Huge drop in buyer mortgage valuation

secla

As said valuations are subjective and the bank may just be playing it safe, they may find a lender that values differently, On the flip side would  you be willing to lose your "dream house" over 25k ? are you so close to your borrowing limit that theres no way that could be made up if worst comes to worse.

Hoenir

slasfra said:

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?

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. 

Who have you received an email from, the potential buyer? 

slasfra

jim1999 said:

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.

Fingers crossed then! The issue is that houses just don’t really come up in our area and so the only ones comparable on the market (3 bed semi) don’t take into account the condition of our property, cul de sac location, standard of build - so the ‘similar’ properties do sell for around the mortgage valuation. These are usually ex council or on main roads. Ours is the first house to sell on the street as they were built in 2019.

horsewithnoname

DullGreyGuy said:

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

I think the first broker didn’t exactly put much 
effort in, just computer says no sort of thing. The second broker realised that knocking one year off the term was key because of age. 

Obviously the broker was just a middle man with the bank who actually lends the money, I imagined that was understood so I didn’t spell it out. 

Exodi

slasfra said:

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

slasfra said:
Ours is the first house to sell on the street as they were built in 2019.

To play devils advocate, I personally don't think it's a strong footing based on what you've said to be adamant that it 'really is worth the asking [price]'. Obviously if you ask 100 sellers if they think their house is worth the selling price, you'll get 100 yeses.

Estate agents valuing a house that you say 'is the first house to sell on the street [since they were built]' and your own chartered surveyor putting the same value as the offer (which is a totally common thing to do - I haggled a significant discount off my current property as it involved an awkward mix of probate and an angry ex-wife, and as the seller had never lived in property, I also reduced the price citing the potential for a full re-wire, boiler replacement, etc - none of which I needed to do. Despite this, loh and behold the surveyor valued the property at exactly what I offered for it. He made no secret that they are steered by the sales price).

slasfra said:
The issue is that houses just don’t really come up in our area and so the only ones comparable on the market (3 bed semi) don’t take into account the condition of our property, cul de sac location, standard of build - so the ‘similar’ properties do sell for around the mortgage valuation.

This is likely the root cause of your 'computer says no' problem. Comparables sell for around mortgage valuation, but you say yours is worth much more because of the 'condition' and 'standard of build'.

Nonetheless, the buyer is forced to look to other lenders to see what valuations they place on your property.

Do you have a plan B? You say you can't accept £25k less, can you accept £20k less? £15k? Or not a single penny less?

Obviously the buyer may be feeling hard done by as they presumably are forced to look at less favourable mortgages with higher rates and payments to get over this hurdle (with a seed planted in their mind that they are over-paying for the house) and it may reinforce it if you're not willing to compromise one penny.

BarelySentientAI

slasfra said:

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. 

Of course, the first of those seems not to be true (to the party that matters at least), and the second is entirely irrelevant to the buyer (or more importantly to their lender).

Brie

Did the valuer actually look at the right property? 

Selling MiL's flat the mortgage company came back and said no way to the price offered and accepted.  We asked why and were told that it's because the place was in pretty rough shape for a new build block of flats.  Problem was that was the next door property and MiL lived in a converted Victorian vicarage.  They refused to back down as we were obviously lying!!!  So the sale fell through as the buyer couldn't find another mortgage.  

slasfra

Exodi said:

slasfra said:

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

slasfra said:
Ours is the first house to sell on the street as they were built in 2019.

To play devils advocate, I personally don't think it's a strong footing based on what you've said to be adamant that it 'really is worth the asking [price]'. Obviously if you ask 100 sellers if they think their house is worth the selling price, you'll get 100 yeses.

Estate agents valuing a house that you say 'is the first house to sell on the street [since they were built]' and your own chartered surveyor putting the same value as the offer (which is a totally common thing to do - I haggled a significant discount off my current property as it involved an awkward mix of probate and an angry ex-wife, and as the seller had never lived in property, I also reduced the price citing the potential for a full re-wire, boiler replacement, etc - none of which I needed to do. Despite this, loh and behold the surveyor valued the property at exactly what I offered for it. He made no secret that they are steered by the sales price).

slasfra said:
The issue is that houses just don’t really come up in our area and so the only ones comparable on the market (3 bed semi) don’t take into account the condition of our property, cul de sac location, standard of build - so the ‘similar’ properties do sell for around the mortgage valuation.

This is likely the root cause of your 'computer says no' problem. Comparables sell for around mortgage valuation, but you say yours is worth much more because of the 'condition' and 'standard of build'.

Nonetheless, the buyer is forced to look to other lenders to see what valuations they place on your property.

Do you have a plan B? You say you can't accept £25k less, can you accept £20k less? £15k? Or not a single penny less?

Obviously the buyer may be feeling hard done by as they presumably are forced to look at less favourable mortgages with higher rates and payments to get over this hurdle (with a seed planted in their mind that they are over-paying for the house) and it may reinforce it if you're not willing to compromise one penny.

Thank you. This makes sense and is exactly what I felt in my mind.
We know we can’t go lower - we already negotiated a lot and accepted the offer which was £10k below top valuation. The house was only on the market 3 day before first viewing, and then that first viewer made the offer we accepted. 

We do love our current house, so if we had to stay it’s not the end of the world and we are happy here. We are sensible and know what we can reasonably afford. It also means now that we would have to pay 20% of the valued price back to the help to buy loan, even if we accepted lower. 

 
Interesting what you said about surveyors/valuations - I would have thought they had standards to uphold to do it all properly. 

slasfra

Brie said:

Did the valuer actually look at the right property? 

Selling MiL's flat the mortgage company came back and said no way to the price offered and accepted.  We asked why and were told that it's because the place was in pretty rough shape for a new build block of flats.  Problem was that was the next door property and MiL lived in a converted Victorian vicarage.  They refused to back down as we were obviously lying!!!  So the sale fell through as the buyer couldn't find another mortgage.  

Yes she definitely did. The valuer was absolutely lovely and commented on the condition on the house and how ‘I got to so many properties and I never comment but this is really special’. 

slasfra

BarelySentientAI said:

slasfra said:

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. 

Of course, the first of those seems not to be true (to the party that matters at least), and the second is entirely irrelevant to the buyer (or more importantly to their lender).

Completely get that. I think that’s why I’m struggling because I also don’t want the buyers to pay more than it’s worth and be trapped.

If it’s a case that that is what it’s worth then we just can’t sell yet and that’s fine. 

Im just confused how all estate agents could be so wrong. And it’s hard to know how much interest there would have been (a good indication of if it was good value) because this was the first viewing (viewing booked the day it went onto market), they offered straight away and we accepted.