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AIBU?

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Original poster

Both houses we have tried to buy have been downvalued

60 replies

spuddy56 · 06/04/2022 16:59

We are attempting to be first time buyers. Both the houses we have had offers accepted on have been downvalued by the mortgage company by 15k and 10k. The market is mental here. There's so little coming on and anything affordable for a first time buyer gets snapped up and goes over asking. The sellers won't reduce.

We've managed to save a 15% deposit for a 300k house/flat completely on our own while renting so there is no leeway or extra money from family to make up the extra in cash.

What can we do? Do we just give up and keep renting? We are so scared about buying at the peak and then not being able to remortgage or something. I'm so upset that after years of saving we are finally able to buy but still can't.

OP posts:
Paddingtonthebear · 06/04/2022 20:13

This happened to us last year, house was down valued by £25k by the mortgage lender (hsbc). We tried a different lender (Halifax) and their valuation came back at the agreed asking price. Purely due to luck of what surveyor you get on the day I think. We ended up pulling out of the sale due to major survey problems so it was probably overpriced, but it may be worth trying a different lender.

WestminsterCrabby · 06/04/2022 20:15

Try a different lender. We had a down valuation on our first house that we didn't agree with so asked our broker to find another lender who didn't charge a valuation fee. Second lender valued at our agreed price and all was well. Worth a go.

Xfox · 06/04/2022 20:32

Largely depends on your attitude to risk. The bank has decided on the level of risk they are happy with - you may or may not agree, and so choose to shoulder that risk yourself. Also look at the bigger picture too. How many months rent is the downvalue? There may be a tipping point where it is better to suck up the cost and buy rather than paying rent for X months while you continue to look. How long do you plan to stay there? - the longer it is the less it will matter longer term. But it is big sums of money so absolutely needs careful consideration

SareBear87 · 06/04/2022 21:11

My house was overvalued by the vendor/EA compared to Natwest in 2018 by £25K. I've just had it revalued (Dec 2021) and it's increased in value by £30K (according to the same EA).

I was in the same position as you, renting, saved for 10+ years and desperate to buy. Everyone (and I mean everyone) told me house prices were going to crash - they haven't. And there is no way I could afford to buy the same house today as I did in 2018. Apart from a lick of paint, I haven't changed anything, the market is just crazy.

I'm on the south coast where prices are bonkers at best.

Trust your gut feeling

Original poster
spuddy56 · 06/04/2022 21:24

Thanks all. Maybe we will try a different lender. What we can afford probably wouldn't be suitable for starting a family so that also complicates matters as we know we wouldn't be there for ages (maybe 5-8years ) putting us more at risk.

OP posts:
Kabalagala · 06/04/2022 21:28

Try a different mortgage company and just keep trying. We've just (literally a few hours ago) got our mortgage offer for a 90% mortgage where we offered £20k over asking.
We had to look at places significantly under our budget before we made any progress. Keep trying! The market is unlikely to crash significantly and renting is becoming more precarious!

rainingsnoring · 06/04/2022 21:32

I think overpaying is too much of a risk to at the moment (and in the last 18 months). It is likely that the market is at it's peak although I think it has definitely slowed in some areas/ price ranges. Reality should kick in soon especially amongst first time buyers with less deposit. Good luck.

tttigress · 06/04/2022 21:38

I am guessing the mortgage company thinks the housing market is at a peak.

With so many costs going up, I would not be surprised if people have less to spend on housing.

hypaingea · 06/04/2022 21:47

Try a different mortgage company and just keep trying. We've just (literally a few hours ago) got our mortgage offer for a 90% mortgage where we offered £20k over asking.

Personally I think it's crazy to stretch with high LTVs in the current climate.

hypaingea · 06/04/2022 21:48

What we can afford probably wouldn't be suitable for starting a family so that also complicates matters as we know we wouldn't be there for ages (maybe 5-8years ) putting us more at risk.

ideally you need to future proof & have something you can stay in long term to ride out any dips.

Kabalagala · 06/04/2022 21:53

@hypaingea

Try a different mortgage company and just keep trying. We've just (literally a few hours ago) got our mortgage offer for a 90% mortgage where we offered £20k over asking.

Personally I think it's crazy to stretch with high LTVs in the current climate.

The alternative is keep paying rent £500 more a month than our mortgage will be, if our landlord raises rent or sells, we can't afford anything else locally. Or we can wait, and risk seeing prices continue to soar. We're in the south east, and I highly doubt there will anything more than a temporary stagnation in prices unfortunately. Luckily we've been able to buy somewhere big enough that we won't need to move any time soon. It's well worth the risk for us
hypaingea · 06/04/2022 21:57

Yes for those stuck with high rents buying is obviously more attractive & if you can future proof by buying bigger that's something.

I'm in London in an expensive area & prices have stagnated really since Brexit, once you factor in stamp duty.

Original poster
spuddy56 · 07/04/2022 07:20

Yep we have to consider that our landlady could raise the rent or kick us out at a moments notice and we would be faced with higher rent somewhere too. I really don't know what is best.

OP posts:
nodogz · 07/04/2022 09:07

@spuddy56 It's such a tricky situation. I don't think many people (who bought easily) realise how unstable and expensive the rental market is and that this should factor in to your decision making criteria as the security of your own home might be worth the extra couple of thousand.

Just keep plugging away, the right house is out there. Explore all the areas in your 1.5 hr travel time and leaflet preferred areas and houses? Expand the search from minimum to maximum value. Be the best buyers, if it's a probate offer to take it as it comes (no need for vendors to clear). If someone has a fancy pond, tell them you love fish and you'd definitely keep it!

Is there anything you can do for extra cash? Freelance? Upcycle furniture? Grow plants for Facebook marketplace? A couple of extra grand, a different lenders valuation and a good seller could be the right combination!

hypaingea · 07/04/2022 09:18

I fully appreciate the rental market is shite & would favour European reforms.
I think as long as you are mindful re the future & future proof as much as possible it will help.

LGY1 · 07/04/2022 09:20

We have just had our house valued.
One of the estate agents said to me that at the moment some houses are being valued at less than the offer price, but people moving from their first to second home (our market) have made that much equity in their first that they are making up the difference in cash so it doesn’t matter

MatildaTheCat · 07/04/2022 09:27

We are looking for DS and the market is scaring me. Interest rates are very probably about to rise sharply which will make some of this excess borrowing unaffordable.

We bid on a property that was on at 600 and it went for 650. Nice house but not suddenly worth 650.

I’d recommend trying to find properties that have been sitting on the market for a while or have been recently returned to the market. Or waiting which is what we are inclined to do.

user1471538283 · 07/04/2022 09:44

This is happening more and more. I dont think it's your bank being cautious.

You can only afford what you can afford and what the bank can loan.

I know its disappointing but something will give soon.

hypaingea · 07/04/2022 09:55

It's definitely a weird time, prices are crazy but all other economic signs are saying the opposite. The BOE believe inflation is temporary because salaries won't go up yet they initially thought it was a blip & there is huge demand for staff in certain industries so who knows what to think

MyCommentWasDeleted · 07/04/2022 10:29

Sit tight, the market looks like it is topping out and should correct. Article in todays independent reporting the same - www.independent.co.uk/voices/housing-market-recession-inflation-b2052204.html

Don’t be in a position where you’ve overpaid 15k on a house that has dropped in value.

TheLadyDIdGood · 07/04/2022 10:37

If you put this in the mnet property & DIY forum, you'll get lots more replies from people going through the same thing.

Kabalagala · 07/04/2022 12:03

Waiting for a crash is risky in my opinion. It may happen, may not. Might be this year, might be in 5 years. House prices are currently still rising.
More regulations are coming in for landlords and renting is going to get harder.

hypaingea · 07/04/2022 12:17

Yeah i'm not sure about a crash, just stagnation.The impact of rate rises, cost of living won't be felt for a few years as most buyers fix.

Alarae · 07/04/2022 12:23

In the grand scheme of things throughout a lifetime of ownership £10k isn't massive. If that's what it costs to secure your home, and you can afford it, I would go for it.

If your deposit is 45k on a purchase of £300k that banks have downvalued to 290k, that gives you a LTV of ~88%. I imagine the banks will still lend to you at 90% LTV, so you could consider a 2 year fix to pay down the mortgage and then hopefully at the end of that period you would tip into a lower LTV bracket.

Unfortunately with the way the housing market, unless the house has been on the market a long time, it's likely that someone else will just come in and buy the house at the same price.

It is doubtful house prices will truly crash, although they could stagnate. If you are intending to live there for a decent amount of time, paying the extra now probably won't really matter.

PicaK · 07/04/2022 14:12

The point is they don't have the money to make up the shortfall