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Original poster

House Devalued ? Help

29 replies

Superstar41 · 12/01/2021 19:56

Hi there

I’m in the process of purchasing a shared ownership property @ 40%

We offered on the property the full asking price £250,000 (£100,000 for the 40%) however a mortgage valuation was done last week and they’ve come back today saying the property is only worth £230,000 (£92,000)

I’m incredibly stressed and upset because unless the vendors and housing association drop the price, the bank won’t give us the mortgage (Brexit and COVID I think have caused the drop, also I think the estate agent marketed the property too high) I was told by my advisor it doesn’t matter who values it as most surveyors talk it would only be valued @ £230,000

Anybody been in this situation?

Thanks

OP posts:
Arnoldthecat · 12/01/2021 20:02

The industry knows well that the property market is inflated and they want to make sure they are closer to the right side of it than the wrong side hence their lower valuation.

Original poster
Superstar41 · 12/01/2021 20:11

@Arnoldthecat that makes sense, so will be the same for everyone trying to purchase the property if they pulled out ? So the vendor won’t have much choice unless they are happy to pull out ?

OP posts:
Original poster
Superstar41 · 12/01/2021 20:15

To be honest it’s all so confusing :(

OP posts:
LawnFever · 12/01/2021 20:16

Have you passed on the valuation to the vendor & estate agent?

Original poster
Superstar41 · 12/01/2021 20:20

@LawnFever I have yes so I guess I have to leave it until I hear back, it’s so upsetting!

OP posts:
Arnoldthecat · 12/01/2021 20:24

Maybe mortgage companies are expecting the buyer to front up the difference in valuations thus shouldering the perceived extra risk in the inflated housing market.

Original poster
Superstar41 · 12/01/2021 20:26

Maybe, but just not possible, if I was able to put that money into it, I wouldn’t be doing shared ownership...

I don’t think many people who are purchasing a shared ownership property have those funds available - if we did, we’d be buying on the mainstream market!

OP posts:
user1471523870 · 12/01/2021 20:34

It happened to us last year (but not shared ownership). We decided to go for another lender which was out second best choice and they had free valuation. Their valuation came up significantly higher. We were still annoyed but we went with them in the end.
The odd part is that both the valuations were done by the same company, just ordered by two different banks. Clearly the instructions can be to me more or less conservative....

Original poster
Superstar41 · 12/01/2021 20:36

@user1471523870 this is actually super helpful thank you! Our Mortgage advisor has said there’s no other choice so I will mention this to him and see if it’s possible that we change lenders!! Our case isn’t so straight forward so we will have to see

OP posts:
Original poster
Superstar41 · 12/01/2021 20:37

@user1471523870 because it’s shared ownership there aren’t as many lenders :(

OP posts:
Terminallysleepdeprived · 12/01/2021 20:38

Sorry of this is a daft question...are you putting and money yourself in to the 40% or is it a 100% mortgage on that?

When I was buying my first house 18 months ago I was told I had to put up a % of the "owned" section and the bank etc would not offer 100% mortgage on it. I walked away and bought an older house in a cheaper area in order to avoid shared ownership. Could this be an option for you?

Original poster
Superstar41 · 12/01/2021 20:43

@Terminallysleepdeprived not a silly question, putting a 10% deposit down into the £100,000 (or so we were) unfortunately not, the houses where I live are pretty expensive, 2 bed houses around here are around £220,000 and with LTV rates being so up in the air at the moment wouldn’t be possible :(

OP posts:
Terminallysleepdeprived · 12/01/2021 20:52

@Superstar41 ah that wouldn't help then.

I am quite lucky, I live in a fairly deprived area of the Midlands and house prices are very low compared even to local towns never mind the South. I have a 3 bed terrace with massive garden (bigger than I knew once we finally cleared it) which I paid 85.5k for, same house but less land in nearest town start at 140k and move it to parts of London and my cousin sold his similar house for over 450k

Definitely speak to your broker about alternative lenders, but equally talk to the HA as they may surprise you.

user1471523870 · 12/01/2021 20:54

[quote Superstar41]@user1471523870 this is actually super helpful thank you! Our Mortgage advisor has said there’s no other choice so I will mention this to him and see if it’s possible that we change lenders!! Our case isn’t so straight forward so we will have to see[/quote]
I really hope you have some room with your choice of lenders. Maybe this one was your only choice with a certain set of parameters, but if you are ok with changing something you can have more of a choice?
It is not true every valuation will be the same! It wasn't for us!

Original poster
Superstar41 · 12/01/2021 20:56

@Terminallysleepdeprived if I didn’t have Family that were poorly I would leave the area without a problem and move to the West Midlands (I work in Telford twice a week so that would work for me) but unfortunately I can’t leave here yet! I called the Housing association today they said if it’s been valued @ £230,000 there’s not much they can do, if the vendor is happy then they will be - so I will have to wait for tomorrow I guess and see how it goes!! Got my heart set on it , will be gutted to lose it now!

OP posts:
HitsAndMrs · 12/01/2021 20:57

Same thing just happened to my friend. SO property. She has had to apply through another lender but they haven't valued it yet. If they give the same valuation she will have to back out. Weird that this is common at the moment?

Original poster
Superstar41 · 12/01/2021 21:01

@HitsAndMrs will the vendor not help? yes it’s happening because I’ve been told we’re due to go into another Lockdown like March where the property market comes to a halt. With COVID - 19 and Brexit the house prices are due to drop, they’re preparing for it so this is how! Problem is because this is happening to so many people, if the vendor pulls out to re advertise it will happen again so I guess they would just stay put!!

OP posts:
jojoandgrangran · 12/01/2021 21:08

I had a shared ownership flat and I wasn't allowed to sell it for over market value. It was written in the deeds.
So they got an independent valuation on it and I wasn't allow to sell above that price.
Check there isn't anything similar for you.

Original poster
Superstar41 · 12/01/2021 21:13

You weren’t allowed to sell it above or below? The issue will be if they can’t sell it below - it was valued by a chartered surveyor in September I believe , now according to our valuation it’s no where near that level @jojoandgrangran

OP posts:
jojoandgrangran · 12/01/2021 21:42

I could sell it below, but not above market valuation. Get the housing provider out again to do another valuation?
Especially if the market has changed.
Or go back to housing provider with the new valuation that you have?

jojoandgrangran · 12/01/2021 21:43

In the deeds it said you had to keep it as affordable housing, so not profit over the market value when selling it.

Original poster
Superstar41 · 12/01/2021 21:49

@jojoandgrangran ah I see, yeah it makes sense, I just can’t understand how the valuation done by the chartered surveyor could be so much more than the mortgage valuation - I guess COVID and Brexit hasn’t helped in the past few months - fingers crossed I get my answer tomorrow

OP posts:
embarassedmum2017 · 12/01/2021 22:16

This happened to us 11 years ago when we bought our SO property. First lender downvalued by £20k, the housing association couldn't do anything. We tried another lender who valued at the selling price and we were able to proceed.

I don't think the housing association will accept the lower valuation. If you love the house and don't want to walk away, you to need to try another lender.

TrySarahTops · 12/01/2021 23:29

Is the house worth £250?

When we were remortgaging a few years back, we added to our mortgage and the valuation came back lower than we had anticipated. We pushed back at our mortgage company and asked them how they had come up with that valuation (as they certainly had not been inside the house). We were told that it was based on an algorithm. So we presented various identical houses to ours that had sold for a similar amount and a two bed that sold for higher than the valuation. The mortgage company upped the valuation to what other houses had sold for.

So it might be worth pushing back to the mortgage company?

Arnoldthecat · 13/01/2021 08:36

I think that regardless of what the mortgage co say, you have to consider whether you could be buying a slice of future negative equity.

The housing market in this country has been ramped and inflated for years by all those with vested interests but it is they who are saddled with the mortgage and the property who will, in the end, pay the price in terms of owning a mortgage which is higher than the property value and therefore being locked into that property.

Government have fuelled this folly with endless help to buy schemes and now the ultimate folly, a stamp duty holiday, at a time when the country is virtually bankrupt and living on fake money and credit.

You also have masses of foreign investment who see the UK as a convenient capital park for their fake money, massive projects,building overpriced apartment blocks in all major cities, mostly to enslave British renters.