Help- mortgage valuation significantly less than offer price

meggles88

Hi all,

Our mortgage evaluation came back today significantly lower than the offer price. Originally house on for £400,000 lots of interest as modernised with new extension etc. We got the highest offer or £420,000. Houses don’t sell in the street often and not a bad area so popular.

Unfortunately the mortgage valuation has come back today valuing it at £384,000. I do not have a spare £36,000 unfortunately! I am lucky enough that I own my current house which has sold for £165,000 and we were going to use £140,000 for the deposit keeping some money back for stamp duties, decorating and IVF treatment.

We love the house but don’t want to pay over odds especially as there are things that need doing to it…

has anyone been in the position before? I did have a homebuyer survey and wondering if the surveyor would be able to do a retrospective valuation or maybe try a different lender. It really has knocked us sideways and weren’t expecting it. Mortgage lender has done online valuation and obviously not visited the property! 

Can I use the private surveyor valuation to help with mortgage valuation/application.

sorry for the essay stress through roof right now! 

LizzieC2024

I’ve had this before, but with a new build lender.

chances are, you are over paying on the property. You can try different lenders but a lot use the same surveyors I.e eSurv. Depends what lengths you’re willing to go to get THAT house.

of course, your seller and their EA will encourage exhausting all lenders until someone says it’s what they say it’s worth. 

But the options are:

- offer the price the surveyor valued the house at
- try to negotiate in the middle and you pay a bit more deposit and they reduce part of the price
- try another lender
- appeal the value (I did that, no luck!)
- pull out of buying the house 

I ended up pulling out of buying the house in the end. I saw on Rightmove a year later that it did sell for the price it was on for, so you never really can guarantee these things…

good luck whatever you decide x 

Mr2018

This has literally just happened to me today also, marketed at £250k, offered £230k and accepted (after some negotiations) but valuation for mortgage came back today at £215k. Estate agents said they've seen this happen a bit more recently and think lenders being over cautious with valuations due to the uncertain market.

Been told, the valuation company cover many lenders so this is likely to be a problem with the next buyer (if I pulled out) and if I change lender.
There is little chance to negotiate the valuation but could try and submit evidence that supports the original asking price (I've asked the EA for this).
Have gone back to the EA with the report, EA said doubt vendor's will drop further but awaiting to here from back from them. Hoping to negotiate a middle ground.
Or then left with pay the full difference on top of the deposit or pull out - neither I want to do.

So open for any more thoughts on what to do here also. Anyone have any views on the current state of lenders and over cautious valuations? Should I be worried I'm over paying based on a desk valuation from a lender based down south (I'm up north) over a local estate agents who knows the area etc?

kingstreet

Ask the lender if you can pay for a physical valuation if you are confident the desktop is inaccurate.

elsien

And if you are looking to negotiate with the seller, point out that unless there’s a cash, buyer and the other buyer is likely to have similar issues. 

ACG

kingstreet said:

Ask the lender if you can pay for a physical valuation if you are confident the desktop is inaccurate.

This. As it might not have taken into account the extension. 

Failing that, try a different lender. But in the first instance see if they can do a physical one. 

meggles88

Thanks all Barclays was the initial provider so I will see whether they can do in person survey. I am going to ask the surveyor to do a valuation as well. Hopefully can use this as more of a gage if the true value of the property. There are a few things which need doing such as extractor fan installation, queries around the porch etc so will see. Love the house but don’t want to pay £36000 over what is worth with more money to spent on repairs etc!

Hoenir

meggles88 said:

Originally house on for £400,000 lots of interest as modernised with new extension etc. We got the highest offer or £420,000. 

£20k of the £36k is you outbidding other parties. Remember it's the lenders money are you using to purchase not your own.  £16k as a prcentage of £400k is 4%. Lenders will naturally be cautious until such time as interest rates do start to fall / no longer remain a primary discussion point.  Certainty over house prices in the short term is far from certain. 

ReadySteadyPop

elsien said:

And if you are looking to negotiate with the seller, point out that unless there’s a cash, buyer and the other buyer is likely to have similar issues. 

Good point, they will know this already but pointing it out will let them know they can`t call your bluff.

DayDreamerandGeneralWaster

Not only lenders being cautious - some EAs are being unrealistic with their pricing. Did you look at sold prices? Appreciate they will be older if people in the street don't move but still worth checking. 

housebuyer143

Definitely get a physical valuation. If I wss the seller I wouldn't entertain a reduction of any kind based on a desktop valuation. Remember though, you can expect to have to put in £20k more than it's valued at because you offered more than it was probably worth. You can hope someone values it for £420k, but you are really aiming for £400k.