Nationwide Undervaluation

jellycat1997

Good morning, 

I have had continuous back and forth between myself and the valuation team at Nationwide.

I have had an offer accepted on a flat for £285k. The vendor is set on this price and will not negotiate further.  

However, the property has been valued at £260K, making Nationwide unable to offer any higher than £260k. The bank are allowing me to borrow £156k and put down a deposit of £104k and recommend putting down an additional £25k in cash to pay for the remainder of the house. 

Fortunately due to excess cash, this is something that I will be able to do, however, is this something that is done often? I'm concerned that the sale may fall through because of this. 

I am a FTB so a little unsure on the buying process. Unfortunately my solicitors aren't being very helpful and are failing to provide an update to my queries, and I have come to the MSE forum for some advice. 

gazfocus

I would be more concerned that if nationwide have valued the flat at £260k, and you are still paying £285k, you are paying way over the odds for the flat so you have to think about a) how much you really want the flat and b) whether you can afford the eventual lower resale value when you come to sell.

DE_612183

If you have all the cash then you'll be fine.

As long as the loan meets the LTV the bank accept then there is not a problem.

However, you appear to be paying £25k over the asking price, I know you say the vendor is set - but would they still be set if you thought about walking away - have you asked the EA to make the vendor aware of the situation?

Could save you a few grand if nothing else.

Hoenir

jellycat1997 said:

I have had an offer accepted on a flat for £285k. The vendor is set on this price and will not negotiate further.  

Then the choice is yours to proceed or walk away. Don't become emotionally engaged. This is  business transaction. There'll be other properties come along. 

RelievedSheff

If the flat is still worth £285k to you then put the extra towards it.

If not, renegotiate or walk away.

ReadySteadyPop

gazfocus said:

I would be more concerned that if nationwide have valued the flat at £260k, and you are still paying £285k, you are paying way over the odds for the flat so you have to think about a) how much you really want the flat and b) whether you can afford the eventual lower resale value when you come to sell.

Good advice.

MeteredOut

Interesting you regard the Nationwide figure as an undervaluation, rather than the buyer asking for an overvaluation...

Do you believe £285K is a fair value, given what other similar properties nearby have sold for?

ReadySteadyPop

MeteredOut said:

Interesting you regard the Nationwide figure as an undervaluation, rather than the buyer asking for an overvaluation...

Do you believe £285K is a fair value, given what other similar properties nearby have sold for?

Exactly, it is just a "valuation" according to that lender, depending on interest rates and market conditions the next valuation could be even lower.

jimbog

What have similar properties sold at (and when?)

Brie

Did you question Nationwide as to why their figure differed from that that the vendor wanted? 

We had a similar thing when we were trying to sell MiL's flat and the bank (might have been Natwest?) said it wasn't worth anything like what the EA had priced it at.  When asked we were told for a purpose built flat in a new build was it was in pretty rough shape , didn't have a lift that would have been expected in a new build, etc etc.  We pointed out that the flat was in fact in a converted Victorian vicarage, that it was built more than a century earlier and the conversion was done in the early 1980s.  They wouldn't budge on the fact that they had got it wrong and their computer was looking for the building next door with the same post code.  

Or maybe the EA overvalued the place you want and the vendor is sticking to that.

user1977

gazfocus said:

I would be more concerned that if nationwide have valued the flat at £260k, and you are still paying £285k, you are paying way over the odds 

I wouldn't say it was way over the odds. Split the difference and it's £272.5k +/- 4.6%. The minimum usual margin of error for valuations is 5%.