Lender down valued house by a whopping £70k!

porridge_enthusiast

We're FTB in London who've had our offer accepted for a house for £650k, which was a bit under asking and in line with other properties in the area.

Today we've just had our broker send us the report form Halifax who have valued the house at only £580k, which made us quite worried.

As I understand, our chances of appealing are basically zero (survey was done in person, not just digitally). We will go back to the estate agent and try to get a lower offer, but even meeting in the middle at around 620 has me a bit worried. Has anyone had anything similar? Would it be worth applying with a different lender even though the outcome might be the same?

Hoenir

Surveyor is independent and works for the lender. Might be same Company used through another lender. Discussion with the EA as a priority. 

Albermarle

Maybe first ask the EA why they think the valuation was so low. For sure you might not get the whole truth, but you might find out something of importance.

kingstreet

Asking prices aren't relevant. Did you look at recent sold prices for similar property in the vicinity? These "comparables" are what surveyors use to justify their valuations.

GDB2222

It’s strange that the op is only concerned about not being able to buy the house, rather than considering the possibility that the surveyor is right and the op has over-offered by £70k. 

user1977

kingstreet said:

Asking prices aren't relevant. Did you look at recent sold prices for similar property in the vicinity? These "comparables" are what surveyors use to justify their valuations.

Also bear in mind that those prices reflect offers made probably at least 6-12 months previously (by the time the transaction completes and the registered prices filter through), so in a rising market (is it?) then a surveyor's cautious valuation is by definition going to be lower than the price the property will currently achieve, and buyers need to find the cash to make up the difference (and cross their fingers that their assessment of the market is correct).

Of course if the market's actually been falling then you've got an even bigger problem!

nicmyles

You need to work with the vendor's EA to gauge the likelihood of being able to meet halfway on it. It may help to appeal it, even though as you say chances of success are close to nil, to show that you've exhausted all options. EA can no doubt provide some comparable sales prices for you that are more recent than what is on Rightmove etc. I'm not convinced it's worth trying another lender, as so many use the same surveyors - EA may have info on that.

You need to ensure you are confident that this is the right offer. There is no objective measure of what a property is worth. But what this tells you is that the offer is probably toppy, and if you need/want to sell in a short period of time, you may find similar issues. If the place is the best you've seen and works for you, you think it's somewhere you're likely to be for 5 years+, you're confident in the market (no-one can have total confidence), and you're not on a v high LTV meaning you risk negative equity if things go wrong - then you should try and do what you can to come to a deal. Ignore anyone who tells you this is "over-paying" - you're paying what you need to to buy the house you want, with a full appreciation of the possible risks. 

Without knowing the exact area/size of house etc, it's impossible to advise, but I would suggest £650k for a house in most decent bits of London is likely to be reasonable, and the market is likely to go up over time there.

porridge_enthusiast

nicmyles said:

You need to work with the vendor's EA to gauge the likelihood of being able to meet halfway on it. It may help to appeal it, even though as you say chances of success are close to nil, to show that you've exhausted all options. EA can no doubt provide some comparable sales prices for you that are more recent than what is on Rightmove etc. I'm not convinced it's worth trying another lender, as so many use the same surveyors - EA may have info on that.

You need to ensure you are confident that this is the right offer. There is no objective measure of what a property is worth. But what this tells you is that the offer is probably toppy, and if you need/want to sell in a short period of time, you may find similar issues. If the place is the best you've seen and works for you, you think it's somewhere you're likely to be for 5 years+, you're confident in the market (no-one can have total confidence), and you're not on a v high LTV meaning you risk negative equity if things go wrong - then you should try and do what you can to come to a deal. Ignore anyone who tells you this is "over-paying" - you're paying what you need to to buy the house you want, with a full appreciation of the possible risks. 

Without knowing the exact area/size of house etc, it's impossible to advise, but I would suggest £650k for a house in most decent bits of London is likely to be reasonable, and the market is likely to go up over time there.

Thanks for this, I've messaged the EA with our meet in the middle offer and waiting for a response. We're confident we would live in the house for at least 5 years and we've been hunting Rightmove in the area for around a year and this is the best property to come to market since. We would be borrowing at 90% LTV if they accept the meet in the middle offer though

nicmyles

90% LTV would worry me a little, personally - are you likely to be able to overpay the mortgage and reduce that more quickly?

ReadySteadyPop

Albermarle said:

Maybe first ask the EA why they think the valuation was so low. For sure you might not get the whole truth, but you might find out something of importance.

It is much more likely that the asking price was too high, you should treat the valuation as a reality check for both buyer and seller.