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  • FIRST POST
    • Atreyu107
    • By Atreyu107 7th Sep 18, 10:20 AM
    • 95Posts
    • 68Thanks
    Atreyu107
    Massive down-valuation on a new build
    • #1
    • 7th Sep 18, 10:20 AM
    Massive down-valuation on a new build 7th Sep 18 at 10:20 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 3
    • Crashy Time
    • By Crashy Time 8th Sep 18, 9:10 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    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).
    Originally posted by catshark88

    Scary to think that people expected anything else.
    • danyalaziz
    • By danyalaziz 8th Sep 18, 9:42 PM
    • 40 Posts
    • 5 Thanks
    danyalaziz
    I have had the same issue when buying our shared ownership property which was down valued by 20k. After a month, the HA decided to lower the price following a revised survey.
    • AnotherJoe
    • By AnotherJoe 9th Sep 18, 11:11 AM
    • 11,473 Posts
    • 13,245 Thanks
    AnotherJoe
    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

    According to that reasoning, house prices can never fall and lenders can never change their mind about the value of a propert even if circumstances change, such as the economy, the amount they are allowed to lend as a multiple, the interest rate tests they must apply or local factors such as say a new incinerator opening next door or the local school gettingmarked down by Ofsted (all these have an effect on supply and demand),


    So, since house prices can obviously fall, that reasoning is wholly incorrect.
    • Crashy Time
    • By Crashy Time 9th Sep 18, 6:35 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    According to that reasoning, house prices can never fall and lenders can never change their mind about the value of a propert even if circumstances change, such as the economy, the amount they are allowed to lend as a multiple, the interest rate tests they must apply or local factors such as say a new incinerator opening next door or the local school gettingmarked down by Ofsted (all these have an effect on supply and demand),


    So, since house prices can obviously fall, that reasoning is wholly incorrect.
    Originally posted by AnotherJoe

    Many people still probably believe they can`t fall.
    • Crashy Time
    • By Crashy Time 10th Sep 18, 10:41 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    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.
    Originally posted by brit1234

    Yep, it is all about helping banks and developers, nothing to do with helping ordinary people. Many people are now awake to the fact that property is well overpriced though, that is a step in the right direction IMO.
    • kinger101
    • By kinger101 10th Sep 18, 10:46 PM
    • 4,489 Posts
    • 6,228 Thanks
    kinger101
    Many people still probably believe they can`t fall.
    Originally posted by Crashy Time
    Some believe they can't rise as well.
    • nkomp18
    • By nkomp18 11th Sep 18, 9:14 AM
    • 170 Posts
    • 150 Thanks
    nkomp18
    My experience with a new-built in London was pretty similar. Exchanged 3 years ago for 500k
    Just before completion the mortgage evaluator came up with a 465k figure.
    I showed this to the developer and they came back with their own evaluation with comparables estimating it at 510k.

    Not sure how it works with shared ownership but the issue with new-builts that are soon to complete is that a lot of investors are trying to sell them off as contract re-assignments for cash buyers. Because they exchanged 5 years ago at a pre-sale price, they still make profit on a 460k contract re-assignment.

    My developer said as soon as the notice to complete is served, it becomes a normal apartment that regular people can get a mortgage for, and the price shoots up at market price again.

    Not sure how it works with shared ownership, but you could show the evaluation report to the developer and ask them to prove it is worth what you are paying for and you can take that new report to your bank for reconsideration. Often the developer or the bank might agree to a second (free) evaluation if you escalate this enough.

    I do hope it works out for you because I can understand how stressful this can be. No one likes to lose their life savings because some mortgage evaluator did their job by googling stuff on rightmove.
    Last edited by nkomp18; 11-09-2018 at 9:22 AM.
    • Crashy Time
    • By Crashy Time 11th Sep 18, 7:26 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    Some believe they can't rise as well.
    Originally posted by kinger101

    Are you hoping they will go up some more?
    • Crashy Time
    • By Crashy Time 14th Sep 18, 6:49 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    With headlines like this there should be more down-valuations to come?


    https://www.telegraph.co.uk/news/2018/09/13/bank-england-head-accused-spreading-gloom-no-deal-brexit-house/


    Of course MC tried the same line BEFORE the Brexit vote, and look where that ended up, it is almost like a large section the public want house prices to crash now.
    • PersianCatLady
    • By PersianCatLady 15th Sep 18, 1:43 AM
    • 578 Posts
    • 571 Thanks
    PersianCatLady
    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
    Originally posted by Atreyu107
    Or could it be that the sweet talking developer has had you over and you have paid well over the odds?
    • Crashy Time
    • By Crashy Time 15th Sep 18, 7:34 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    Shared ownership in the current economic/political climate is a terrible terrible idea IMO.
    • Crashy Time
    • By Crashy Time 18th Sep 18, 10:07 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    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).
    Originally posted by catshark88

    More and more of these types of articles cropping up, sentiment must be taking a good hit by now?
    • buggy_boy
    • By buggy_boy 18th Sep 18, 10:16 PM
    • 540 Posts
    • 402 Thanks
    buggy_boy
    Im just going through buying a property and the valuation on my own property for a remortgage (was remortgaging my place to buy a BTL) was a complete joke, didn't effect me much but banks are definitely going on the conservative side. Some banks are better than others..

    Banks use area stats, where as you could be in a town/village that has risen a lot sharper than the county area which is where the problems can occur.
    • Sir_Robin
    • By Sir_Robin 18th Sep 18, 11:56 PM
    • 32 Posts
    • 40 Thanks
    Sir_Robin
    Heh when I was buying the remaining share of my property I mentioned the valuation given by the housing associations valuer to the valuer on behalf of the mortgage lender. Surprisingly they ended up the same

    As with most things in life those who struggle to pay have to pay more. Shared ownership shares are overpriced, the mortgage rate won’t be as competitive because it’s niche and the solicitors pretend it’s a hugely complicated big deal so will charge you a fortune. It might not be the optimal way but if it is the only way then it’s s good call imo.
    Last edited by Sir_Robin; 19-09-2018 at 12:04 AM.
    • Crashy Time
    • By Crashy Time 19th Sep 18, 9:57 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    Im just going through buying a property and the valuation on my own property for a remortgage (was remortgaging my place to buy a BTL) was a complete joke, didn't effect me much but banks are definitely going on the conservative side. Some banks are better than others..

    Banks use area stats, where as you could be in a town/village that has risen a lot sharper than the county area which is where the problems can occur.
    Originally posted by buggy_boy

    Will probably get a lot more conservative IMO.
    • Crashy Time
    • By Crashy Time 23rd Sep 18, 10:23 PM
    • 6,814 Posts
    • 2,512 Thanks
    Crashy Time
    https://www.buyassociation.co.uk/2018/07/25/what-are-down-valuations-why-are-they-on-the-rise/
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