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Under valuation mortgage

(16 Posts)
Mumsywumsywoo Sat 05-Mar-16 10:24:21

Has anyone had any experience of this happening to them? If so who was the provider??

acazc Sat 05-Mar-16 11:00:00

This happened to the buyers of our house. They were with Halifax. The surveyor carried out a seriously in-depth survey, more than the HB one they'd instructed, yet jumped to a lot of wrong conclusions and it caused our house to be valued at £30k less than the sale price. The next buyers' surveyor found no such problems. It meant we lost those buyers as they only had 10% deposit, but we sold in the end. Also, you are at the mercy of other similar, sold houses in your immediate area. We didn't have any comparator first time round, but a couple of weeks later we did.

Bearbehind Sat 05-Mar-16 11:11:53

I don't think it matters who the lender is as they often use the same surveyors.

It's a problem for both the buyer and seller and the resolution really depends on who stands firmest.

If you are selling and get an undervaluation you have to decide if you are willing to lower the price or risk remarketing and the same happening again.

If you are the buyer you have to decide what the house is worth to you and look at whether you can still get the mortgage you need, albeit likely at a higher interest rate.

Often its s compromise between the 2 ie the 2 parties meet at a price somewhere in the middle.

Mumsywumsywoo Sat 05-Mar-16 11:29:08

Our valuation was carried out on Friday but I'm nervous as the HB survey came back at 50k less than what we've agreed to pay. This doesn't actually bother us as we've done our research and disagree - the surveyor is known to be a tough cookie locally and regularly does this apparently, he once under valued a house by 120k!

We have 20% deposit but I don't know how tough the bank will be as it's going to be a second property for us...

Bearbehind Sat 05-Mar-16 12:47:46

£50k is a lot to take on the chin and if you've only got 20% deposit on a second property you might struggle.

Basically the lender will base the loan on their value so if they we prepared to lend 80% that will now be 80% of the valuation leaving you to make up the other 20% plus the £50k

You are unlikely to have much more flexibility that that as its a second property so you won't have the option of a very high LTV.

First option would definitely try to renegotiate on the price- even if you think it's worth it is a brave seller that won't budge at all after an undervaluation- especially one that big.

This situation will be further complicated if you were planning to complete before the end of the month to avoid the stamp duty increase as pulling out of this sale will result in a bigger stamp duty bill on whatever you do buy.

It all depends if you can raise the shortfall.

Bearbehind Sat 05-Mar-16 12:49:02

Should have added, the stamp duty complication pretty much rules out trying s different lender as it is very unlikely to go through in time.

Mumsywumsywoo Sat 05-Mar-16 13:32:02

Thanks Bear.

The bank is using a different surveyor to the one I used for my HB report so I am hoping the difference is not as large as 50k. As you can tell we are trying to get this through before stamp duty changes and it's all looking very unlikely. I hate this waiting game - how long until we find out if the property has been undervalued by the bank?

Bearbehind Sat 05-Mar-16 14:42:19

Sorry- I misunderstood - I thought the valuation you've had was for your mortgage.

Lenders vary in how long after the valuation you hear- ours was 3 days.

On the up side, if this surveyor is notorious for being cautious you might be ok.

On the downside- he isn't risking the lenders money, the next surveyor is.

Fingers crossed.

acazc Sat 05-Mar-16 19:48:47

Depending on your type of house, a simple valuation survey can involve little more than some desk research and a quick look round. How long did he/she take?

Mumsywumsywoo Sat 05-Mar-16 20:15:24

I have no idea. It's a holiday home at the moment so in pretty good nick. They did collect the keys though from the holiday letting agent so I assume they went in. It's only a tiny fairly basic house but because it's a great location by the sea and has a parking space which is really quite rare the price is high. I do think it's justified though and there are other properties for sale nearby for a similar price however if you go 1/2 mile further away you can get double the house for your money but again the reason is because you are a stones throw from the sea. Sorry I'm rambling. I don't suppose they could have been in there for any more than half an hour...

acazc Sat 05-Mar-16 22:08:37

I see. Fingers crossed. Do keep us posted.

Mumsywumsywoo Sat 05-Mar-16 22:36:55

Will do. I fully expect to be in tears next week.

Bearbehind Sat 05-Mar-16 22:43:41

It might not be bad news- some surveyors don't seem to give a shit.

Ours, when we sold, knocked next door to start with, then got the price wrong (he thought it was £259k when it was £295k).

He clearly had no idea what he was valuing but it worked for us!

Mumsywumsywoo Sun 06-Mar-16 07:04:12

I'm trying to stay positive. I think it's because I want it to so bad and that I also know the seller has been so awkward the whole way through. He is acting like he is doing us a favour by letting us buy it! The EA keeps saying over and over 'he doesn't really need to sell it (basically implying he is some rich guy). WHY IS HE THEN??? So frustrating.

acazc Sun 06-Mar-16 09:25:56

Do try and stay positive - I really don't believe there is only one house for you. We lost out on our first house we offered on and I was distraught, convinced it was the only house I wanted etc. but now, I thank GOD we didn't get it. The house we've ended up with is a million times better and I can now see all the flaws with the first house.

Mumsywumsywoo Sun 06-Mar-16 12:24:01

You are right acazc. If it's meant to be it will be...and all that jazz.

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