Down valuation - Renegotiate price with seller vs try new lender for better valuation?

TheB

Hello!

Looking for opinions from anyone that might have been in this position...

We had our mortgage approved with Natwest but they have just downvalued the property we want to buy by a massive 30k! I am still trying to get the actual report from our broker but my understanding is there are not enough comparables that have been completed (they will not use SSTC) and they did a physical survey rather than just desk research and therefore will not even look to overturn the decision. This is the 5th house we offered on and we would not have offered on it if we didn't feel the asking price was fair compared to others on the market. We also paid for an independent full building survey and valuation which valued the property at the offer price (I have their comparables but they are all SSTC and Natwest won't entertain them)

We are now trying to decide the next steps...

1. Do we go back to the seller and ask to renegotiate sale price? They are now in a chain but I think it is very unlikely that they will come down the full 30k - that said, the property has made 90k in just a year (it's a lot but we think the current price is actually comparable to other local properties and it's had a lot of reno done  - new kitchen, floors, all windows replaced, new boiler, full redecoration - the only areas still needing work are garden and bathroom) so they might come down some, and then we could take a bit of a hit and borrow less from Natwest but still have just about enough money in our pot to do the work needed - the benefits are a lower debt, lower interest rate over 5 years plus lower purchase price so potential to make more money on the property over time if it has been unfairly valued by Natwest. Obviously, the cons are we are overpaying on the property according to Natwest (but not according to the other local surveyors we used who came highly recommended and who I assume did a more thorough survey))

2. Do we just go for another lender now (Halifax) at a higher interest rate and see if they value the property higher? But this means the higher interest rate and the potential they also downvalue/use the same surveyor but could be quicker than re-negotiating and was our broker's suggestion. It would also give us two down valuations to challenge the sellers if that was the outcome. 

If anyone has been in a similar situation I'd love to hear your thoughts, I am leaning towards option 1.... 

TIA to anyone who can help!

stek2008

I'm by no means an expert - but having been messed around by NatWest recently I do sympathise. 

I'd suggest starting with a honest "just keeping you updated" phone call to the seller's estate agents...
Tell them you're not looking to back out but are having to look at options with your mortgage broker, advise them the valuation came in £30k lower and ask them to enquire if the seller can meet you anywhere on price. They might be keen enough to get things moving that they meet you somewhere so the £30k is less to swallow. 
Stress you're exploring other options too like alternative lenders/increased deposits...

NatWest tend to use LGSS (Legal & General Survey Services) to do their valuations. 
I understand that Halifax usually use E.Surv. BUT there can be some crossover - e.g. my NatWest application stalled because a E.Surv surveyor (instructed by LGSS) refused to value the property as worth anything.

My broker did some research for me to see which lenders use other survey companies after NatWest fell through - we've gone with Santander, who use Countrywide, if that's any help.
All these big survey outfits outsource though so it's quite possible that you might get the same local surveyor instructed again by any of them...

TheB

Thanks for replying, this is helpful as it is what we were thinking of doing as a first step.... sorry you got messed around too. Did you get a better valuation with Santander in the end?

stek2008

TheB said:

Thanks for replying, this is helpful as it is what we were thinking of doing as a first step.... sorry you got messed around too. Did you get a better valuation with Santander in the end?

Still waiting to hear - they valued on Thursday last week so hoping for an update any day now. 

Hope you manage to get your situation sorted. 

Thrugelmir

Has the property been flipped on the back of the renovation?  90k is a sizable increase. 

TheB

Thanks Stek, you too! Thrugelmir - so our solicitor has also asked them to justify the increase and explain why they are selling so fast... - it doesn't seem to be a professional flip - the couple are young and not developers (we don't think anyway) and it's not a complete renovation... but I agree, it's a huge increase. We aren't sure how or why they are selling so fast so we just tried to stick to the condition of the house now vs others we were looking at, and paid for the full building survey just in case they had uncovered something and trying to shift it fast but it hasn't found anything major. 

amnblog

1. Do we go back to the seller and ask to renegotiate sale price?

Why would you not? Don't ignore the potential that it is not worth what you believe it is worth


2. Do we just go for another lender now (Halifax) at a higher interest rate and see if they value the property higher?

Lender two may appoint the same valuer as Lender one, also refer to the answer to Q1

nekr0mantik

i went through down valuation last year with Halifax and then tried Barclays and the second one was even lower then first valuation even though 2 different valuation company so I think your not gonna get much better valuation.

TheB

Thanks to all that have replied. We have made a new offer to the sellers so we will see what the outcome is. 

Knotty13

TheB said:

Thanks to all that have replied. We have made a new offer to the sellers so we will see what the outcome is. 

How did it go?

TheB

Hello! Well, we heard from the estate agent today that the exact same valuer attended the property this morning, so I am expecting the same valuation next week! A bit of a waste of time but there we go. Was worth a punt. I am surprised they even went out again. 

Anyway (assuming the same outcome again) this leaves us with the decision of if we want to pay over the bank's valuation and we are very torn.

We really like the house and we know that the market locally is wild, with everything going for higher than it's probably worth... all the houses around it continue to go on for a similar price if not more... and we don't massively want to have to start again in that market. We are already out of our property and living in a situation that can't really be long-term. We've also already invested in buying this house (RICS survey, searches etc) and the private survey valued it at the current sale price. 

But also there is a line where we won't be left with enough in our pot to do the work we know it needs. At the moment we are thinking we could offer to meet the sellers halfway between the original offer and bank valuation which is still 15k over the bank's valuation but leaves us just about enough to do the work we think the house needs.

But is that a crazy amount over bank value to pay? I know what you are willing to pay is a personal choice and subject to personal financial stability and how much you want the house but I would be really keen to hear if people have offered over and above bank value and if it was a lot or if this just feels like a really stupid decision?! Any thoughts from others are very welcome!