Downvalued Flat

dyna_2

Hi,
Please help me! I reserved a new build flat last year (before the market started to deteriorate) and it has just been downvalued by £22,000. I'm waiting on the builders to come back with their response however, in the meantime, wondered if anyone new the legalities surrounding such issues.

The problem is that i've already exchanged contracts so am not able to simply walk away - i don't think - which is where you come in. If the builder refuses to reduce the price, and i can't afford the remainder, are they able or likely to sue me?

Thanks

neas

You signed on the dotted line my old chappo.

Rule of thumb.. dont buy offplan

Its a harsh lesson to learn I wouldnt want to learn it... Flats are terrible when markets crash.

beecher

http://forums.moneysavingexpert.com/showthread.html?t=922147
http://forums.moneysavingexpert.com/showthread.html?t=921057
http://forums.moneysavingexpert.com/showthread.html?t=915595

there's a lot of it about at the moment.

obsessed_saver

If you were happy with the price last year when you exchanged, why can't you "afford" it now?

zzzLazyDaisy

Probably because the lender will now only give a mortgage based on the new valuation - leaving OP an extra £22000 cash to find to make up the difference?

LandyAndy

Peter101 wrote: »

Not strictly true, the house we are going for was undervalued by 20k. But the lender is still going to pay out the full amount.

That's probably because you still have an LTV ratio that is acceptable to the lender.

dyna_2

Hi everyone,

thanks for getting back to me - i cannot 'afford' it now because, as pointed out by LasyDaizy, i'm at a £22,000 deficit and my lender won't make that up. as a first time buyer - there's no way on this earth i could find that money. which is where the legality question came in.

zippygeorgeandben

Hi Dyna,

Just want to wish you luck on this one. I hope someone will be here shortly to offer you some legal advice.

Ben

pinkshoes

What was the price you agreed on, and how big was the deposit you paid?

If the deposit was less than £22k, perhaps it's best to pull out and lose that than lose £22k?

Hopefully the builder will agree to a reduction in price.

Had you agreed a completion date? You could try saying that it'll take you 3 years to save up another £22k, so you'll have to set a completion date for May 2011! Not sure that will work...

dyna_2

Thanks Ben!

The price i agreed was £112,000 and i'm putting down a 10% deposit with 5% builders deposit also - so 15%. The problem with pulling out is that i've already exchanged contracts which entitles the builders to sue me, which in turn will totally reck my credit rating and probably mean i could never buy in the future - or so i'm led to believe.

we're meant to complete end of June - though i'm sure this will change anyway - but nice idea about the saving up!! i think they'd sue me before they let me do that.

puddy

there must be some solution to this. the builders want to sell and you want to buy, thats the bottom line. the mortgage company wont lend you enough (now) to pay what it has been valued at.
Im sure I have heard of people pulling out after they've exchanged, but i too thought that you couldnt do that, so maybe they either made it up or they hadnt exchanged yet.

try to negotiate with the builders, at the end of the day its not in their interests to sue you, but it is in their interests to sell the property, and iin this market, they wont get more than the new value for it anyway, hence giving you an extra argument. try and get them on your side, you need to be nice about it and hope that they return the 'nice' attitude and see the deal though in a way you can afford.