Our surveyor has valued the property we are buying as under our offer - WWYD

[iwantavuvezela]

I would like some candid opinions (feel emotionally involved I guess, and not sure what to do)

We are busy selling, and put in an offer (which after much negotiating) we settled on. Had the survey done and it was valued at almost £18,000 less that what we offered!
What would you do - if the buyer does not negotiate would you walk away.
We do want to buy, love the house, its an area we want to be in - but within this unsure market I am worried about paying over the odds and the value still falling! I understand that surveyors are cautious now, the bank will lend us the money (as we have equity) but am worried about the large amount difference!
Any advise appreciated

I wouldn't pay over the odds for a house in these times, regardless of how 'nice' the house may be.

With interest rates and mortgages being as tight as they are, you don't want to start with the prospect of 'negative equity' ... especially as interest rates are going to rise.

Room for some serious negotiation?

I'm not sure you would even get a mortgage agreed if that's what the valuation survey showed. Show it to the vendor and drop your offer accordingly.

we can get the mortgage, but that is because we have equity and therefore the bank knows that they will make back their money (we are borrowing about 70% of the money needed. But i need to try and think with my head on this one!
I am going to try and negotiate but i think its going to be accept the original price or walk away!

Can you contact the surveyor and ask what the valuation is based upon - that may give you more of an idea whether it is fair. Once I had spoken to him/her I would reopen negotiations - it might not be possible to get full #18,000 discounted but the vendor would be wise to meet you in the middle especially if the surveyor has made a good case for the down-valuing.

Get the data the surveyor valued your property on. Often they take stupid comparable properties. In many areas they are being cautious about valuations. To be honest £18k doesn't sound alot to me but it depends on the value of the property. I would use it to try and negotiate the price down, it is good ammunition.

If you love it it is its value to you not mere bricks and mortar which counts, assuming you can still finance it. Some elements are subjective and not as appreciated by a surveyor. How much of % purchase price is £18k ?

I would do as Lalalonglegs suggests - talk to your surveyor to see why there is such a large differential between your offer and his valuation. Perhaps you can agree a compromise position. With the economy as it is, mortgage lending tight and interest rates on the rise, you may find your vendors take a pragmatic decision and meet you in the middle - but I would not want to be paying over the odds for a house in the current climate, unless it is your forever house and it won't matter for the next 15-20 years.

If you don't want to talk to the surveyor ask your Estate Agent to do it for you. They have a vested interest in keeping the chain together. The surveyor will most probably have based his valuation on "comparables" - the recent sale prices of similar properties in the area - and to get these, they often talk to Estate Agents.

Thats a good idea, will ask our EA - I know he gave the surveyor details of other properties but might be worth us having a look at them as well.
Our surveyor felt that this was the price based on the average square metre price in the area.

A valuation based on an average price per square metre is complete and utter nonsense. Our house is a small, 150 year old cottage and is almost unique in the area. If it was valued on that basis it would be worth a lot less than it is actually worth.

Did the surveyor do a full survey, a homebuyer's report or just a valuation? If it was just a valuation then he probably wouldn't have even set foot in the house and may not even have stopped his car as he drove past. I'm astonished that in the current climate banks still think this is an acceptable way to value property.

we had a similar position and went ahead anyway - it was and is still the only decent sized house we can afford in the area. our surveyor admitted he marked it down as its new - ten years old - but the sought after victorian terraces that cost the same are tiny by comparison to ours.

nocake i think i explained that poorly. Our surveyor did go to the house, and we then phoned him to ask about the discrepancy. He (as part of the conversation) said that he had valued properties in that area, and there was aguide price per square metre. Although that was not only what his valuation was based on - there were other factors that he listed, and that he felt that his figure represented the value of the property.
We are hoping for a compromise position from the seller, and i guess are doubting ourselves when we got the valuation (it was not what we expected!)

Well our surveyor valued the house we are buying at £20,000 under what we offered and we went ahead anyway. The seller (as with your chap) was very adamant that it was original price or walk away.

Basically there were no real surprises in the survey, so nothing we didn't know when we made our offer, and we know the area and we know what the property can resell for when we've done some work, so we felt it was still a good investment.

Also I felt he was being deliberately conservative to help us negotiate money off, whereas the seller was completely uninterested in negotiating.

Finally we don't intend to sell for some time so if we take a small hit in the short term, it doesn't really matter to us.

Ultimately though I think it comes down to questions only you can answer:

1. How much is the property worth to you
2. How much do you trust the valuation
3. How likely is your seller to negotiate
4. Can you afford to sit it out if the value does drop slightly in the short term.

youngvisitor thanks for that - i guess as we offered that amount we did think it was worth it (although at the higher end of our negotiation)
we do feel that the valuation is cautions
i think the seller is unlikely to negotiate
I guess we have to think do we WANT the house, we are planning on living in the house for a long time (10 - 15 years) so its not a short term decision .....
mmmmhhhhhhhh

How many other houses are there available in the area that you might like? we looked for a year and didn't find any that were suitable, until the one we eventually bought - ended up paying more than we had planned but in such a slow market it was worth it (we are staying here long-term too). Just something else to bear in mind ...

I think that if you say to the sellers what is happening and that you have to pull out of the sale, then they might reconsider the price.

They won't want to loose you. Any sale at the moment is important and non-existent.

Explain to the sellers that you have to pull out the of deal over the difference in the price and they might back down and drop their asking price for you.

If not then you have to think, will you go to another mortgage lender who will use a different surveyor who might be different of the valuation or if you really want the house get the sellers to drop 50% of the difference and perhaps try and raise the other 50% yourself ? Ask family ??

We did this on our house and asked for help from the family to raise a bit of extra money to buy our new house ??

Just a suggestion, I am sure the sellers won't want to loose you !!!

Thinking with your head involves hard decisions.

If you were to scrutinise every fact and figure regarding the housing market and affecting economic news you might be considered wise to take yourself outside of the market for a while and let it sink without you on board.

Thats not much fun though so you need to consider being at the very least a little hard nosed. YOU payed for this survey, talk to the person/company and get your moneys worth.

If they maintain it is in their view an accurate figure then get straight back to the vendor and let them know, offer them all the details to back it up. Use the EA as well, keep them informed and get yourself a fairly valued house.

Check what the house last sold for, if it sold since 2004 and the vendor is making a profit then you are paying too much unless it has been extensively refurbished.

DYOR

I buy and sell properties as part of my work.

Just tell them the valuer has down valued it. Tell them you can't pay more than that: that's all you can borrow- and see what they say. If they say no, then think about it hard, and if you love the property you can always stick with your original offer. But if you think values are falling, then definitley try to get the price down a bit more.

another mortgage co might give a higher valuation, but it's fees every time.

There is absolutely no harm in asking; you won't loose the house because of it if you are still prepared to pay the higher price if the vendor says no.

Bear in mind it's just before christmas, and the market dies around the beginning of december, so they may not want to loose the sale at this point in the year with noone knowing whether prices will go up or down next year. Also, the agents will be wanting to see the sale go through because they need their commission.

"Check what the house last sold for, if it sold since 2004 and the vendor is making a profit then you are paying too much unless it has been extensively refurbished."

Sorry but this HUGELY depends where you are.

Houses round our way have almost doubled in value since 2004 and property prices have not dropped at all during the recent recession. Our house was valued in 2007 at the height of the boom and achieved exactly the same price when it sold this year.

Thanks for that , considering all feedback - lauree thanks as well, i appreciate your professional advice from someone in the trade so to speak!

Also your sellers have to realise that, if you do pull out, there is a chance of the next surveyor coming back with the same valuation and it happening all over again.

I would reduce your offer.

No harm reducing your offer. Make it sound like you have to pull out. Let them stew on it for a while. You could then suggest a compromise.

Good luck!

Haven't read all the thread but this happened to us.

We offered X, it was accepted.

House valued at X-25,000.
(we couldn't get a mortgage for the full amount then)

Deal with vendors to agree on the middle value of X + 12,500. (we had to borrow some money to cover the shortfall in mortgage).

So you pay £9k more than value, then take £9k less than offer?

happened to us too with this property.

our research (before and after initial offer and valuation) showed the property had been on the market for two years and had two sales fall through.

We offered 10k below asking price, being cheeky, and were surprised when it was accepted. We were gutted when the valuation came back at 20k below our accepted offer.
The down value was mainly due to factors associated with it being a very old building (damp, dodgy old plasterwork etc) but also factors like only having a downstairs bathroom (not a problem for us) and having an 'unconventional layout' due to being a conversion of an old school. The latter point was actually a huge bonus for us, we wanted 'unconventional'.
We weighed all this up and then offered 2k over the surveyors valuation. We were actually very surprised that it was accepted but the vendor conceded that any future survey was likely to say the same and with mortgage lenders tightening their belts they knew they were unlikely to get another sale any time soon.

We could have gone a little bit higher (would have wiped out funds for works that needed doing) and were prepared to because we love the house, and it will be our home for the next 15-20 years all being well.

If i were you I would offer slightly above valuation stating anything relevant from the surveyors report/valuation with regards to works needing to be carried out, and negotiate upwards from there.

While you don't want to be paying massively over the odds for it, if you love it, want it to be family home and can stand the financial implications then these things are more important than the monetary value.

I have not regretted for one single minute buying this house, even though it is now costing us more (in money and time) to carry out the works we want and need to do, because this is our home and we are all very happy here.

Our now house was valued at 8k less than it was for sale for.But what the surveyor didn't know and I did know was that it was the first house to come up for sale in the village for 10 years or so.There was almost no chance of another one ever coming on the market because it is an estate village and 98% rental.There were also 3 other people hoping that we'd pull out so that they could buy it,so we went ahead with our original offer and have never regretted it.Local knowledge goes a long way imo.