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

michael1234

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.

MaryNB

Skiddaw1 said:

As it happens, our previous two house moves both took place in a buyer's market. In retrospect, whilst we may not have maxed out in terms of selling price, it was SO much easier to find a buyer able to proceed as well as for us to view plenty of in-budget houses. I feel desperately sorry for anyone trying to buy or sell currently, especially FTBs.

My friend is trying to buy her first home with a slightly smaller budget than I had about 14 months ago and hasn't a hope of getting anything like what I got (2 bed terraced house), even going out further a few miles. She's right at the bottom of the market for houses. There are about a third of the properties on the market as there were in late 2020. When I bought I told the EA I wasn't going above asking (more Covid related economic uncertainty at the time) but thankfully got the house. I could have afforded another £15k or so and, with the enormous benefit of hindsight, it would have been more than worth it. Otherwise I'd still be stuck in a house share in a city with soaring rent prices. 

TXC

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.

My hourly trawl of rightmove tells me the sale on this house has fallen through yet again. Daresay it's been downvalued again. 4th time on the merry go bevause of unrealistic expectation.

OP - just as an fyi this is also a two bed, they seem to be considerably less able to command higher values from surveyors than 3+ beds from what I've experienced (makes sense as it eliminates a lot of families from the potential buyer base), and I'm in one of the craziest parts of the uk market wise. just my advice- take the buyers at valued price. Your only other option would be to wait for an extremely generous cash buyer. Only you know if you have that time at your disposal in your chain.

TheJP

GDB2222 said:

TheJP said:

GDB2222 said:

TheJP said:

GDB2222 said:

aoleks said:

One belief keeps coming back in dozens of threads: that as a FTBer, you don’t have money.

As a FTBer, I will pay what I want to pay, even if I’m able to get more. Your status as a buyer says nothing about your deposit or about how much you want to stretch your finances.

From where the stupid advice to ignore FTBers and sell to someone with cash or equity?

When did FTBers become these parasites you keep describing?

The advice I have actually seen on this thread is to check that your buyers have the means to complete the purchase. Of course, it does not matter whether that’s from equity in their current property, or savings, or bank of mum and dad. Normally, the estate agent should do that, but they seem to have slipped up here. It’s been assumed, rightly or wrongly, that the most likely source is equity. 

In this case, the op commented that their buyers are really nice people, which is a bonus, but not nearly as good as them having lots of dosh, given that a valuation below the offer price was entirely foreseeable. 

I think from the sound of it they do have the means (mortgage DIP) as they wouldn't have offered what they did if they didn't think that the lender would authorise that much. The issue is the bank will only take the risk on £170k as that's what they value the property at. If the bank valued it at £196K then they would proceed.

The trouble is that the lender valuation at around £170k was predictable as a likely outcome. The estate agent should have assessed viability of the offers on that basis, and advised the sellers accordingly. 

As it was, I assume the agent advised on the buyers being proceedable, but made the mistake of doing so on the basis the lender would value at the agreed sale price. Then, given a range of offers that the agent presumably said were all proceedable, the sellers chose the highest one. 

I'm not sure if the OP has made public what they actually marketed the house at, I know that PB valued it at £170-180K. Again if the buyer gave the EA a DIP for £200k and had X deposit then that would satisfy the EAs screening. The EA cant for certain predict that the lender would value the property at £170k as it could have gone the other way and been valued more than what the OP accepted.

I don't know of any EA that would ask a buyer if they can make up the shortfall if the house was to be valued at X when they submit their first offer.

There is no blame in this situation just wrong outcomes, the OP was given a figure to market and accepted a higher offer and then used that figure for their onward purchase. Effectively the OP is doing what the buyers have done and that is offering on a property they cant afford.

If the property market in the area is on fire, with rapidly rising prices, the estate agents must have had quite a few sales falling through in this way. You would think they would adjust the way they work to deal with that, as they only earn money when sales complete?

It's hardly rocket science for the estate agent to tell the seller that they've had a lot of sales fall through recently due to low valuations, and to recommend accepting Buyer X's offer because he has say £50k equity in the house he's selling or £50k in the bank.

EA - Sir/Madame your house based on many factors is worth between £170-180K, great lets market it at £185K, bidder offers £196K lender wont approve. At what point did the EA fail here? They can advise but we all know the seller holds the key when deciding what to market at. My EA said my house in the market and with similar properties was £10k less than i sold, i knew based on research my area was hot.

The EA is a mediator they don't tell the seller what offer to accept, if the seller wants to accept an offer over £100K list price then that's up to the seller.

By your scenario what you have identified is that the OP is greedy and not accepting their house is £26K less than what the buyer offered. This then leads on to the further issue that the inflated/unrealistic valuation or OP expectation to buy their next house.

Noneforit999

TheJP said:

GDB2222 said:

TheJP said:

GDB2222 said:

TheJP said:

GDB2222 said:

aoleks said:

One belief keeps coming back in dozens of threads: that as a FTBer, you don’t have money.

As a FTBer, I will pay what I want to pay, even if I’m able to get more. Your status as a buyer says nothing about your deposit or about how much you want to stretch your finances.

From where the stupid advice to ignore FTBers and sell to someone with cash or equity?

When did FTBers become these parasites you keep describing?

The advice I have actually seen on this thread is to check that your buyers have the means to complete the purchase. Of course, it does not matter whether that’s from equity in their current property, or savings, or bank of mum and dad. Normally, the estate agent should do that, but they seem to have slipped up here. It’s been assumed, rightly or wrongly, that the most likely source is equity. 

In this case, the op commented that their buyers are really nice people, which is a bonus, but not nearly as good as them having lots of dosh, given that a valuation below the offer price was entirely foreseeable. 

I think from the sound of it they do have the means (mortgage DIP) as they wouldn't have offered what they did if they didn't think that the lender would authorise that much. The issue is the bank will only take the risk on £170k as that's what they value the property at. If the bank valued it at £196K then they would proceed.

The trouble is that the lender valuation at around £170k was predictable as a likely outcome. The estate agent should have assessed viability of the offers on that basis, and advised the sellers accordingly. 

As it was, I assume the agent advised on the buyers being proceedable, but made the mistake of doing so on the basis the lender would value at the agreed sale price. Then, given a range of offers that the agent presumably said were all proceedable, the sellers chose the highest one. 

I'm not sure if the OP has made public what they actually marketed the house at, I know that PB valued it at £170-180K. Again if the buyer gave the EA a DIP for £200k and had X deposit then that would satisfy the EAs screening. The EA cant for certain predict that the lender would value the property at £170k as it could have gone the other way and been valued more than what the OP accepted.

I don't know of any EA that would ask a buyer if they can make up the shortfall if the house was to be valued at X when they submit their first offer.

There is no blame in this situation just wrong outcomes, the OP was given a figure to market and accepted a higher offer and then used that figure for their onward purchase. Effectively the OP is doing what the buyers have done and that is offering on a property they cant afford.

If the property market in the area is on fire, with rapidly rising prices, the estate agents must have had quite a few sales falling through in this way. You would think they would adjust the way they work to deal with that, as they only earn money when sales complete?

It's hardly rocket science for the estate agent to tell the seller that they've had a lot of sales fall through recently due to low valuations, and to recommend accepting Buyer X's offer because he has say £50k equity in the house he's selling or £50k in the bank.

EA - Sir/Madame your house based on many factors is worth between £170-180K, great lets market it at £185K, bidder offers £196K lender wont approve. At what point did the EA fail here? They can advise but we all know the seller holds the key when deciding what to market at. My EA said my house in the market and with similar properties was £10k less than i sold, i knew based on research my area was hot.

The EA is a mediator they don't tell the seller what offer to accept, if the seller wants to accept an offer over £100K list price then that's up to the seller.

By your scenario what you have identified is that the OP is greedy and not accepting their house is £26K less than what the buyer offered. This then leads on to the further issue that the inflated/unrealistic valuation or OP expectation to buy their next house.

I realise not all EA's are created equal but the EA has a stake here too, they don't get their fees until the house sells so they really should be advising the sellers there is potential for a down valuation considering the offer was 10% over the top end they valued it at. Although being Purple Bricks, perhaps its not the same level of service as a main stream EA? If the house has to be re-listed, it just delays the EA's fees and likely costs them more overall in terms of admin etc.

In the current market where 10+ buyers might be vying for a single property, I am not surprised stuff is getting down valued if they are offering well over even the top end of the valuation.

We have an open house this weekend, our EA has 13 people who are viewing it, we had to extend the timeslots as so many wanted to view it. In all likelihood we are going to get several offers above the 'Offers Over' figure so will be interesting to see how many FTB's there are. 

HotPantsCruiser

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?

TXC

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. 

Gavin83

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.

MaryNB

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?

I had to show my AIP and proof of deposit before my seller would formally accept my offer. By checking if the buyer has a low LTV the OP knows they're far more likely to weather a downvaluation. The OP should be wary of any buyer with a 90LTV offering significantly above asking. 

lookstraightahead

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.

Although usually they would only have the choice once they sell their house and are very probably in a chain, which a FTB isn't.

I would rather sell at a realistic price to a buyer with no chain.