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Original poster

Paying more for a house than banks valuation.

8 replies

aquat · 15/09/2013 15:36

Hi,
I've had an offer accepted on a property in a small country hamlet. I believe the price to be fair and was happy with the amount agreed (£10000 less than asking price). Now the bank has come back and valued the house at 6% less than the agreed price. I have a large deposit and this lower valuation only really affects the LTV ratio. The vendor has very clearly said he will not accept anything less than the agreed price and is happy to wait if we don't want it.

The main issue I can see (confirmed by the bank manager confirmed) is that the house is in an isolated rural area that with nothing else sold around it in many years to compare it to. The valuer was from another town with no real local knowledge. Anybody else been in a similar position when buying in a rural location? Am I crazy to consider going ahead with purchase? What are the possible negative consequences of paying more than the bank valuation price?

Thanks.

OP posts:
noisytoys · 15/09/2013 16:09

Depending on how much you love the house and how long it has been on the market I would play hard and threaten to walk away if they don't drop to meet the valued price.

Rockchick1984 · 15/09/2013 16:35

As long as the reduced valuation doesn't affect your loan to value, then the only potential issue would be that you would find it difficult to recoup your price if and when you sell it. A house is only really worth what you are happy to pay - if you can afford to pay the extra, and you aren't bothered about resale value, then I'd personally either see if the vendor will meet you halfway, or just buy it if you would be disappointed not to get it!

BrownSauceSandwich · 15/09/2013 21:25

What is the LTV ratio at the offer price and at the valuation price? If it takes you past one of the major boundaries 75%, 80%, 90%... I think you have to give serious consideration to the continuing extra cost, seeing as lenders will offer you worse rates. I think the seller is taking the piss a bit, but it really comes down to how much you want the house... Are you prepared to risk losing it?

Alwayscheerful · 20/09/2013 10:59

If you really love a house and can afford it, just buy it, the extra will be insignificant in a few years.

Valid point re LTV ratio, if funds are tight it could make for expensive borrowing when remortgaging.

Are we talking less than 10k or a lot more?

CogitoErgoSometimes · 20/09/2013 13:29

Have you approached some different lenders?

MousyMouse · 20/09/2013 13:37

depends on

  • how much is the difference (if only 1000 I would go for it)?
  • can you afford it?
  • is it worth it (for you)?

when we bought the mortgage broker told us that some banks undervalue by a bit on purpose, but don't know it that is true.

OneStepCloser · 20/09/2013 13:52

I was going to say the same as Mousy, banks can undervalue properties, it all depends on how much you want the house really.

Alwayscheerful · 20/09/2013 15:47

In my experience if the LTV is low the bank will just ensure the valuation is the same as the selling price, as the bank/building society will not want to loose the business. There is a particular company ie list of surveyors that do this and work for several of the major lenders.

I have in the past amended an incorrect selling price and low and behold the valuation has been adjusted too.

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