Disappointing house valuation

[HalfBakedAlaska]

My dh and I finally managed to buy our first home two years ago. We live in an area with very high house prices. We got basically a bit of a wreck and have spent the last two years doing it up. It had dangerous bathroom electrics, no bathroom floor under the bath, a rotting, damp-ridden kitchen, mouldy carpets, etc.

We've redecorated all downstairs and two of the three upstairs rooms. We've laid a hard wood floor in the sitting room, created a utility area, installed a new kitchen, damp-proofed the kitchen and put in a new ceiling, put in a new bathroom, had new circuit breakers put in, new fuse board, new garden fences, new shed, redone garden.

We're remortgaging and the surveyor (who apparently valued it when we moved in two years ago) says it is only worth three grand more than we originally paid for it. We are gutted. Does this sound right to people? Any advice on what we should do? We're not sure if we should pay for another valuation or not.

Incidentally, the house next door (which is in a terrible condition - 1970s kitchen and decor, overgrown garden, etc) just sold for 3,400 less than ours has been valued at.

I would say unfortunately the only thing that would significantly increase the value of a house is either adding a bedroom/extending or doing necessary things that a potential buyer would spot on a survey anyway (new roof/full rewire etc). New kitchens and decor make it much more 'sellable' but only if the buyer likes what you've done. Sone people might have totally different tastes and so your new kitchen maybe worthless to them (I'm sure it's lovely though!).
It is frustrating when you've put so much work in, but at least now you have a house YOU like and are happy to live in while you're there.

I would however be very wary of remortgaging for more than a house has been valued at as someone mentioned. It puts you in negative equity which I don't think is ever a good idea. I suppose if you're planning to downsize next that might work, but otherwise I'd find it v stressful knowing I owed more than I could get for the house.

How much have you actually spent? Most of what you describe is fairly cosmetic so I wouldn't expect it to add value, it would just make it easier to find a buyer. But it sounds like the things you've done that add value are a new kitchen and bathroom. Then it depends on what has happened to house prices in your area in the 2 years.

Assuming you've had the work done for your own benefit and not to sell the house for more money, then you can enjoy the improvements whether they add value or not.

Unfortunately it sounds very much like other people i know who are in the same situation. My mother in law bought a bungalow around 3 years ago & did the same as you really, brand new kitchen, bathroom all with underfloor heating, redecorated & carpeted every room, back & front garden had £6k spent on it totally redoing it!!
Sadly she passed away in May but i know from months previous she'd had a valuer round as she'd thought about selling, spend all her money & just live off the government basically till her last days, and he'd told her she should never have spent all that because it basically made very little difference to what she could sell it for.
We know obviously now because its going on the market for what she bought it for, and that's after having around £18k worth of work done on it!!

Thanks all. We did have a look at Zoopla before our survey, which was another cause of frustration as they valued it as significantly (over 10k) higher than our surveyor.

We did do most of the work for our own benefit, but I think it will have a significant impact on the price when we do sell. There seems to be a huge amount of variation in our street - houses are all the same, but well-presented ones can go for 20k more than a neighbouring house with poor/old decoration. It's a funny old world.

I totally understand your situation and your house value should reflect the improvements you've made. It is true that building societies often produce low valuations for remortgage. It's advantageous to them if the value is as low as possible because the higher the loan to value percentage the higher the interest rate they charge. Cynical but true. I'm sure your property will sell for much more on the open market. Also why an estate agent will happily do a valuation even when you're not selling. If he/she are lovely you will remember them when you are moving on. It's their investment in future business. Shame on you Finance Princess - we need to be positive and supportive to people on this forum.

Sorry am late to the thread but just thought I'd add that we experienced the exact same thing.

We spent £80K on a complete house refurb after buying a wreck, when we got a valuation for a re-mortgage we were valued at £190K which was the exact price we paid for the house 2 years earlier. No other house of the same type has sold in the 2 years since we moved in so our assumption is that the valuer has simply taken the last sold price (ours) and used that as his basis.

We challenged the valuation and sent copies of receipts and a detailed outline of the work undertaken but they refused to budge, citing that house prices in the area fell by 9% in the two years since our purchase.

It has cost us significantly more than we had anticipated as we've had to invest more to get the LTV ratio the mortgage demanded.

Just out of interest, was the valuation done by the firm with the initials CW? They did ours and are apparently known for employing this practice.