Buyers lender undervalued property

TheLeonC

Hello all,

Today, ironically Friday 13th, we had a call from our estate agent to say that the surveyor who had been round to value the property for a mortgage had down valued it by 30k! We had our own valuation down as we are repaying a help to buy loan and that came back at the price we sold for, and that was including 3 comparable property sales in the area to justify this price. 

My question being, what are the chances of this being successfully appealed? We have sent the estate agent our survey which outlined the price and comparable properties. I’m not sure how the surveyor can down value it by 30k based on the area and house prices, based in the south east of England. 

DE_612183

the surveyor can say what they want - it's up to the buyer and the lender to decide what they want to do.

what has the buyer come back to say?

DE_612183

also what are the values for reference purposes - £30k on £1m property has a very different impact on one which is £100k

TheLeonC

DE_612183 said:

the surveyor can say what they want - it's up to the buyer and the lender to decide what they want to do.

what has the buyer come back to say?

The buy is still keen but would imagine the lender may say they can only borrow the amount the survey has said

TheLeonC

DE_612183 said:

also what are the values for reference purposes - £30k on £1m property has a very different impact on one which is £100k

It is around a 11% undervalue 

GDB2222

These valuations are for different purposes, so the 11% difference may simply reflect different instructions given to the valuers.

The proposed new lender wants a conservative figure - the amount the property can fetch pretty quickly in a forced sale. After all, if the lender has to foreclose, that's exactly the position they will be in. They won't be able to hang on for months, waiting for the one perfect buyer.

The HTB lender, on the other hand, wants a more optimistic value. The higher the value, the more you have to pay them, after all. So, they can look at the price achievable with lengthy marketing, in the most favourable conditions.  

MeteredOut

TheLeonC said:

DE_612183 said:

also what are the values for reference purposes - £30k on £1m property has a very different impact on one which is £100k

It is around a 11% undervalue 

You need to understand it is simply a 11% difference in valuation - calling it an undervalue is bringing emotion into things and, hard as it is, that thinking does probably not help you make the best choice of where to go next.

We've seen quite a few instances like this. Valuers for mortgage companies are (anecdotally) valuing on the lower side, perhaps at the bequest of the mortgage company in order to lower their risk. 

The valuation you got for came back with a figure that you wanted to see in order to get the loan; in these scenarios, valuers often ask people what they think its worth (or will align the valuation with their asking price), and so long as it is not too far off the mark, will go with that.

Unless the difference in valuation means the buyer cannot proceed, it is not your problem. It is not yours to appeal. It becomes your problem if the buyer can no longer afford your property. You can advise them to try another lender, but if they agree, don't be surprised if that valuer comes back with the the same or similar difference in valuation.

You mention the property is in the South East, as if that means this difference should not occur; I'd suggest the opposite - properties in that area have historically had more volatile prices.

Gentoo365

MeteredOut said:

TheLeonC said:

DE_612183 said:

also what are the values for reference purposes - £30k on £1m property has a very different impact on one which is £100k

It is around a 11% undervalue 

You need to understand it is simply a 11% difference in valuation - calling it an undervalue is bringing emotion into things and, hard as it is, that thinking does probably not help you make the best choice of where to go next.

We've seen quite a few instances like this. Valuers for mortgage companies are (anecdotally) valuing on the lower side, perhaps at the bequest of the mortgage company in order to lower their risk. 

The valuation you got for came back with a figure that you wanted to see in order to get the loan; in these scenarios, valuers often ask people what they think its worth (or will align the valuation with their asking price), and so long as it is not too far off the mark, will go with that.

Unless the difference in valuation means the buyer cannot proceed, it is not your problem. It is not yours to appeal. It becomes your problem if the buyer can no longer afford your property. You can advise them to try another lender, but if they agree, don't be surprised if that valuer comes back with the the same or similar difference in valuation.

You mention the property is in the South East, as if that means this difference should not occur; I'd suggest the opposite - properties in that area have historically had more volatile prices.

It is a potential problem in that the HTB company will want their part paid off based on their valuation. So effectively the OP will need to top up to pay the HTB loan. 

e.g. if the the HTB company owns 20% of the equity, with an 11% devaluation they effectively want 22.5% of the selling price to pay off their 20%. (If my mental arithmetic is correct, could be wrong).

chanz4

my help to buy was 8k over what I sold for

doodling

Hi,

Unless the surveyor has made a gross factual error - e.g. he thought it was a semi when it is clearly detached, or he failed to notice the 3rd 4th and 5th bedrooms - then the chances of a successful appeal are pretty much zero.

An 11% difference in opinion of the value isn't outrageous - maybe a little more than expected but as others have pointed out, the valuations were for different purposes so that will have an effect.

TheLeonC

GDB2222 said:

These valuations are for different purposes, so the 11% difference may simply reflect different instructions given to the valuers.

The proposed new lender wants a conservative figure - the amount the property can fetch pretty quickly in a forced sale. After all, if the lender has to foreclose, that's exactly the position they will be in. They won't be able to hang on for months, waiting for the one perfect buyer.

The HTB lender, on the other hand, wants a more optimistic value. The higher the value, the more you have to pay them, after all. So, they can look at the price achievable with lengthy marketing, in the most favourable conditions.  

The confusion for us is that the HTB survey was done 1 month ago with comparable property sales in the area to evidence that valuation, we find it hard to believe that the property has dropped 30k in 1 month, but looking at reviews on the company the bank used they aren’t exactly brilliant! A lot of similar complaints,1.7 on Trustpilot isn’t the best!