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

MaryNB

BikingBud said:

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.

This is why I thought the title of the thread was strange. I'm not sure how it was so unexpected. I would say a valuation anything lower than the asking may be unexpected (if priced reasonably to begin with of course) but not a valuation at asking price, especially if that's what the EA valued it at (given some EA's reputation for overvaluing).

If a buyer posted here saying they were offering £196k on a house advertised at £170k, I've no doubt they'd receive numerous warnings about a downvaluation from the bank. 

Gavin83

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?

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. 

I don’t expect buyers to do anything other than honour their offers. If they’re choosing to offer over the asking price they should fully accept they’re overpaying for the property and that’s the choice they’re making. What you shouldn’t do is over offer to get accepted knowing full well you’re gonna reduce it in the future. It wastes the time and money of everyone in the chain, including the buyers themselves.

If you don’t want to overpay (which is a completely reasonable stance) then don’t offer over the asking price.

I really don’t understand the opinion that it’s the sellers fault for accepting the offer either. Why would you turn down money if someone is willing to pay it?

Its the buyers fault. Don’t blame the seller for taking someone at their word.

TXC

Gavin83 said:

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?

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. 

I don’t expect buyers to do anything other than honour their offers. If they’re choosing to offer over the asking price they should fully accept they’re overpaying for the property and that’s the choice they’re making. What you shouldn’t do is over offer to get accepted knowing full well you’re gonna reduce it in the future. It wastes the time and money of everyone in the chain, including the buyers themselves.

If you don’t want to overpay (which is a completely reasonable stance) then don’t offer over the asking price.

I really don’t understand the opinion that it’s the sellers fault for accepting the offer either. Why would you turn down money if someone is willing to pay it?

Its the buyers fault. Don’t blame the seller for taking someone at their word.

But this isnt a case of the buyers not following through on their offer - they are not saying "we wont pay this anymore even though we can" - as I said above if the bank had been able to facilitate their purchase I have no doubt the buyers would have proceeded as they likely held an AIP for their 196k offer

The buyers were almost certainly upfront about requiring a mortgage to complete their purchase and their offer being dependent on the bank playing ball. 

The seller, knowing that the mortgage is required for these buyers, should have taken anything above and beyond the asking price as "a bonus" (by their own admission 'every bit of advice out there tells you to expect a downvaluation") 

With all due respect if the buyers had an extra 26 grand floating about in cash I doubt theyd be buying a 2 bed, theyd be increasing their deposit for a 3 bed.

jenni_fer

lookstraightahead said:

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.

Love the polar opposite views
No request for notes, that's just how desperate they were for us to sell to them.

Of course... it didn't work out because we lost our onward purchase and have now just accepted a new £20k over asking offer from a different buyer who also wrote us a lovely note about why they wanted us to accept their offer!

Gavin83

TXC said:

Gavin83 said:

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?

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. 

I don’t expect buyers to do anything other than honour their offers. If they’re choosing to offer over the asking price they should fully accept they’re overpaying for the property and that’s the choice they’re making. What you shouldn’t do is over offer to get accepted knowing full well you’re gonna reduce it in the future. It wastes the time and money of everyone in the chain, including the buyers themselves.

If you don’t want to overpay (which is a completely reasonable stance) then don’t offer over the asking price.

I really don’t understand the opinion that it’s the sellers fault for accepting the offer either. Why would you turn down money if someone is willing to pay it?

Its the buyers fault. Don’t blame the seller for taking someone at their word.

But this isnt a case of the buyers not following through on their offer - they are not saying "we wont pay this anymore even though we can" - as I said above if the bank had been able to facilitate their purchase I have no doubt the buyers would have proceeded as they likely held an AIP for their 196k offer

The buyers were almost certainly upfront about requiring a mortgage to complete their purchase and their offer being dependent on the bank playing ball. 

The seller, knowing that the mortgage is required for these buyers, should have taken anything above and beyond the asking price as "a bonus" (by their own admission 'every bit of advice out there tells you to expect a downvaluation") 

With all due respect if the buyers had an extra 26 grand floating about in cash I doubt theyd be buying a 2 bed, theyd be increasing their deposit for a 3 bed.

I very much doubt they said this. They likely made the offer and possibly added some spiel about why they were the best buyers. No one makes an offer and says “If the lenders don’t agree we’ll be down valuing”.

EAs don’t generally pluck their housing values out of thin air. They generally don’t undervalue. Certainly no one buys a house expecting the bank to value it at more than the EA does.

If it’s on the market for say £180k you should expect the bank to value it at £180k or less. If you then choose to offer £200k you should do so expecting this down valuation and therefore should be prepared to cover the rest out of your own pocket. If you can’t afford to do this or you don’t want to then don’t offer over asking. It’s really that simple.

Or am I wrong and people really believe the banks will agree with their over asking offer? I’m really not sure people are that naive but maybe I’m being generous.

eidand

Gavin83 said:

TXC said:

Gavin83 said:

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?

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. 

I don’t expect buyers to do anything other than honour their offers. If they’re choosing to offer over the asking price they should fully accept they’re overpaying for the property and that’s the choice they’re making. What you shouldn’t do is over offer to get accepted knowing full well you’re gonna reduce it in the future. It wastes the time and money of everyone in the chain, including the buyers themselves.

If you don’t want to overpay (which is a completely reasonable stance) then don’t offer over the asking price.

I really don’t understand the opinion that it’s the sellers fault for accepting the offer either. Why would you turn down money if someone is willing to pay it?

Its the buyers fault. Don’t blame the seller for taking someone at their word.

But this isnt a case of the buyers not following through on their offer - they are not saying "we wont pay this anymore even though we can" - as I said above if the bank had been able to facilitate their purchase I have no doubt the buyers would have proceeded as they likely held an AIP for their 196k offer

The buyers were almost certainly upfront about requiring a mortgage to complete their purchase and their offer being dependent on the bank playing ball. 

The seller, knowing that the mortgage is required for these buyers, should have taken anything above and beyond the asking price as "a bonus" (by their own admission 'every bit of advice out there tells you to expect a downvaluation") 

With all due respect if the buyers had an extra 26 grand floating about in cash I doubt theyd be buying a 2 bed, theyd be increasing their deposit for a 3 bed.

I very much doubt they said this. They likely made the offer and possibly added some spiel about why they were the best buyers. No one makes an offer and says “If the lenders don’t agree we’ll be down valuing”.

EAs don’t generally pluck their housing values out of thin air. They generally don’t undervalue. Certainly no one buys a house expecting the bank to value it at more than the EA does.

If it’s on the market for say £180k you should expect the bank to value it at £180k or less. If you then choose to offer £200k you should do so expecting this down valuation and therefore should be prepared to cover the rest out of your own pocket. If you can’t afford to do this or you don’t want to then don’t offer over asking. It’s really that simple.

Or am I wrong and people really believe the banks will agree with their over asking offer? I’m really not sure people are that naive but maybe I’m being generous.

That's what i said as well.We see people here all the time in this situations, offering over and then coming here to cry how the bank down-valued to what the original price was. 

If you can't cover the over price you yourself offered ( and no one forced you to ) then don't offer over asking.
Don't blame the vendor, blame yourself for not having any kind of financial sense and go buy red boots instead.

propertyhunter

Thrugelmir said:

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. 

This is how I see it. Some of these houses will never come back onto the market in my lifetime if people are planning on them being 'forever homes' - since they're buying at the stage of life when you stay put. For these houses, I would not flinch in offering even 25k over asking (this is London prices). 

Thrugelmir

propertyhunter said:

Thrugelmir said:

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. 

This is how I see it. Some of these houses will never come back onto the market in my lifetime if people are planning on them being 'forever homes' - since they're buying at the stage of life when you stay put. For these houses, I would not flinch in offering even 25k over asking (this is London prices). 

Some years ago a property came on the market close to Marlborough. Guide price £2.25 million. In the end there were 53 interested parties. The winning bidder paid £3.75 million.  To some people money is no object to get what they want. 

Gavin83

propertyhunter said:

Thrugelmir said:

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. 

This is how I see it. Some of these houses will never come back onto the market in my lifetime if people are planning on them being 'forever homes' - since they're buying at the stage of life when you stay put. For these houses, I would not flinch in offering even 25k over asking (this is London prices). 

Earlier on lookstraightahead questioned why people would pay over asking, even if they could. I don’t necessarily disagree with this questioning but none the less people do. 

I’ve seen several houses round here go for more than asking. We viewed a house last year that was listed at £425k. It popped up on the land registry sold prices the other day, it went for £480k. I very much doubt the bank funded that so they likely found £55k from their own pocket. Madness? Maybe but I’m sure they had their reasons.

Ultimately EAs don’t set prices, nor vendors, lenders or surveyors. Like any market prices are set by buyers. If someone is willing to pay it that’s what the house is worth.

I get it, it’s hard for FTBs. I was one myself 4 months ago. But offering an amount you know you can never hope to pay in the hope the vendor will have no choice but to agree is underhand. Offer what you think the house is worth and what you can afford to pay.

eidand

It is what it is, some people look at houses as an investment and can't stand the idea of "overpaying", whatever that means.

Others want specific things and don't just look at the money. Having the right type of property, in the right area is far more important than a few extra k.

A forever home you're happy in is way more important than a bit of extra cash.