Unfair house valuation - WWYD?

[Klaudiagal]

We have bought a 4 bed property less than 2 years ago in Teddington for 550k. It was in a very bad state, but since then we insulated the house from outside, insulated the attic, changed roof over extension, rewired, changed Lino flooring into oak wood and porcelain tiles, new bathrooms, new kitchen, replastered walls and ceilings and put a beautiful bifold doors to patio.. according to property price index, the value of property went up to 588k (did not take into account any work we did), but in the meantime we had 3 estate agent valuations between 680k to 735k (this one last week).
As we are planning to remortgage soon, we requested property valuation from our current mortgage providers, for which we were charged over £500, and we estimated the property value at 700k based on previous valuations. They sent a 20-sth year old girl who obviously was very inexperienced (she asked whether the house was built in 1998, when it is built in 70s and previous surveyor even gave us an exact year based on the specific way it was constructed). I can add that the house is in Teddington 5 minutes from Thames and bushy park, so definitely not an area that decreased in value recently. We got valuation updated today to 580k!! Less than what property price index would suggest!!! And after all the extensive renovations we did.
I called the bank and asked whether they can request a reasoning behind going that low, especially that the house next door is on the market for over 700k, but they refused to do anything or provide any details behind this valuation.
AIBU thinking that since I paid £500 for this valuation, I should have a document showing the reasoning behind it?
What do I do now? Can I put a complaint? I think it is just a blatant incompetence OR bank trying to get more expensive mortgage out of me. Anybody can advice ? Mumsnetters, please help, I am just gobsmacked!

@Bluntness100

The thing is op, you bought it less than two years ago, so possibly it’s less about finish and more about the property itself.

I can see a four bed on for just than 700 but I can’t see anything in thr area that sold for 550 in the last two years.

Listen, I get it, I really do. But the house you are mentioning in your post is on the same estate and similar size. Also our house is very different to what it was when we bought it and is rewired. Insulated and better roof put in and patio window changed - and those details actually do matter in valuation. And the valuer has put it below Property Price Index which means she thinks it is worth LESS then when we bought it with wires hanging out of the walls:)

@BlackLambAndGreyFalcoln

Whenever I've remortgaged I've never had to have a survey done if staying with the same lender. I've just used my own figure for the house price based on local knowledge/nationwide house price index etc and never had it questioned by the bank. Most of these "remortgages" were just switching products at the end of the initial product fix so didn't need to do a full mortgage application, but I did once remortgage for home improvements which did need a full mortgage application, but again the valuation figure I provided was accepted by the bank and I didn't need to have a survey done. If I was switching lenders obviously I would have to have a survey done, but it's always been financially worthwhile (especially avoiding the survey) to stay with the same lender.

Yeah, I know! Since we did so much work to it I wanted the price to reflect it at least partially. How wrong was I:)

Thing is OP if you want to flip a property you need to add square footage to ensure a profit. It's only worth doing the kind of work you did if you are going to stay in the house a long time.

@Klaudiagal

I am merely saying the the house on my estate next door is for sale for £700k so I need evidence why she thinks it is irrelevant.

Put your house up for sale at £800k. In fact, put it up for £1m!

You can advertise a house for sale at absolutely any price you choose.

Why would a surveyor value your house based on what someone has decided to advertise theirs at?

@TatianaBis

Thing is OP if you want to flip a property you need to add square footage to ensure a profit. It's only worth doing the kind of work you did if you are going to stay in the house a long time.

I am not flipping it, I am remortgaging, so want to get better rates:)

@SofiaMichelle your sarcasm is endearing

I know I was told in the current climate mortgage lenders are keeping their valuations close to the bone. There were two specifically, one was Santander, can't remember the other but it wasn't Halifax.

CeibaTree That first house you linked to, would be about £140k where I live! We're in a popular seaside town near Edinburgh. I have to wonder whether people in London realise what they could buy, if they just moved up North. And I say this as someone who used to live in London. The house I live in now is 5 bed with a sea view, probably would be valued at £250k, but in London it would be over a Million.

@Bluedeblue

CeibaTree That first house you linked to, would be about £140k where I live! We're in a popular seaside town near Edinburgh. I have to wonder whether people in London realise what they could buy, if they just moved up North. And I say this as someone who used to live in London. The house I live in now is 5 bed with a sea view, probably would be valued at £250k, but in London it would be over a Million.

I know, it's crazy!

You can advertise a house for sale at absolutely any price you choose

No you can't. Because your buyer would only be able to get a Mortgage based on the value given by the Valuer. A Bank will not lend someone £1,000,000 to spend on a house worth £600,000. This is because if the customer stops paying their Mortgage, the Bank will evict them and sell the property. The Bank don't want a debt of £1,000,000 when they can only re-sell for £600,000. This is why LTV calculations are done with a higher interest rate being applied to larger LTV : to reflect the increased risk to the Bank, should the customer default.

Hi OP. We live in a similar 1970's house and I'm always surprised at the price difference between ours and any of the (often smaller) victorian terraces. Ours is maybe 25% less for the same floor area - probably more. Period features do sell! I think you can't compare to any houses with character near you. Standing on it's own I would expect the house to have risen in value but you can't assume the rise in value is the same as a victorian terrace. It is possible that your valuation really is correct. You spent 550K buying it and have done some updating, but nothing you mention is major and it does not add floor area. Kitchens and bathrooms can be quite individual taste so may not add what you spent. My guess from what you did was a spend of around 20K (unless you went very high end, which is of course fine if that's how you want to spend your cash but in an ex-council type property does not always add value above and beyond a mid-range choice). I hope you can get it reviewed though so you are confident in the valuation.

Sorry, also meant to add that London is heading, I believe, for a market downturn given changes to home working etc. This might make their valuations more conservative than they would have been 18 months ago as at the end of the day this is just about protecting their investment.

I think the OP is getting a harsh time here. Ots perfectly reasonable to query the value as it will affect her mortgage. I'm a valuer and do think that value is low. The old saying for valuing property is that it's an art as well as a science.

The valuation will be based on comparable data. The better the comps the more reliable and more comfortable the value will be. In a situation like this, where there is somewhat limited evidence, the value needs to use more if their own judgement. As all values are different you'll often have them provide different values for the same property. None of these are necessary right or wrong as long as the rationale used by the valuer is reasonable.

In terms if evidence, sold prices are the nest but asking prices for properties on the market can be taken into account.

Best of luck OP

I am not flipping it, I am remortgaging, so want to get better rates

I know - the same principle applies tho - if you want to see a profit in 2 years need to add square footage. I don't know how long you're going to stay in the house.

@allaboutthecrisps

Hi OP. We live in a similar 1970's house and I'm always surprised at the price difference between ours and any of the (often smaller) victorian terraces. Ours is maybe 25% less for the same floor area - probably more. Period features do sell! I think you can't compare to any houses with character near you. Standing on it's own I would expect the house to have risen in value but you can't assume the rise in value is the same as a victorian terrace. It is possible that your valuation really is correct. You spent 550K buying it and have done some updating, but nothing you mention is major and it does not add floor area. Kitchens and bathrooms can be quite individual taste so may not add what you spent. My guess from what you did was a spend of around 20K (unless you went very high end, which is of course fine if that's how you want to spend your cash but in an ex-council type property does not always add value above and beyond a mid-range choice). I hope you can get it reviewed though so you are confident in the valuation.

Hi, you are right and I fully agree, but the house I am comparing to is the same estate, similar style and age, and similar size (a bit smaller actually) so it is a fair comparison..

Just making a point that I am not expecting mine to be any similar to a pretty Victorian in the next street, I am well aware of this difference and it is not at all source of my moaning:)

OP you say you got market valuations of £600/700k - are you sure they weren't asking prices from estate agents, rather than actual valuations?

I agree that the works you have done are irrelevant - you might add some nominal value and probably make it more saleable, but you are never guaranteed to recover what you spend on a property.

I think that ex-council housing / on a council estate means that there is a ceiling. That's probably why the value is out of kilter with the house price index - the house price index can't drill down into specific postcodes or roads, its regional at best.

I’m not far away from there, OP, and I agree, it does sound very low.

Looks to me as if they’ve simply added the local percentage increase to the previous sold price. Which doesn’t work if you’ve undertaken major renovations.

Just because someone’s well qualified, BTW, it doesn’t necessarily follow that they’ve got much common sense.

@masterofthechef I want that house

I think you've been treated unfairly. You could request a return of say £250. They might agree to this especially if you threaten to take all your custom elsewhere. If you get nowhere complain to the bank ombudsman.

I know when we remortgaged with NatWest we had 3 choices - remortgage for original value, remortgage based on desktop valuation (basically just based on property index) but this wasn't binding, or have a new valuation but that was binding and we were warned could go up or down.

www.zoopla.co.uk/for-sale/details/58181763/?search_identifier=b379bbb6b0d497f7829c84ea2ba1ec71

This is a 3 bed for 530k, why would a 4 bedroom cost 170k more?

The house you're comparing it to OP is on the market. Having worked with surveyors, they can only use completed sales as comparables, so the fact that there's a house on for £700k makes no difference because it may not sell at all / sell for a much lower figure.

If you're convinced it is priced correctly at £700k, then delay your remortgage until its exchanged at the very least, get the estate agent to put in writing the offer and submit that to the surveyor / bank tto challenge the valuation.

@Africa2go

The house you're comparing it to OP is on the market. Having worked with surveyors, they can only use completed sales as comparables, so the fact that there's a house on for £700k makes no difference because it may not sell at all / sell for a much lower figure.

If you're convinced it is priced correctly at £700k, then delay your remortgage until its exchanged at the very least, get the estate agent to put in writing the offer and submit that to the surveyor / bank tto challenge the valuation.

Also the house OP is comparing hers to was on the market last year and didn't sell, so there's no guarantee it will sell at this price this time round anyway.

@Hfjshdhs

4 bedroom renovated house in Teddington, I am genuinely shocked at how low your own valuation of £700k is. Surely it would be more like £900k+?! And definitely definitely not £588k.

Same, I know this area well. I’ll buy it at that price!!

This may or not apply to your house OP but we wanted to get a better LTV rate on our mortgage and we were planning to do some renovations to our 1950s home. We sank about 60k in but the surveyor told us it was only likely to add 20k to the value of the home. We did some of what you did re insulation and opening up the garden with doors and then made the downstairs open plan and did some patios etc

We didn’t care because we have no intention of selling ever but in his opinion a lot of modernising work does not reap a significant financial return relative to what is put in. Maybe there might be an element of that in your valuation too.