House valuation from lender is less than agreed purchase price, what now?

[oatsandhoney]

I recently put in an offer on a lovely house which was accepted and have been going through the usual stages, paid for the survey etc and all looking good. Suddenly my mortgage lender, having done their valuation have now come back to say the property is worth 8k less than the price I've agreed.

As far as I know I can either stump up the extra cash myself (I don't have enough) or ask the sellers to reduce the price. We live in a very buoyant local housing market so I expect if I ask that they'll simply put the house back on the market and I'll lose it.

How common is this to happen? Do I have any other options? I really don't want to lose the house as it's perfect for us and there's so little else available on the market.

[HuckleberryGin]

This happened to our first buyers. In the end the sale fell through as they couldn't afford the extra and we couldn't afford to drop the price.

We did appeal the decision by the bank- they wanted 3 similar properties that had sold in last 3 months within 1 mile of house.

:(

[bilbodog]

I think that this happens quite a lot. First thing to try is see if you can negotiate with the vendors - could you afford to meet half way?? Speak to the estate agents and get their advice as well. If you do really love the house and intend to stay for a while then try to make it work. Good luck.

[CryingShame]

If this will happen to you, it's likely that it would happen to other potential buyers as well. Stress this to the Estates Agents - essentially the mortgage provider is saying it is overpriced.

Explain that you can't afford to pay the shortfall so you'll be withdrawing your offer. I wouldn't offer to top up the mortgage because you're likely to need that cash for other things as you move. Sorry but I'd start looking at other properties until you hear back from the vendor.

[heron98]

We had this. We just had to pull out because they wouldn't lend us all the money and the vendor wouldn't reduce the price.

[YelloDraw]

That happened to me as the seller.

The buyers appealed and were not successful.

EA basically said I had no choice but to reduce the price because once the mortgage val was done, it is available on record when other mortgage valuations are done and would come back to the same price.

If you can offer £1 or £2k maybe do that, or just say - this is the mortgage valuation. Any other mortgage val will come back to the same value. We can't top up, we either proceed at the mortgage val price or unfortunately we will have to withdraw from the process (and any other buyers needing a mortgage will have the same issue).

[HuckleberryGin]

YelloDraw that's not necessarily true. Once that sale fell through we put house on market again and ended up selling for £20k more than the bank valued for (so £10k than original sale). Different lender, different valuation.

[YelloDraw]

HuckleberryGin Was that in London in a more buoyant market?

This was the north, just before the extra stamp duty was coming into play - no sure I'd have got a better offer post stamp duty changes.

[HuckleberryGin]

No in Yorkshire.

[YelloDraw]

No in Yorkshire

Oh well I obviously just got pressured by the EA then ;-) It was highly annoying but in the grand scheme of things I was more happy to have the sale complete than to reduce the price.

[Magstermay]

We had this, valuation was £12,000 less than our offer (£40,000 below asking price!!). We couldn't afford to put more to it so reduced our offer accordingly. We did consider offering another £1-2k but decided against as we needed the money to do work to the house.
It was a probate sale and we were ftb so I think in the end they just wanted to get rid of the house and accepted after much deliberation. Had the house not needed work/ circumstances been different we would have offered that little extra for goodwill.