Your experience - Down valuations :/

BirchFozz

Hello all, currently waiting for result of lender valuation (Bank of Ireland / BoI) and feeling worried that it’ll get down valued. 

The property went up for sale for £60k more than it was bought for 2 years ago. And we offered 5k more than that as we were up against other offers! 

What has been your experience? Did the seller realise they has asked for too much and accepted the new valuation etc.

I can totally understand if this property gets down valued - other similar in the area have not sold for anywhere near this price, BUT the house market has gone crazy/inflation AND they did add in a driveway to the front. 

Just looking for some advice - others experience.

Also worth noting we are right at the end of the process really -we have a first time buyer who’s pretty much all set, just in enquiries- and the seller of our future home has no forward chain, and is going into rented. 

Any points of view from sellers/buyers would be great! 

[Deleted User]

Some will lower the price, some won't, some will meet halfway. There are too many factors for anyone else's experience to be useful.

But tackle it if and when the valuation comes in low. The figure will I form your strategy.and options.

user1977

BirchFozz said:

I can totally understand if this property gets down valued - other similar in the area have not sold for anywhere near this price, BUT the house market has gone crazy/inflation AND they did add in a driveway to the front. 

Well, the surveyor is going to look largely at what others similar in the area have sold for, so if there are recent sales which don't back up the price you've offered, expect the valuation to be lower than the price. Can you tell how much difference driveways make to the price locally?

TheCuriousSausage

My daughter's flat (which she sold a month ago) was valued at 10% less than two estate agent valuations. The solicitor said the surveyor was qualified and the estate agents weren't. She did manage to negotiate a little bit more but it wasn't good

lookstraightahead

At the end of the day it's the lenders risk. Wait to see what happens and that will inform your next step.

trakky14

We've experienced both, a house we wanted was downvalued 25k by the lender...the seller refused to come down more than 6k. We ended up walking away from that one. We're in the process of buying another that is about 100k more than anything in the area so we fully expected that to be undervalued.. BUT the surveyor went to see it in person and valued it what we are paying (it has outbuildings and land so worth more than the desktop valuation suggests)....

Depending on what happens you can either try another lender who might value it higher or try and get a in person valuation rather than a desktop one if the property is a lot different to the local ones.. or hope the seller will take some money off. Depends what they come back with. 

jonnydeppiwish!

BirchFozz said:

Hello all, currently waiting for result of lender valuation (Bank of Ireland / BoI) and feeling worried that it’ll get down valued. 

The property went up for sale for £60k more than it was bought for 2 years ago. And we offered 5k more than that as we were up against other offers! 

What has been your experience? Did the seller realise they has asked for too much and accepted the new valuation etc.

I can totally understand if this property gets down valued - other similar in the area have not sold for anywhere near this price, BUT the house market has gone crazy/inflation AND they did add in a driveway to the front. 

Just looking for some advice - others experience.

Also worth noting we are right at the end of the process really -we have a first time buyer who’s pretty much all set, just in enquiries- and the seller of our future home has no forward chain, and is going into rented. 

Any points of view from sellers/buyers would be great! 

£60k on what sort of asking price? If it’s £100k then I’d be more worried than if the asking price was £600k

k1irk1978

The house we're buying was valued at £50k less than the agreed purchase price of £330k. The seller was not willing to renegotiate on the price. We are putting down a large deposit so were still in a position to proceed with the purchase and it didn't affect the mortgage product we had applied for. After much deliberation we decided to proceed with the purchase regardless of the valuation as we felt that the house was worth the price we were willing to pay for it. We did some research and interestingly the price on Zoopla was initially in line with the price on the valuation survey but this has since been increased and is now in line with the price we're paying which seems to be a strange coincidence. Prior to the valuation survey conducted by the building society we did have our own independent level 2 survey undertaken which didn't identify any major structural problems.

CRISPIANNE3

We sold our house recently and was valued £65,000 more than it was in Dec 2019.  I was worried about down valuation but the Surveyor from Countrywide who came on behalf of the buyers kept complimenting us on the house and everything we had done to it. The mortgage offer was received for the buyers and the lender was happy with the validation. 

Gavin83

BirchFozz said:

Hello all, currently waiting for result of lender valuation (Bank of Ireland / BoI) and feeling worried that it’ll get down valued. 

The property went up for sale for £60k more than it was bought for 2 years ago. And we offered 5k more than that as we were up against other offers! 

What has been your experience? Did the seller realise they has asked for too much and accepted the new valuation etc.

I can totally understand if this property gets down valued - other similar in the area have not sold for anywhere near this price, BUT the house market has gone crazy/inflation AND they did add in a driveway to the front. 

Just looking for some advice - others experience.

Also worth noting we are right at the end of the process really -we have a first time buyer who’s pretty much all set, just in enquiries- and the seller of our future home has no forward chain, and is going into rented. 

Any points of view from sellers/buyers would be great! 

Personally if someone decided to offer over the asking price I'd expect them to honour that regardless of what the valuation came back at. If they were unwilling to I'd remarket, even if it meant taking a lower offer from someone else. I'm just one person though and everyone will think differently on this.

TheCuriousSausage said:

My daughter's flat (which she sold a month ago) was valued at 10% less than two estate agent valuations. The solicitor said the surveyor was qualified and the estate agents weren't. She did manage to negotiate a little bit more but it wasn't good

I think it's far more complicated than that.

Ultimately a house, like anything else that's for sale is worth what someone is willing to pay. If a surveyor values a house at £200k but someone loves it and pays £250k I'd argue that the value of that house is £250k, certainly to the vendor anyway. Without that recent sale though I'd suggest the most reliable value is from an independent surveyor (not from a lender) who has visited the property in person.

Lenders have their own bias. Some will change what they value the property at based on the individual applying or the size of the deposit and of course they rarely (if ever) value it above the offer price. It's all about risk to them.

Also most surveyors don't visit a property in person and therefore I'd suggest their valuation isn't accurate. Comparing to other similar properties skip a lot of individual elements. In some ways estate agents have an edge, although they obvious have their own bias.

WittyUserName

Are you worried that you might pay more than what the property is ‘worth’ or worried about making up the difference? 

I absolutely agree with @Gavin83 that each party has their own bias: 

- the lender values based on risk 

- the estate agent values based on commission they’d like to earn 

- the seller values based on what ‘profit’ they’d like to make 

- the buyer values based on what the property will mean to their quality of life

I disagree that the lender’s valuation is the true value of a property. It’s just that they hold most of the cards because they are providing the funds. After all a cash buyer could sweep in and buy it for a price way above the bank’s valuation. Does that mean the cash buyer overpaid? No, they paid what it’s worth to them.

To me the lender’s valuation is just one amongst many, I don’t think it’s necessarily the yardstick against which value should be measured. 

Ultimately it depends on whether you consider the property to be worth what you offered, and whether you can make up the difference caused by the down valuation.

Whether the seller will be open to negotiation (in the event of a lender’s down valuation) depends on whether other interested parties have enough of a deposit to step
in and make up the difference if you drop out.

Our lender valued our property at £55k less than what we’d offered but fortunately like @k1irk1978 it didn’t affect our product, and thanks to sufficient equity we were able to make up the difference. 

We didn’t even bother asking the seller for a discount because the property had many others lining up and waving their wallets, all of them with enough equity from their prior properties to make up the difference if we dropped out.

With that sort of competition the seller would’ve laughed us out of the room. We really really liked the property - it’s perfect for our family - so our valuation of it is very different from the lender’s.