We offered £250,000 for a property, but it has just been valued at £240,000. Is this a problem?

Falesh

Hi there,

We have an offer accepted for £250,000 on a 2 bed bungalow in a nice area in York: (rightmove property url number is: 136702118 I can't post links yet) We have just had a valuation for the property and it came back as £240,000. The property sold in Oct last year for £265,000, but the sale fell through due to the buyers chain collapsing. We haven't been able to find any property that is comparable for less then £260,000. Even so we are worried that we might be paying too much, is this an issue or are valuations often out a little bit from what the market is willing to pay? Any input would be much appreciated!

gazfocus

It’s only really a problem if you cannot afford to stump up the extra £10k as the mortgage will
only be offered based on the valuation of £240k. 

I would personally be tempted to speak to the estate agents and inform them that the valuation has come back at £240k and so you can only offer that and see what the vendors say. 

Falesh

Thanks for that. The valuation was quite a surprise as we were thinking it was worth £260,000 due to not finding anything else as good for less. Are valuations often out a bit?

gazfocus

Falesh said:

Thanks for that. The valuation was quite a surprise as we were thinking it was worth £260,000 due to not finding anything else as good for less. Are valuations often out a bit?

I wouldn’t have thought valuations are ‘often out a bit’ to be honest. In my experience, the valuer will have been told what the agreed sale price is and they will be asked to validate whether the house is worth the agreed sale price. 

At the end of the day, it doesn’t matter if the valuation is ‘a bit out’ as it’s the valuation from the mortgage lender that determines how much the lender will lend. 

user1977

Valuation isn't an exact science, £240k and £250k are in the same ballpark. The usual minimum margin of error is +/- 5%. 

mexican_dave

A common enough situation, the property seems worth £250k to you (can't see anything else you like) but only £240k to the valuer, who has no personal interest in the property. So long as you can afford it that's fine, still worth going back to the agent to see if you can get it for £240k, as previously suggested.

Albermarle

mexican_dave said:

A common enough situation, the property seems worth £250k to you (can't see anything else you like) but only £240k to the valuer, who has no personal interest in the property. So long as you can afford it that's fine, still worth going back to the agent to see if you can get it for £240k, as previously suggested.

Even if you  settle for £245K, or even £247,500. Still would be £2.5K you didn't expect, so might have done you a favour.

ReadySteadyPop

Falesh said:

Hi there,

We have an offer accepted for £250,000 on a 2 bed bungalow in a nice area in York: (rightmove property url number is: 136702118 I can't post links yet) We have just had a valuation for the property and it came back as £240,000. The property sold in Oct last year for £265,000, but the sale fell through due to the buyers chain collapsing. We haven't been able to find any property that is comparable for less then £260,000. Even so we are worried that we might be paying too much, is this an issue or are valuations often out a little bit from what the market is willing to pay? Any input would be much appreciated!

Market will have changed since October, best to just offer the value the bank has given.