Huge drop in buyer mortgage valuation

slasfra

I am selling my house and have accepted an offer and all was proceeding well. However, the buyers mortgage valuation has come back today at 25k below their offer and our asking price.

The asking price was based on two valuations we had from separate estate agents, and is also the value given by our own chartered survey/valuer we had to instruct for the help to buy.  

We absolutely cannot accept any less than they offered (because it really is worth the asking, and we couldn’t afford our new house) so it’s either they can get another mortgage or we stay put. 

I feel so sorry for the buyer that they have to go through all the mortgage application again for a higher payment mortgage, and maybe think they’re offered way too much? 

They are going to another mortgage provider but does anyone had any experience of this. We are just so shocked! 

propertyrental

It happens. Especially if the loan involved is near the valuation ie the buyer has little or no deposit.

The lender is worried that in the event of repossession and sale they would not get back their loan.

A different lender might offer a higher valuation/loan, or the buyer could make up the shortfall.

Failing that, time to re-market.

slasfra

propertyrental said:

It happens. Especially if the loan involved is near the valuation ie the buyer has little or no deposit.

The lender is worried that in the event of repossession and sale they would not get back their loan.

A different lender might offer a higher valuation/loan, or the buyer could make up the shortfall.

Failing that, time to re-market.

Thank you for the reply - how realistic do you think it is to value higher? Especially as it’s 25k less than asking!

youth_leader

Could you hold out for a cash buyer instead?

slasfra

youth_leader said:

Could you hold out for a cash buyer instead?

Unfortunately no, and I don’t think our property would really suit the cash buyer demographic. 

We are only selling as our dream house came up and we couldn’t miss out on it, but they only accepted our offer on the basis on being a really short chain and a quick sale. So I think if this falls through it will be off the market and staying here. 

horsewithnoname

Friend had a similar situation, decision in principle, then when they actually tried to borrow the money was told £25,000 less. They went to a different broker who got them the full amount, so a different broker might help your would-be purchasers?

slasfra

horsewithnoname said:

Friend had a similar situation, decision in principle, then when they actually tried to borrow the money was told £25,000 less. They went to a different broker who got them the full amount, so a different broker might help your would-be purchasers?

This is reassuring to hear! It’s actually what happened to us but we’ve resolved our issue now. 

I do wonder if it’s the same for our buyer with it not being about affordability etc but about the ‘value’ of the property. From the tone of the email I think the buyer suspects we’ve asked massively over value, but this has been the value provided by 3 people and actually the accepted offer was a below the top end. 

Herzlos

slasfra said:

propertyrental said:

It happens. Especially if the loan involved is near the valuation ie the buyer has little or no deposit.

The lender is worried that in the event of repossession and sale they would not get back their loan.

A different lender might offer a higher valuation/loan, or the buyer could make up the shortfall.

Failing that, time to re-market.

Thank you for the reply - how realistic do you think it is to value higher? Especially as it’s 25k less than asking!

Depends, what is 25k as a percentage?

DullGreyGuy

horsewithnoname said:

They went to a different broker who got them the full amount

Ok my world is insurance and yes in that space Brokers are really important... I am a little surprised that mortgage brokers have that much influence, they always felt more arms length and not able to influence underwriters in the same way... I mean never heard of a mortgage broker with delegated underwriting authority where they can agree the lending on behalf of the bank like some insurance brokers can. 

Its certainly very possible that another lender's valuer will come to a different number but presumably they went with their best option to start with so there is an immediate and mid term cost of going to the next best option. As always these things come down to negotiation and who what's which property more. They may be willing to take the hit to get the property, they may want a reduction to share the cost etc etc

jim1999

It can just be down to the whims of a specific valuer.

We had our property downrated by one lender 100k because it's near something the valuer disliked.

But it was clearly mad, as there are plenty of houses nearby (exactly the same) that were going for around our expected valuation.

The broker picked another lender, who came out and valued it at the amount we were expecting.

slasfra

Herzlos said:

slasfra said:

propertyrental said:

It happens. Especially if the loan involved is near the valuation ie the buyer has little or no deposit.

The lender is worried that in the event of repossession and sale they would not get back their loan.

A different lender might offer a higher valuation/loan, or the buyer could make up the shortfall.

Failing that, time to re-market.

Thank you for the reply - how realistic do you think it is to value higher? Especially as it’s 25k less than asking!

Depends, what is 25k as a percentage?

Offer was £250k, mortgage value was £225k, so around 10%?