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

lookstraightahead

peter3hg said:

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.

I agree, I was in a similar situation. However, savvy experienced buyers probably wouldn't want to 'throw' money away like that. 

lookstraightahead

TXC said:

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.

This is a great post.

Gavin83

Your buyers chose to offer over asking. They knew what the house was worth, should have expected the house to be down valued from this and therefore have had the funds available. The tactics they’re pulling are immoral.

In your shoes there’s absolutely no way I’d sell to them unless they met the original offer. I’d be re-marketing the property, regardless of other circumstances. It is of course your choice though.

A piece of advice for the future. Don’t choose your buyer based on how nice they are. Choose those who have the funds available to back up the offer they’ve made. That generally means no FTBs if the offer is over asking.

Carrot007

Gavin83 said:

Your buyers chose to offer over asking. They knew what the house was worth, should have expected the house to be down valued from this and therefore have had the funds available. The tactics they’re pulling are immoral.

In your shoes there’s absolutely no way I’d sell to them unless they met the original offer. I’d be re-marketing the property, regardless of other circumstances. It is of course your choice though.

A piece of advice for the future. Don’t choose your buyer based on how nice they are. Choose those who have the funds available to back up the offer they’ve made. That generally means no FTBs if the offer is over asking.

Only as immoral as seller accepting a overpriced bid that they know the buyers will never get a mortgage based on.

Advice for the future. Don't accept offers above the valuation price no matter how many £'s are in your eyes. Choose an offer that will be proceedable and don't ruin the chain for everyone.

TXC

Gavin83 said:

Your buyers chose to offer over asking. They knew what the house was worth, should have expected the house to be down valued from this and therefore have had the funds available. The tactics they’re pulling are immoral.

In your shoes there’s absolutely no way I’d sell to them unless they met the original offer. I’d be re-marketing the property, regardless of other circumstances. It is of course your choice though.

A piece of advice for the future. Don’t choose your buyer based on how nice they are. Choose those who have the funds available to back up the offer they’ve made. That generally means no FTBs if the offer is over asking.

No - FTBs dont know resolutely what the house is worth, does any buyer before banks have their say? FTBs only know what they need to offer to get a foot in the door. I daresay if theyd offered OP the asking price they woukdnt have been looked twice at.

Banks and EAs are the only people who know what the house is worth - in this instance they were proven right. The buyer did indeed choose to offer over and would likely have secured the mortgage should valuation have been in line , however: the seller equally chose to follow £ signs to the tune of £26k over this, ignoring the EA value and and therefore assumed all the risk of this overage in my view. 

Unfortunately it's not paid off

BikingBud

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,

This isn't a down value but an over bid.

This behaviour needlessly pushes prices by continuing to fuel the frenzy.

lookstraightahead

 Gavin83 said:

Your buyers chose to offer over asking. They knew what the house was worth, should have expected the house to be down valued from this and therefore have had the funds available. The tactics they’re pulling are immoral.

In your shoes there’s absolutely no way I’d sell to them unless they met the original offer. I’d be re-marketing the property, regardless of other circumstances. It is of course your choice though.

A piece of advice for the future. Don’t choose your buyer based on how nice they are. Choose those who have the funds available to back up the offer they’ve made. That generally means no FTBs if the offer is over asking.

Why do you assume people with equity will pay over valuation?

Usually they don't want to chuck their money away either. 

What you're advising is trying to find gullible desperate people who have loads of money to waste. That's an oxymoron. 

Thrugelmir

lookstraightahead said:

 Gavin83 said:

Your buyers chose to offer over asking. They knew what the house was worth, should have expected the house to be down valued from this and therefore have had the funds available. The tactics they’re pulling are immoral.

In your shoes there’s absolutely no way I’d sell to them unless they met the original offer. I’d be re-marketing the property, regardless of other circumstances. It is of course your choice though.

A piece of advice for the future. Don’t choose your buyer based on how nice they are. Choose those who have the funds available to back up the offer they’ve made. That generally means no FTBs if the offer is over asking.

Why do you assume people with equity will pay over valuation?

Some houses only come onto the market every few decades. If it's what you want and you've the money to make it a forever home. Why not outbid everyone else. No different to people that collect art at auction. 

jenni_fer

lookstraightahead said:

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. 

Taken in is a bit harsh!
They were cash buyers,  they gave us a long accompanying note about why they wanted our house specifically and they offered more than anyone else to ensure they got it. That was their choice. 

lookstraightahead

jenni_fer said:

lookstraightahead said:

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. 

Taken in is a bit harsh!
They were cash buyers,  they gave us a long accompanying note about why they wanted our house specifically and they offered more than anyone else to ensure they got it. That was their choice. 

Sorry

why did they give you a note? You didn't ask everyone to tell you why they wanted your house did you ...  

In the nicest possible way, I don't think you and I would have made a compatible chain. But it's worked for you and your buyer so in the end that's all that matters.