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

lookstraightahead

KDuffy said:

...  

Surely they should take into account the ridiculous price rising we've had recently?

Maybe they have and that's why they've valued it as they have. The price rises are ridiculous (in my opinion) so they're going to be a bit more cautious.

Did you offer over asking? Where are your vendors going and what us their situation?

GDB2222

KDuffy said:

GDB2222 said:

If I were a totally cynical FTB, in a red hot area, but without a lot of money, I might do the same as your buyers.

I'd offer what it takes to get my foot in the door, and then once you are committed to your onward purchase I'd be in a good position to screw you down and get the property for what it's actually worth - or less, perhaps.

All the OP can do is acquiesce in that process, or remarket the property. Even then, there are no guarantees of doing better.

This has crossed my mind, but it feels like a mighty risk doesnt it? You either end up eating your words and actually paying what you unintentionally offered, or end up being rejected by messing around the sellers? 

Most of our viewers were exhausted from shopping around and just wanted to settle on a house, is what we gathered.

I'm just saying that the result is the same for you, whether the buyers are a cynical bunch of unprincipled B*********s, or simply naive and exhausted.  You have now invested in your onward purchase, and you need to decide whether to start with some new buyers or not. 

I think there's a lesson to learn here. If you do choose to go with new buyers, base your choice on the amount of equity they can demonstrate, not whether you like them. 

user1977

KDuffy said:

The trouble is our area has a couple of properties in a similar range to the £190k, but SOLD properties are lower, albeit months passed now.

Surely they should take into account the ridiculous price rising we've had recently?

The ridiculous price rises only count if they're followed through to completed purchases.

TXC

What they've offered is immaterial now as you have it in black and white what the lender believes it to be worth (and they sadly do call the shots for majority of buyers) - you can either accept it or not. As others have said it is actually in line with purple bricks valuation so some may argue you should have hedged to lose anything above and beyond asking price given the state of the market. Offering above is the only way that FTBs can get on at the moment and very few will be able to lay their hands on an extra 26k  (i dont think many people in general would tbh)

A 15% difference in offer vs. valuation is not negligible (given the average downval is between 3% - 5%) and its very unlikely another lender will value a meaningful amount closer to the amount you want (especially as they tend to use the same valuation companies between them)

As others have said:

• Find out what equity the buyer can contribute and see if palatable (i personally wouldnt waste time in having them approach another lender)
• Move onto another buyer with a similar offer but understand that this will in all likelihood get downvalued too (adding more time onto your purchase)
• Hold out for a cash buyer (who is unlikely to offer you 26k over asking - if anything would probably want a slight reduction for the convenience of cash)
• Admit that your house isn't worth that much money and move forward with the valuation figure

Close to half of valuations carried out last year resulted in a down valuation apparently - thats a ridiculous amount. EAs have a lot to answer for in terms of whipping buyers into bidding wars.

A house I was down valued on is now on its 3rd go around the merry go round i believe, as it keeps getting downvalued - but the vendor has a figure in their head that they want and to hell with the bank's view. Now entering its fifth month on the market and could have been sold twice over. But unlike yourself they are in no great rush as there's no onward chain.

TXC

GDB2222 said:

KDuffy said:

GDB2222 said:

If I were a totally cynical FTB, in a red hot area, but without a lot of money, I might do the same as your buyers.

I'd offer what it takes to get my foot in the door, and then once you are committed to your onward purchase I'd be in a good position to screw you down and get the property for what it's actually worth - or less, perhaps.

All the OP can do is acquiesce in that process, or remarket the property. Even then, there are no guarantees of doing better.

This has crossed my mind, but it feels like a mighty risk doesnt it? You either end up eating your words and actually paying what you unintentionally offered, or end up being rejected by messing around the sellers? 

Most of our viewers were exhausted from shopping around and just wanted to settle on a house, is what we gathered.

I'm just saying that the result is the same for you, whether the buyers are a cynical bunch of unprincipled B*********s, or simply naive and exhausted.  You have now invested in your onward purchase, and you need to decide whether to start with some new buyers or not. 

I think there's a lesson to learn here. If you do choose to go with new buyers, base your choice on the amount of equity they can demonstrate, not whether you like them. 

I wouldn't say its cynical and unprincipled, I'd say it is shrewd. Whilst sellers continue to be dazzled by £ signs and don't see the bigger picture this is the only way for FTBs to even get entertained.

Lets not forget FTBs and their chain free status are needed to keep the wheels turning on the market. If 100% of sales were locked in chains I dread to think of the impact of one broken link.

Andthen07

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,

So it came in at the starting valuation given by your agent?

Thrugelmir

KDuffy said:

We had our 2-bed property valued by Purple Bricks at 170-180k.

 Eventually we settled on some first time buyers we liked- their offer was a wonderful £196k. 

Where's the over valuation if the surveyor has said worth a £170k?  That's in line with the EA.  Anybody can offer anything they like for a property. Doesn't mean that can finance the transaction though if they need a mortgage.  Not how the real world works. 

peter3hg

lookstraightahead said:

Hi op

it has actually been valued at what it was valued at by purple bricks.

Most people (not just first time buyers) cannot make up the cash difference, probably yourself included.

Remember it's the risk to the lender that is the important thing here. They will have their own criteria, lots is often to do with floor space, and definitely not new bathrooms etc (which might draw more offers, but doesn't increase the value from a lenders perspective, the new buyer might rip it out).

What have the buyers said? Have they asked for a reduction yet?

I would imagine though that people moving house are likely to have more equity and are less likely to be right on a LTV boundary, meaning a down-valuation isn't as big of a problem from a mortgage point of view.
For example the house I'm in the process of buying could have been down-valued by £46k and still be in the appropriate LTV band for the mortgage to be offered, due to the equity moving from my current house.
As it happened it was valued at the offer price, but it did mean there was considerable leeway if I really wanted to buy it.

jenni_fer

What have the buyers said so far?
Have they come to you and asked you to drop to £170k?
What did you list it as?

In our previous attempt to sell we accepted an offer £20k above asking and it was valued as £10k above. Our response to the buyer was very clear...they offered us £20k more than we believed it was worth, they were told actually they were only overpaying by £10k so that's good news for them, no action required.

Yes, it can be an issue if the buyer is on an LTV boundary and that is often the case for FTB for obvious reason but that doesn't automatically mean it's a loss you should take, the house is worth whatever someone is prepared to pay (and has the finances for).

lookstraightahead

jenni_fer said:

What have the buyers said so far?
Have they come to you and asked you to drop to £170k?
What did you list it as?

In our previous attempt to sell we accepted an offer £20k above asking and it was valued as £10k above. Our response to the buyer was very clear...they offered us £20k more than we believed it was worth, they were told actually they were only overpaying by £10k so that's good news for them, no action required.

Yes, it can be an issue if the buyer is on an LTV boundary and that is often the case for FTB for obvious reason but that doesn't automatically mean it's a loss you should take, the house is worth whatever someone is prepared to pay (and has the finances for).

But if they haven't got the money, they just haven't.

I had 60% LTV and only needed 75%, but there is no way I would have been taken in by what you said (our valuation came back ay 10% below asking, which is what we had offered anyway). 

The house is worth what a buyer feels comfortable with which, after valuation, can change (and of course the biggie, what the lender will risk).

Your buyers obviously felt ok with it.