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  • FIRST POST
    • Atreyu107
    • By Atreyu107 7th Sep 18, 9:20 AM
    • 95Posts
    • 68Thanks
    Atreyu107
    Massive down-valuation on a new build
    • #1
    • 7th Sep 18, 9:20 AM
    Massive down-valuation on a new build 7th Sep 18 at 9:20 AM
    Hi all,

    I'm going through the process of buying my first home through shared ownership. It's a new-build flat being sold by a housing association, and my purchase share is 25% on a total value of 550,000. .

    Everything thing was going smoothly up until yesterday. My mortgage advisor has found a great mortgage, my credit and ID checks were all accepted by the mortgage company and everything was looking good.

    Then the bank sent round the surveyor...

    The valuation report back today values the property at 475,000, a full 75,000 below the asking price.

    My mortgage advisor is in discussion with the Housing Association to understand what's gone wrong, but I'm trying to get my head around how the two figures can be so different.

    The block I'm buying in is all shared ownership, so I know for a fact that there are no cash buyers stumping up the difference. It's also not like I'm the first buyer in the block... In fact, out of the 20 flats available, the flat I'm purchasing is one of the last three to complete.

    Other than getting another valuation done with another lender (and therefore a worse mortgage deal) is there any recourse for me challenging this valuation with the surveyor?

    This is now the second time a Chartered Surveyor has royally done me over on a house purchase, and the lack of accountability is astonishing.

    Thanks all,
    A
    I work in the financial services industry but I am not a financial adviser. I do not give financial advice. Anything I say here is for discussion purposes only and should not be construed as advice.
Page 2
    • Mutton Geoff
    • By Mutton Geoff 7th Sep 18, 11:18 AM
    • 1,645 Posts
    • 1,891 Thanks
    Mutton Geoff
    They have another valuation booked for another two-bed today, and will await the results next week to hand over to my Mortgage Advisor to appeal the valuation. If this doesn't work I'll switch lenders
    Originally posted by Atreyu107

    Be careful, you seem to be working towards disbelieving professional advice on the value of what you are trying to buy and finding ways to raise more money rather than buy a flat for the correct price in today's market.
    Compensation/Refunds - 4,655 | Stooz Profits - 7,636 | Quidco - 4,365 | Tax Avoidance - 107,000
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    • Atreyu107
    • By Atreyu107 7th Sep 18, 11:21 AM
    • 95 Posts
    • 68 Thanks
    Atreyu107
    I asked the HA what valuations were received on other plots in the same block.

    There are upper limits on affordability for SO properties. An individual with enough cash to make up a 15% shortfall on a valuation would more than likely exceed them.
    I work in the financial services industry but I am not a financial adviser. I do not give financial advice. Anything I say here is for discussion purposes only and should not be construed as advice.
    • BoGoF
    • By BoGoF 7th Sep 18, 11:27 AM
    • 5,312 Posts
    • 5,184 Thanks
    BoGoF
    How would the HA know what the valuation was?

    How would they know if a buyer did have the means to make up a shortfall.

    As I understand it such propertiez are in high demand as you get to live in a property you could only dream off and people will lie to get one.
    • Computer Beginner
    • By Computer Beginner 7th Sep 18, 1:42 PM
    • 269 Posts
    • 151 Thanks
    Computer Beginner
    OP,

    Just my opinion, but this whole thing sounds risky and expensive.
    I would move somewhere cheaper and buy a normal freehold house, if possible.

    If that's really not possible - then good luck.
    • AnotherJoe
    • By AnotherJoe 7th Sep 18, 2:02 PM
    • 15,995 Posts
    • 19,193 Thanks
    AnotherJoe
    I do wonder if SO properties are more expensive than non, simply because they allow people to buy a more expensive place than otherwise. A bit like PCPs on cars.
    • LisbonLaura
    • By LisbonLaura 7th Sep 18, 4:05 PM
    • 1,061 Posts
    • 1,535 Thanks
    LisbonLaura
    I didn't realise the pricing of new property was now enshrined?

    Erm OP, you work in financial services?

    I must be missing something here.
    Last edited by LisbonLaura; 07-09-2018 at 4:08 PM.
    • gycraig
    • By gycraig 7th Sep 18, 4:45 PM
    • 519 Posts
    • 444 Thanks
    gycraig
    Whenever can seen shared ownership the "full price" has been far higher than similar houses nearby that aren't shared ownership
    • Mutton Geoff
    • By Mutton Geoff 7th Sep 18, 5:19 PM
    • 1,645 Posts
    • 1,891 Thanks
    Mutton Geoff
    Whenever can seen shared ownership the "full price" has been far higher than similar houses nearby that aren't shared ownership
    Originally posted by gycraig
    My thoughts too. Gearing might make it an easy way in but an expensive way out. Maybe the OP is of the mindset that they are buying the whole place for their purchase price therefore viewing it as a bargain whatever the price.


    These schemes seem to disadvantage those who can least afford it.
    Compensation/Refunds - 4,655 | Stooz Profits - 7,636 | Quidco - 4,365 | Tax Avoidance - 107,000
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    • Crashy Time
    • By Crashy Time 7th Sep 18, 5:53 PM
    • 8,442 Posts
    • 2,982 Thanks
    Crashy Time
    I've long been of the view that the shared ownership schemes/scams have had "optimistic" pricing, higher than comparable open market stuff.


    Well, they would, wouldn't they. Just because it's a HA doesn't mean they're not greedy for their bonuses & high salaries...
    Originally posted by theartfullodger

    A lot of houses have "optimistic" prices IMO. It probably won`t change much until recession/rate rises hit.
    • brit1234
    • By brit1234 7th Sep 18, 6:36 PM
    • 5,191 Posts
    • 11,968 Thanks
    brit1234
    Don't forget all the other shared owenship extra costs and restrictions. I would look and understand the small print before going forward. Personally I have always thought shared ownership a scam to inflate prices and labled wrongly as affordable homes.


    As for your valuation, you do know London house prices are still falling and awash with unsold flats. You wait 3 months and I am sure the valuer will value it even lower.


    Must be a high end area for that price.
    Scams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.

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    • Tom99
    • By Tom99 8th Sep 18, 12:52 AM
    • 4,937 Posts
    • 3,475 Thanks
    Tom99
    Sound like the valuer did you a favour and you have had a lucky escape.
    • Klr005
    • By Klr005 8th Sep 18, 9:13 AM
    • 22 Posts
    • 11 Thanks
    Klr005
    Seems a lot of people don't understand shared ownership or how it works.

    The price is non negotiable. Its set at a value and you pay a share on that meaning the other purchasers in the block had valuations come back to match the price.

    Whatever you think of Housing Associations and price inflations, others have bought their share and so OPs valuation must be different and under valued compared to the others of the same price.

    Good luck with a different valuation.
    • bigstevex
    • By bigstevex 8th Sep 18, 9:26 AM
    • 850 Posts
    • 385 Thanks
    bigstevex
    Interesting that you've been 'screwed' over by someone who values properties for a living instead of being screwed over by a greedy developer. I know which one I'd be blaming.
    • ProDave
    • By ProDave 8th Sep 18, 9:56 AM
    • 1,319 Posts
    • 1,571 Thanks
    ProDave
    Seems a lot of people don't understand shared ownership or how it works.

    The price is non negotiable. Its set at a value and you pay a share on that meaning the other purchasers in the block had valuations come back to match the price.

    Whatever you think of Housing Associations and price inflations, others have bought their share and so OPs valuation must be different and under valued compared to the others of the same price.

    Good luck with a different valuation.
    Originally posted by Klr005
    I could put my house on the market at an inflated above valuation non negotiable price. But I would not expect anyone to actually come and buy it.

    Likewise I would walk away from this if they are so arrogant they expect you to pay more than a professional valuer has said it is worth.

    If nobody buys it, they will have to get real and lower the price. Don't be the mug that pays over the odds for it, go and find something else.
    • Crashy Time
    • By Crashy Time 8th Sep 18, 10:35 AM
    • 8,442 Posts
    • 2,982 Thanks
    Crashy Time
    I didn't realise the pricing of new property was now enshrined?

    Erm OP, you work in financial services?

    I must be missing something here.
    Originally posted by LisbonLaura

    No, that seems to make perfect sense to me.
    • Klr005
    • By Klr005 8th Sep 18, 10:36 AM
    • 22 Posts
    • 11 Thanks
    Klr005
    If your only option for house buying is shared ownership, you don't get the luxury of just walking away.
    I think the OP is saying that the other valuations have all come back spot on so why hasn't theirs.
    • getmore4less
    • By getmore4less 8th Sep 18, 10:47 AM
    • 37,446 Posts
    • 23,121 Thanks
    getmore4less
    It can be better to go looking for second hand shared ownership.
    • Smi1er
    • By Smi1er 8th Sep 18, 11:26 AM
    • 635 Posts
    • 464 Thanks
    Smi1er
    What area of London?

    A 2 bed new build flat in London value wise is only going in one direction at the moment and it isn't up. Value it next month and it will be less.

    I personally don't understand why someone would want a small 25% share in a 550K flat. I think the valuer has done you a huge huge favour
    • hazyjo
    • By hazyjo 8th Sep 18, 2:05 PM
    • 12,340 Posts
    • 16,848 Thanks
    hazyjo
    Why don't you speak with a couple of regular estate agents to see what sort of ballpark price they would expect to get for what you're looking at.

    Because at the moment my crystal ball is telling me you'll be back in a few years' time questioning how your flat can be valued so low when you paid more when you bought it several years before, and how you're trapped and possibly even in negative equity.
    2019 wins: Bottle of Prosecco; Popcorn Shed popcorn; Moisturising 'M&S Time Capsules'; Case of Boost Sport + 30 Just Eat voucher; Battle Proms tickets and hotel; under-eye serum...

    "Should know better." Apparently.
    • catshark88
    • By catshark88 8th Sep 18, 7:42 PM
    • 1,059 Posts
    • 8,883 Thanks
    catshark88
    V good article in The Times (money section) today, about the difficulties people have been having with negative equity in HTB flats (and how v profitable they are for house builders).
    "Have nothing in your houses that you do not know to be useful, or believe to be beautiful." William Morris
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