with hindsight, I should have done.

But there were no cash-buyers at the time (apart from a couple that offered very low bids), and any of the others would have had to go through with being downvalued, too. I guess one of them might have enough in the bank to be able to make up the downfall, but we'd only have their word for that, until the downvaluation happened,and then I'd be in the same boat as I am now. I guess if they're told that this is the very thing that's led to the sale falling through, they'd be less likely to do it themselves...

I wonder if you can get them to "legally" state that they can afford the purchase, even with a downvalue...? I'm guessing not, otherwise that'd be the done thing, wouldn't it?

Mxx

grumiofoundation

Mark_Michalowski said:

Yes, Gavin83, with hindsight, I should have done.

But there were no cash-buyers at the time (apart from a couple that offered very low bids), and any of the others would have had to go through with being downvalued, too. I guess one of them might have enough in the bank to be able to make up the downfall, but we'd only have their word for that, until the downvaluation happened,and then I'd be in the same boat as I am now. I guess if they're told that this is the very thing that's led to the sale falling through, they'd be less likely to do it themselves...

I wonder if you can get them to "legally" state that they can afford the purchase, even with a downvalue...? I'm guessing not, otherwise that'd be the done thing, wouldn't it?

Mxx

But even if you could get them to state this doesn't mean they have to then do so.

If we had been down valued* we could have paid an extra 10-20k out of savings. Doesn't mean we would have done. So the vendor knowing we could afford i wouldn't help unless they legally commit to carrying through with the purchase.

(Offered under asking, not FTB shenanigans (although were FTBs)!)

Mark_Michalowski

Gavin83 said

"However if you’re asking me whether it’s wrong for buyer to over offer, knowing full well they’ll never be able to pay it and hoping the vendor will have no choice but to agree to a reduction then my answer is yes, it’s wrong."

Yes, this.

Naivety or ignorance are (partial) excuses, but to do it in the full knowledge of what will happen... that's wrong.

Mxx

Mark_Michalowski

My sister thinks I should go to the vendor of the house I'm buying (for £155k - the rest of the money from selling mine will clear my mortgage. Or rather, at the moment, won't now clear my mortgage) and just tell him that I can only offer £150k because of my buyers; but I've said no (to her... almost anger!! LOL) because that doesn't feel fair. It's not his fault, it's between me and my buyer. I have no idea what his financial situation is, and whether £5k is a lot or a little to him. And if I do it, then I'm little better than my buyers.

Mxx