House valuation

[QuidditchSwitch]

This is a post for traffic really. Well also a bit aibu.

We're selling a property. It was valued by an agent and we soon accepted an offer a couple of k below asking.

The buyer requires a 60% mortgage and the mortgage company instructed a valuation.

That valuation came back as 12.5% below the agreed price, which means the buyer can't afford to make up the shortfall with more funds. I suggested asking for an 80% mortgage, which given 80% of the new valuation would mean that the existing deposit would cover it.

I was told by the agent that they couldn't do this but haven't been told why.

So, the buyer wants to do a second valuation. They've approached me and are asking me to pay £750 to pay for this.

Aibu that this sounds a bit dodgy?

My concerns are

I've never been asked to pay for a bank valuation for a property that fell through.

£750 seems like a lot of money for a valuation anyway, particularly as it's a sub 250k property.

If they request a new valuation, surely the valuers could well just send the same valuer around resulting in the same position we are in now, but £750 down.

I mentioned these to the estate agent who said, yes but we don't know if they will send the same valuer or not, the buyer is willing to take a chance to try again.

I mentioned that I thought £750 was a lot anyway and they said that this includes the broker fee. Huh?

Should I just say no?

How desperate are you to sell? I personally would say no and wait for another buyer.

Another valuation doesn’t make sense as the only one which matters in this situation is what the mortgage lender thinks. I would go back to your estate agents and say the buyers have until x date to find a solution and then you will put the property back on the market.

I'm not terribly desperate but do want to sell. However I don't think a second valuation potentially by the same man will change anything. Surely the bank sends whoever is local to a property?
I made an error - the original ltv was 70% and I suggested 80%. A minor thing.

Changing the LTV won’t help unless you’re going from 80% LTV to 60%. Ultimately the bank doesn’t agree with the valuation and isn’t willing to lend against it at that value. If they only have a 60% mortgage requirement then the bank must be really worried about the value because their stake in the property is relatively low.

Not a chance in hell would I pay any of the buyers costs in this situation, if they want the house then it’s up to them to make their finances work for them! I’d give them a deadline to come up with a solution or re-market it, it sounds like it sold fairly quickly first time round.

I don't understand why switching a 60% mortgage for an 80% one would help things. An 80% mortgage would mean a lower deposit so the risk to the lender would be increased.

But anyway, I wouldn't be paying for a valuation in your position.

I made an error, it was originally 70%. So 70 to 80 would mean there would be enough deposit left over to cover the shortfall.

Yes how many valuations would it take!

Are you completely sure that the property is actually worth what the buyer has offered at? Are there any comparables in the street or area you can look at to justify your value? They likely want to keep their LTV bracket for a cheaper interest rate.

Even if you found a new buyer and they had a different valuation, it could be down valued again. Could you accept less?

Well I've always worked with the idea that a property is worth what you can get for it. We've been offered almost asking so I thought it must be right.

Unless you're desperate to move and have had your property on the market for a while, I'd say no. If they don't want to pay the price they offered, pull out of the sale and put it back on the market.

A property is worth what someone is prepared to pay for it
If the bank won’t lend this buyer enough money then you either

Find another buyer
Accept a reduced offer

Personally I would not pay for another valuation.

@QuidditchSwitch

I'm not terribly desperate but do want to sell. However I don't think a second valuation potentially by the same man will change anything. Surely the bank sends whoever is local to a property? I made an error - the original ltv was 70% and I suggested 80%. A minor thing.

It’s not minor if the highest mortgage amount they can get is for 70%

Thanks for all replies. I thought I was going mad. I don't understand why people use brokers who charge the client a fee.

The ltv idea was just a suggestion.

Thanks for all replies. I thought I was going mad. I don't understand why people use brokers who charge the client a fee.

Because an independent broker searches the whole market for the best deals. They also know which mortgage companies have what requirements or restrictions etc. and the best fixed term rates. It can make a huge difference to the monthly cost of a mortgage, and the brokers fees can be recouped within a couple of months due to the monthly cost being lower.
There's no way I'd be paying a penny towards a new valuation. It sounds as though your prospective buyers can't afford to buy your property. The mortgage rates seem much less attractive ( and therefore more expensive) once you have less than 25% LTV.

Don’t pay for it. They can pay and roll the dice or pull out, not your problem.

Thank you :-)

If they are using a broker, the broker can challenge the lenders valuation. They can also ask what company did the valuation and ask for it to be re panelled to another valuer or source another lender who doesn’t use the original valuer

It may be that the potential buyer can’t afford the mortgage on the 80% LTV rates. 75% and below the rates are much better.

Hahaha they have a good sense of humour! Why would you be paying £750?! It’s not your fault that their finances aren’t stacking up

I’m afraid this is more common than you’d think, especially in London. My property sold for £10k over asking with multiple bidders. Unfortunately, the buyers’ lender did not agree and downvalued us £25k.

Our buyers agreed to make up £15k in cash but we had to accept £10k less and take the hit. We really didn’t want to go back on the market as were buying another property we loved and there was a risk it would happen again with a different valuer anyway. I think that valuation also gets recorded so others doing valuations can refer to it but can’t recall. Still annoyed about it! To me it was worth whatever someone wanted to pay! I would not pay their valuation fee though, that’s on them.

Yeah it's not your problem. Tell them to challenge the valuation and if not then get it back on the market (if already marked sstc) and find another buyer

FYI, they probably don't have a big enough income to get the 80% LTV mortgage. The max mortgage you can take is based on a multiple of your income. So it makes perfect sense they might not be able to borrow more than whatever value that 70% of the purchase price is.

Wouldn’t do it, and would put the property back on the market

80% is probably too many income multiples.

Put the property on the market. Another valuation isn't going to make the property affordable for this person and it's not your problem.

Just remarket it.
If they genuinely have 40% equity there's lots they can do. They are choosing not to.