Huge variations in valuation

[DianaBlythe]

We are FTB and struggling a bit to navigate this.

We have had an offer accepted on a property for £273 500. It was marketed at £279 950.

We have had our own Home Buyers Report done which values the property at £265 000. On reflection I think this is actually right and the property was marketed too high and we offered too much.

Our mortgage company have done a valuation survey which did involve sending a surveyor out and getting access to the property. They have valued it at £250 000.

Have started the process of trying to negotiate price down.

Estate agent are online and have sent us a list of comparables which are not very helpful. Half of them are 4 or 5 bedroom houses that have sold for up to £100 000 more.

We have a decent deposit and can get a mortgage despite this but don't want to pay over the odds especially in current climate. Also don't necessarily want the vendors to know this!

Given the home buyers and lenders survey are so different should we try and challenge? How would we go about doing this?

If we could get the property for £265000-£268000 I'd be happy. Would that be madness?

[Bearbehind]

If your mortgage company have valued it at £250k you need to pay your deposit on that amount and top up anything extra over £250k you actually pay.

If you think the property is worth more and you can top up the mortgage then it might be a good move but, 2 people, who's job it is to value property, disagree with you so you'd need to be certain you know better otherwise you're starting off with negative equity in effect,

[pamplemoussed]

It does not matter what a report says or an estate agent or a anyone else. What's it worth to YOU? Sometimes people decide they really want a house and offer over the asking price, sometimes on the nose, sometimes less. It;s worth whatever a buyer is willing to pay for it. It's subjective, not pegged to a report.

You decided it was worth 273,500 and offered in good faith that offer was then accepted in good faith. Don't be that buyer.

[Bearbehind]

Well it clearly does matter if their lender doesn't think it's worth what they've offered pamplemoussed

[superram]

Ask for it to be reduced, if the vendor says no you need to decide if it is worth that to you or if you are prepared to walk away. Depends on where in the country you live but even in London, very little is going over valuation. The estate agent would annoy me too.

[CountMagnus]

The mortgage company is possibly being conservative, but I think the Homebuyers report may give you scope for negotiating the price down.

Have you looked to see what other nearby similar properties have sold for? You might be able to challenge the mortgage valuation if you can find three comparable properties that sold for higher than figure given.

What position are your vendors in? How much was it last sold for and what work have the current vendors done to it to justify any large increases in value? You can use a house price calculator to help:

www.nationwide.co.uk/about/house-price-index/house-price-calculator

[DianaBlythe]

Our offer of £273500 was in good faith but was based on being able to get a better interest rate because of a better LTV and on not putting ourselves at risk of getting quickly into negative equity.

I would generally presume that the surveyors know better than I do and are more objective!

It is worth a little more to us in terms of emotionally we really like the set up and location. We need to be within walking distance of the city centre as DHs work has no parking, there's been very little coming on the market, the property is vacant and we were planning to complete very quickly and we're very keen to move out of our damp dingy rented flat which we got in a hurry having relocated for my job and only having a few days to find anywhere.

Equally we don't want to be screwed over. I think we maybe have been a little naive.

[DianaBlythe]

The vendors bought it last March and have done it up and put on an extension. They aren't living there at present and I don't think ever have. They have done a lot to it but have probably spent quite a bit and potentially were hoping to make more I think.

[Kiroro]

pamplemoussed you haven't understood this issue really - if the mortgage co has down valued, it meas they will lend only up to the valued amount, and this then affects your LTV and can 1) mean you can't actually borrow enough to buy the property or 2) push you into a new LTV % which impacts the interest rates you can achieve.

I would challenge the mortgage co valuation (because you have the homebuyers one) and this shows good faith that you do want to proceed.

TBH I don't think the mortgage co valuations are great, they value on the basis of prior comparables which isn't that useful if the property is interesting/unuusl or e.g. you have the only house on the street that gets lovely light all day or something like that.

[DianaBlythe]

Thanks for all the help. I have asked the lender via our broker if they will consider our HomeBuyers report in the first instance.

We would potentially walk away even though we have incurred costs at this point. I'm hoping the vendors realise that they are likely to come up against the same problems with another buyer and that we can agree to meet in the middle. It's just knowing what order to do things in!

[contractor6]

Vendor's need to take note of the mortgage valuation as other buyers will also has same issue. House near me was sold above valuation and vendor wouldn't negotiate, its still on market a year later. Ours sold in two weeks because we were realistic.

[wowfudge]

The vendors quite likely haven't thought about surveyor valuations. They may have overpaid, spent too much on the work and probably have considerable costs plus a potential capital gains tax bill. How much did they pay for it?