Advice for renegotiating following down valuation (FTB)

Chloe27895

I would be grateful for advice on how to go about renegotiating on our house purchase. We are first time buyers and had applied for 90% LTV

The mortgage valuation came back yesterday evening as 4-5% lower than our offer, back to the houses original asking price. The lender has offered the maximum they would lend based on the valuation and the option of a 95% LTV with a higher rate if needed but this rate would be significantly worse obviously

Our first option is we want to renegotiate the purchase price with the vendor, I'd be grateful for any advice on how to approach this. 

Coincidentally, we have just received our own survey report, which does contain a fair few moderate problems to fix in the next year or so - e.g. fascias and gutter repair, exterior door replacements, a window replacement, rotten door frame in garage etc etc which I could use as leverage if needed

The vendor is selling his rental property with no chain so I have hopes he may be more able to renegotiate that someone with a chain and needing a very specific amount for the own property purchase

How would you begin the conversation?

Thanks

[Deleted User]

I don't think there's any advice to give you on 'how' to negotiate on this. Essentially if you decide to then you need to raise the survey and elements that have been raised and try and ask for a reduction based on this and see what they say. I highly suspect you will get a no though.

Ultimately - the areas that have been brought up I think would generally be considered standard maintenance / wear and tear that would be expected. Unless you're buying a new build then there will generally be some things and most of this are things that should be clear on viewing and not really a post offer negotiable.
The valuation was also a fairly small reduction and within the standards of variability you would expect.

If I was the vendor I would think that you have chosen to offer above the asking price so nicely, unless it's something dramatic then it's up to you to find the extra funds if the valuation comes in lower if you want the property.

Did the property have much interest from other buyers do you know?

Chloe27895

Thank you

As far as I know there was one buyer offering and they were a "similar position" so I assume also first time buyers needing a mortgage

I was surprised by the valuation, the house is in poor condition as it hasn't been looked after well by landlord or tennant. However it is in an incredibly desirable location with similar houses selling for more. After making offers on a few houses already and missing out we had gained a good idea or how far over asking price things were going regardless of what the asking price was to start. Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

So far I have let the estate agent know the valuation result and asked if the vendor is open to negotiate, I haven't heard back yet

comeandgo

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

Chloe27895

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

comeandgo

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Chloe27895

comeandgo said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Like I said, I didn't just offer what the house if worth to me, I offered what I genuinely believed the house to be worth. Sadly the banks disagree.
I have a buffer to account for plenty of the shortfall but not all of it.

Although I agree that everyone should always aim to have financial buffers for all manner of unexpected situations, I disagree with your expectation here. I can't think of many people who would go to buy their first house and only decide to use half of what they've saved up on the deposit and let the rest of it sit stagnant in their bank account.
Lets say your first house is £200,000. You will likely aim for £20,000 deposit and try and save over £24,000 perhaps. What you're suggesting would involve saving up an additional £10,000+ which would take the average person several years - several years of paying out for rent more expensive than a mortgage. 

Houses are sold subject to contract and subject to surveys for a reason, the results of surveys and valuations are perfectly suitable grounds to renegotiate.

[Deleted User]

Chloe27895 said:

comeandgo said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Like I said, I didn't just offer what the house if worth to me, I offered what I genuinely believed the house to be worth. Sadly the banks disagree.
I have a buffer to account for plenty of the shortfall but not all of it.

Although I agree that everyone should always aim to have financial buffers for all manner of unexpected situations, I disagree with your expectation here. I can't think of many people who would go to buy their first house and only decide to use half of what they've saved up on the deposit and let the rest of it sit stagnant in their bank account.
Lets say your first house is £200,000. You will likely aim for £20,000 deposit and try and save over £24,000 perhaps. What you're suggesting would involve saving up an additional £10,000+ which would take the average person several years - several years of paying out for rent more expensive than a mortgage. 

Houses are sold subject to contract and subject to surveys for a reason, the results of surveys and valuations are perfectly suitable grounds to renegotiate.

I do understand where you're coming from and it's great that you had a buffer to try and deal with some of it. But - I think the comments have also been because it's not a substantial difference in the valuation and you can make up the difference with an alternative mortgage product should you wish.

The question is more about whether the surveyors comments are worthy of renegotiation and if so, how you approach it. If you do decide to do it then probably just being upfront and focus on the valuation given more than the comments perhaps? Although houses are SSTC based on survey, there is normally something a lot more substantial to base grounds for negotiation on. In general I would expect that element of valuation variance to  potentially come up and most people would generally expect the kinds of maintenance issues you've raised so the vendor would expect that you've made your offer accordingly.

Absolutely nothing to stop you approaching it with them though, the worst they can say is no

Chloe27895

Deleted_User said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Like I said, I didn't just offer what the house if worth to me, I offered what I genuinely believed the house to be worth. Sadly the banks disagree.
I have a buffer to account for plenty of the shortfall but not all of it.

Although I agree that everyone should always aim to have financial buffers for all manner of unexpected situations, I disagree with your expectation here. I can't think of many people who would go to buy their first house and only decide to use half of what they've saved up on the deposit and let the rest of it sit stagnant in their bank account.
Lets say your first house is £200,000. You will likely aim for £20,000 deposit and try and save over £24,000 perhaps. What you're suggesting would involve saving up an additional £10,000+ which would take the average person several years - several years of paying out for rent more expensive than a mortgage. 

Houses are sold subject to contract and subject to surveys for a reason, the results of surveys and valuations are perfectly suitable grounds to renegotiate.

I do understand where you're coming from and it's great that you had a buffer to try and deal with some of it. But - I think the comments have also been because it's not a substantial difference in the valuation and you can make up the difference with an alternative mortgage product should you wish.

The question is more about whether the surveyors comments are worthy of renegotiation and if so, how you approach it. If you do decide to do it then probably just being upfront and focus on the valuation given more than the comments perhaps? Although houses are SSTC based on survey, there is normally something a lot more substantial to base grounds for negotiation on. In general I would expect that element of valuation variance to  potentially come up and most people would generally expect the kinds of maintenance issues you've raised so the vendor would expect that you've made your offer accordingly.

Absolutely nothing to stop you approaching it with them though, the worst they can say is no

I think for me this is quite a substantial difference, but I guess that is subjective! I was worried about a lower valuation but never expected it to be by this much
I think it is likely to be a case of negotiation based on the valuation rather than our survey as I see what you mean with how a lot of the surveys findings could be considered wear and tear. 
I suppose the largest cost problem in the survey could be that it says the garage would likely need replacing in the next 5 years, that's expensive and unexpected, but not an immediate or definite expense. 

And yes you're right - if negotiating fails, we will have to look at other mortgage products. We'll see if they're open to discussion

[Deleted User]

Chloe27895 said:

Deleted_User said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Like I said, I didn't just offer what the house if worth to me, I offered what I genuinely believed the house to be worth. Sadly the banks disagree.
I have a buffer to account for plenty of the shortfall but not all of it.

Although I agree that everyone should always aim to have financial buffers for all manner of unexpected situations, I disagree with your expectation here. I can't think of many people who would go to buy their first house and only decide to use half of what they've saved up on the deposit and let the rest of it sit stagnant in their bank account.
Lets say your first house is £200,000. You will likely aim for £20,000 deposit and try and save over £24,000 perhaps. What you're suggesting would involve saving up an additional £10,000+ which would take the average person several years - several years of paying out for rent more expensive than a mortgage. 

Houses are sold subject to contract and subject to surveys for a reason, the results of surveys and valuations are perfectly suitable grounds to renegotiate.

I do understand where you're coming from and it's great that you had a buffer to try and deal with some of it. But - I think the comments have also been because it's not a substantial difference in the valuation and you can make up the difference with an alternative mortgage product should you wish.

The question is more about whether the surveyors comments are worthy of renegotiation and if so, how you approach it. If you do decide to do it then probably just being upfront and focus on the valuation given more than the comments perhaps? Although houses are SSTC based on survey, there is normally something a lot more substantial to base grounds for negotiation on. In general I would expect that element of valuation variance to  potentially come up and most people would generally expect the kinds of maintenance issues you've raised so the vendor would expect that you've made your offer accordingly.

Absolutely nothing to stop you approaching it with them though, the worst they can say is no

I think for me this is quite a substantial difference, but I guess that is subjective! I was worried about a lower valuation but never expected it to be by this much
I think it is likely to be a case of negotiation based on the valuation rather than our survey as I see what you mean with how a lot of the surveys findings could be considered wear and tear. 
I suppose the largest cost problem in the survey could be that it says the garage would likely need replacing in the next 5 years, that's expensive and unexpected, but not an immediate or definite expense. 

And yes you're right - if negotiating fails, we will have to look at other mortgage products. We'll see if they're open to discussion

Yes. It's worth a conversation to see if you could meet in the middle perhaps. I think the problem area is that they've valued it at what the asking price was (if I'm correct in that?) so it's really a down-valuation which is why I think you will meet more resistance.
But as with everything - just pitch it right and be polite and hopefully there's some ground to be made up. If not, I wouldn't let the valuation deter you from paying that price. You will just need to be careful with you budget and think about the garage repair as a future cost to budget for as well.

Chloe27895

Deleted_User said:

Chloe27895 said:

Deleted_User said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

comeandgo said:

Chloe27895 said:

Thank you

 Many houses are selling (STC of course and may also be down-valued) for 10% over and beyond. So our 5%, though generous, didn't feel like a crazy offer!

But you don’t have the extra cash to offer over which is why you are in this predicament.

We have more than enough money for the deposit required for our offer which is 10%
If someone is buying their first house with enough 'spare cash' to pay thousands of pounds extra in addition to the deposit, mortgage, legal fees etc I reckon they'd be buying a more expensive house in the first place
We believed the house to be worth what we offered based on looking for a house in the area for 6 months and knowing what other houses are selling for - otherwise we obviously wouldn't have offered that amount. Sadly I'm not a professional surveyor
Your comment isn't constructive at all and it quite rude...

When you are offering what you believe the property to be worth to you then you need a buffer to make up the shortfall between mortgage offer plus deposit and what you have offered.  Why should the owner take a hit because you do not have the finance available and can’t stand by your offer.

Like I said, I didn't just offer what the house if worth to me, I offered what I genuinely believed the house to be worth. Sadly the banks disagree.
I have a buffer to account for plenty of the shortfall but not all of it.

Although I agree that everyone should always aim to have financial buffers for all manner of unexpected situations, I disagree with your expectation here. I can't think of many people who would go to buy their first house and only decide to use half of what they've saved up on the deposit and let the rest of it sit stagnant in their bank account.
Lets say your first house is £200,000. You will likely aim for £20,000 deposit and try and save over £24,000 perhaps. What you're suggesting would involve saving up an additional £10,000+ which would take the average person several years - several years of paying out for rent more expensive than a mortgage. 

Houses are sold subject to contract and subject to surveys for a reason, the results of surveys and valuations are perfectly suitable grounds to renegotiate.

I do understand where you're coming from and it's great that you had a buffer to try and deal with some of it. But - I think the comments have also been because it's not a substantial difference in the valuation and you can make up the difference with an alternative mortgage product should you wish.

The question is more about whether the surveyors comments are worthy of renegotiation and if so, how you approach it. If you do decide to do it then probably just being upfront and focus on the valuation given more than the comments perhaps? Although houses are SSTC based on survey, there is normally something a lot more substantial to base grounds for negotiation on. In general I would expect that element of valuation variance to  potentially come up and most people would generally expect the kinds of maintenance issues you've raised so the vendor would expect that you've made your offer accordingly.

Absolutely nothing to stop you approaching it with them though, the worst they can say is no

I think for me this is quite a substantial difference, but I guess that is subjective! I was worried about a lower valuation but never expected it to be by this much
I think it is likely to be a case of negotiation based on the valuation rather than our survey as I see what you mean with how a lot of the surveys findings could be considered wear and tear. 
I suppose the largest cost problem in the survey could be that it says the garage would likely need replacing in the next 5 years, that's expensive and unexpected, but not an immediate or definite expense. 

And yes you're right - if negotiating fails, we will have to look at other mortgage products. We'll see if they're open to discussion

Yes. It's worth a conversation to see if you could meet in the middle perhaps. I think the problem area is that they've valued it at what the asking price was (if I'm correct in that?) so it's really a down-valuation which is why I think you will meet more resistance.
But as with everything - just pitch it right and be polite and hopefully there's some ground to be made up. If not, I wouldn't let the valuation deter you from paying that price. You will just need to be careful with you budget and think about the garage repair as a future cost to budget for as well.

Yes the valuation has taken it back down to asking price.
I would be really happy to meet in the middle. We could just about scrape by with making up the difference ourselves while keeping the mortgage more affordable at the 90% LTV rate. I haven't heard back from the estate agent yet so I assume she's let them know and they're thinking about what they want to say. I haven't suggested a price yet or anything, I've just asked if they are willing to discuss the price