How are mortgage valuations done?

badger09

Willow226 said:

badger09 said:

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

What was the asking price?

What have similar properties sold for recently?

House was valued by the EA and because of the family wanting to sell it quickly (it was their grandmas property and she passed away) they put it up at the valuation of £70,000, we offered that, and they accepted for a quick sale (we are first time buyers, no chain). 

Similar properties are around that price, some a little lower, some a fair bit higher… it’s an end terrace property with a front, side and back garden. There is a drive and a garage. The inside does need updating though. We are in the hull area. 

 

Ok, that sounds reasonable. Problems often arise when FTBs offer way above asking price then its valued lower by lender, & they can't make up the shortfall. I'd check actual sold prices if you can, rather than when they're shown as STC as that doesn't tell you what was paid  - just what was asked

You mention grandma has passed away. Has Probate been granted yet? In other words, can vendors/executors legally sell the house yet? 

Willow226

badger09 said:

Willow226 said:

badger09 said:

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

What was the asking price?

What have similar properties sold for recently?

House was valued by the EA and because of the family wanting to sell it quickly (it was their grandmas property and she passed away) they put it up at the valuation of £70,000, we offered that, and they accepted for a quick sale (we are first time buyers, no chain). 

Similar properties are around that price, some a little lower, some a fair bit higher… it’s an end terrace property with a front, side and back garden. There is a drive and a garage. The inside does need updating though. We are in the hull area. 

 

Ok, that sounds reasonable. Problems often arise when FTBs offer way above asking price then its valued lower by lender, & they can't make up the shortfall. I'd check actual sold prices if you can, rather than when they're shown as STC as that doesn't tell you what was paid  - just what was asked

You mention grandma has passed away. Has Probate been granted yet? In other words, can vendors/executors legally sell the house yet? 

Yes sold for prices from 2019 onwards are 67,000 or more - the lower value ones don’t necessarily have the land and off street parking options that this property has though. 

Zoopla has a price guide estimate of 67-100 for the address?? 

Yes the sellers have the ‘grant of probate’ document… I have been told this is the only thing required to be able to sell the property. 

RS2OOO

Mahsroh said:

I've only ever heard of down valuations. I've never had a valuation come back higher than what i'd said / asking price. So, unless anyone on here has different experiences (although as above there is no hard and fast rule) 

Valuation for my current onward purchase came back exactly half way between the listed for sale price and my offer/purchase price (£30k difference).

Not sure if that amounts to an up valuation or a down valuation, but I think they valued it too high, which is a first.

I also suspect they didn't go inside the property and see the state of it.

badger09

Willow226 said:

badger09 said:

Willow226 said:

badger09 said:

Willow226 said:

@Mahsroh thank you! I get what you’re saying. I’m hoping he will agree ‘in the region of 70,000’ lol! 

I was hoping that there was more cases of the purchase price being agreed than not. Just trying to settle anxieties. 

Valuation isn’t until Tuesday! 

What was the asking price?

What have similar properties sold for recently?

House was valued by the EA and because of the family wanting to sell it quickly (it was their grandmas property and she passed away) they put it up at the valuation of £70,000, we offered that, and they accepted for a quick sale (we are first time buyers, no chain). 

Similar properties are around that price, some a little lower, some a fair bit higher… it’s an end terrace property with a front, side and back garden. There is a drive and a garage. The inside does need updating though. We are in the hull area. 

 

Ok, that sounds reasonable. Problems often arise when FTBs offer way above asking price then its valued lower by lender, & they can't make up the shortfall. I'd check actual sold prices if you can, rather than when they're shown as STC as that doesn't tell you what was paid  - just what was asked

You mention grandma has passed away. Has Probate been granted yet? In other words, can vendors/executors legally sell the house yet? 

Yes sold for prices from 2019 onwards are 67,000 or more - the lower value ones don’t necessarily have the land and off street parking options that this property has though. 

Zoopla has a price guide estimate of 67-100 for the address?? 

Yes the sellers have the ‘grant of probate’ document… I have been told this is the only thing required to be able to sell the property. 

I wouldn't take too much notice of Zoopla, and that's a very wide range of ests! However, the other sold prices are useful and if they've already got Probate, sounds like you'll be ok. Good luck.

Willow226

I wouldn't take too much notice of Zoopla, and that's a very wide range of ests! However, the other sold prices are useful and if they've already got Probate, sounds like you'll be ok. Good luck.

I really hope so! Have my heart set on this move now. I don’t know what I was really looking for in terms of answers to my question really… I know the outcome will be what it will be. 

I have read some of the down valuing posts and see what others have gone through. I’m just hoping this isn’t the ‘norm’ these days (with there being an increase) and we are lucky to get the go ahead with our valuation. 

I’m then hoping if all is well that the transaction doesn’t take long… a solicitor is already instructed by my broker and has been asking me for documents to be completed. 

badger09

Willow226 said:

I wouldn't take too much notice of Zoopla, and that's a very wide range of ests! However, the other sold prices are useful and if they've already got Probate, sounds like you'll be ok. Good luck.

I really hope so! Have my heart set on this move now. I don’t know what I was really looking for in terms of answers to my question really… I know the outcome will be what it will be. 

I have read some of the down valuing posts and see what others have gone through. I’m just hoping this isn’t the ‘norm’ these days (with there being an increase) and we are lucky to get the go ahead with our valuation. 

I’m then hoping if all is well that the transaction doesn’t take long… a solicitor is already instructed by my broker and has been asking me for documents to be completed. 

As its a Probate property, you should be prepared for some 'Not Known' 'Not available' answers on the TA6 (Property Information Form) as the executor vendors probably won't know the house as well as the owner did. This shouldn't cause major problems but as a FTB it might concern you more than it needs to. Your solicitor will advise, but you could have a look at the form so you know what to expect. Feel free to come back with any more questions. Plenty of help here.

https://wura.org.uk/wp-content/uploads/Documents/TF-TA6-Form.pdf

lookstraightahead

I really hope it goes well for you. Lovely to see a seller who sticks to their price, and a buyer who knows their limits.

you deserve for it to be a smooth ride, all of you. With no chain, it should be quite straightforward.

Too many greedy people around at the moment.

lookstraightahead

badger09 said:

Willow226 said:

I wouldn't take too much notice of Zoopla, and that's a very wide range of ests! However, the other sold prices are useful and if they've already got Probate, sounds like you'll be ok. Good luck.

I really hope so! Have my heart set on this move now. I don’t know what I was really looking for in terms of answers to my question really… I know the outcome will be what it will be. 

I have read some of the down valuing posts and see what others have gone through. I’m just hoping this isn’t the ‘norm’ these days (with there being an increase) and we are lucky to get the go ahead with our valuation. 

I’m then hoping if all is well that the transaction doesn’t take long… a solicitor is already instructed by my broker and has been asking me for documents to be completed. 

As its a Probate property, you should be prepared for some 'Not Known' 'Not available' answers on the TA6 (Property Information Form) as the executor vendors probably won't know the house as well as the owner did. This shouldn't cause major problems but as a FTB it might concern you more than it needs to. Your solicitor will advise, but you could have a look at the form so you know what to expect. Feel free to come back with any more questions. Plenty of help here.

https://wura.org.uk/wp-content/uploads/Documents/TF-TA6-Form.pdf

What a nice post.

we sold my MIL property to a first time buyer. We didn't have all the answers as she had been there for 60 years. We let the FTB have as much access as they needed to check things out. It's been beautifully modernised now. MIL always wanted it modern but never got round to it. She would be proud to see it now.

princeofpounds

If you want to understand how valuations are done, in theory read the RICS Red Book Manual (https://www.rics.org/uk/upholding-professional-standards/sector-standards/valuation/red-book/) and the specific guidance given by the lender to valuers.

There are several different methods of valuation, but the usual one for residential property is the comparison method. The surveyor will be able to see recent transactions in the local area, and will adjust for factors like floorspace, condition, location etc. There is a scientific element to this process but huge chunks of it are relatively subjective.

The surveyor's main interest is protecting the interest of their client, the mortgage lender. That means ensuring that the property has sufficient value to act as good security for the mortgage being offered. So they are not going to overvalue on a purchase - indeed the property has been for sale, it is typically rational to assume you are the highest bidder out there and no-one offered more. Overvaluations are more common in re-mortgages if you have just been cautious in your claimed valuation in your application. In circumstances where the sale is supposedly at an undervalue (between family members perhaps) then the lenders and their surveyors normally pay extra attention to valuation (no drive-by valuations, for example).

Sometimes they undervalue. But they are not looking to catch you out. The lenders do actually want to extend mortgages - that is how they make their money - so they try to be as objective as they can. The problems with undervaluation tend to be more common in unusual properties or situations where the market is moving quickly and you have bid above the valuations of prior transactions. In that circumstance, it may well be rational to ask you, the borrower, to take the extra equity risk for choosing to do so. 

Willow226

princeofpounds said:

If you want to understand how valuations are done, in theory read the RICS Red Book Manual and the specific guidance given by the lender to valuers.

There are several different methods of valuation, but the usual one for residential property is the comparison method. The surveyor will be able to see recent transactions in the local area, and will adjust for factors like floorspace, condition, location etc. There is a scientific element to this process but huge chunks of it are relatively subjective.

The surveyor's main interest is protecting the interest of their client, the mortgage lender. That means ensuring that the property has sufficient value to act as good security for the mortgage being offered. So they are not going to overvalue on a purchase - indeed the property has been for sale, it is typically rational to assume you are the highest bidder out there and no-one offered more. Overvaluations are more common in re-mortgages if you have just been cautious in your claimed valuation in your application. In circumstances where the sale is supposedly at an undervalue (between family members perhaps) then the lenders 

badger09 said:

Willow226 said:

I wouldn't take too much notice of Zoopla, and that's a very wide range of ests! However, the other sold prices are useful and if they've already got Probate, sounds like you'll be ok. Good luck.

I really hope so! Have my heart set on this move now. I don’t know what I was really looking for in terms of answers to my question really… I know the outcome will be what it will be. 

I have read some of the down valuing posts and see what others have gone through. I’m just hoping this isn’t the ‘norm’ these days (with there being an increase) and we are lucky to get the go ahead with our valuation. 

I’m then hoping if all is well that the transaction doesn’t take long… a solicitor is already instructed by my broker and has been asking me for documents to be completed. 

As its a Probate property, you should be prepared for some 'Not Known' 'Not available' answers on the TA6 (Property Information Form) as the executor vendors probably won't know the house as well as the owner did. This shouldn't cause major problems but as a FTB it might concern you more than it needs to. Your solicitor will advise, but you could have a look at the form so you know what to expect. Feel free to come back with any more questions. Plenty of help here

What a nice post.

we sold my MIL property to a first time buyer. We didn't have all the answers as she had been there for 60 years. We let the FTB have as much access as they needed to check things out. It's been beautifully modernised now. MIL always wanted it modern but never got round to it. She would be proud to see it now.

Thank you both. 

The family who have the grant of probate have chosen to go with me instead of an investor… which I’m really grateful for… they said that their grandmother would rather have a young family benefit from the property (we have a 15month old daughter)…. The property needs decorating… it’s very typical ‘old lady’ style (patterned carpets and textured wallpaper) but other than that it’s a really good size and will be beautiful when it’s done up. 

The owners said that they put the property on for the lower side of the price estimate just for a quick sale - and accepted exactly that amount - so I’m hopeful that this will be a price that doesn’t require and undervaluation. 

Thank you so much for your help @badger … I will take a look at the link