New build house undervalued by surveyor

hjr_3

We are currently looking to buy a new build property. It has recently been valued at £23k less than we have agreed to pay (We have already managed to get a reduction in price of £12k and lots of extras thrown in). We are now waiting to see if the builders will reduce the price further. Does anybody have any experience of this - should we be paying more than the valuation price? Apparently the valuation is based on resale value rather than new build - does anybody know what sort of a premium new builds command?

All advice gratefully received.

Thanks

gabyjane

Hi we have a new build and it was valued when still unfinished at £150k, 3 weeks later when almost done it was £153k.. We panicked as we thought we may have to pay the mortgage based on the higher amount but we didn't as had already secured the deal..

As for resale prices well i have never heard of that before, may be wrong but i can't see how they could do that as houses are all different..i have a post running r.e this and am keeping an eager eye on it!!

Let us know how you get on.

beecher

You'd be very unwise to pay more than the valuation and your mortgage lender will use the valuation to work out how much you can borrow so you'd have to have an extra £23k in your deposit to make up for it.

Richard_Webster

Valuers are now beginning to do what they should have done before - not allow builders to get away with silly invented prices.

Conrad

HJR - do you follow the economic news?

Many lenders have stopped lending on new build property and others have reduced the amount they will lend to 75%

What does that tell you?

In a nutshell here's why this is happening:
A newbuild property commands a premium (or so we were told) just as a new car does, but when you come to resell (or the lender has to resell in 1 year due to repossession) the 'new' no longer applies and the next buyer doesnt get all the supposed benefits you might have such as chosing certain items / finishes, so the value is less.

Furthermore the mortgage money has dried up meaning about 40% less money is now available to buy homes, which means prices MUST fall logically (you cant burn the fire without fuel). This means lenders are even more likely to sustain a loss if you get repossessed and remember they will have lots of costs and fees to reposses you so unless you are putting down 25% deposit they can easily sustain a loss in a falling market.

The next issue is over supply. Generally accross the UK there is too much newbuild - people will say "ah but not in my area" but that means nothing as lenders credit policy is a one size fits all. This over supply means yet more downward pressure on prices.

Ive been warning people for 2 years on here that this would happen.

The smart thing to do is stay put and you will benefit from falling prices. Buy in 6 - 12 months when things get really tough.

wymondham

Sounds like a sensible valuation to me. Don't pay more than it's worth, regardless of what the builder tells you or how many 'extras' he gives you!

If you went to buy a car, and the seller said it's worth £10,000, but your AA friend said he'd value it at £8,500 would you still buy it? Thought not, it's the same principle with houses.... (or it should be!)

RHemmings

I'm curious about the language here. Why has the surveyor "undervalued" the house rather than the current proposed sale price being an "overvaluation"?

Jorgan_2

Many surveyors are under instuctions to start with sale agreed price, deduct all incentives based on the 'new price' and value it from there. You say you have lots of extras 'thrown in', sorry builders don't work like that. Someone is paying for all the 'extras' and its you, the buyer.

Pez2

Shouldn't the title of this thread read "New build house overvalued by builder"?

hjr_3

RHemmings wrote: »

I'm curious about the language here. Why has the surveyor "undervalued" the house rather than the current proposed sale price being an "overvaluation"?

Thanks RHemmings - you are quite right - I just hope the builder sees it like that too.

SouthCoast

............and what is the secondhand value of all the "free" extras?