House downvalued by surveyor!

[stampduty]

Briefly, the house we are buying has been devalued by 50K by the surveyor.

We have spoken to our solicitor ( private sale so no EA) and he is going to speak to our vendor to reduce the price to the new valuation.

I'm not sure there is anything more we can do as we would need to find an extra 40K on the deposit if we were to proceed at original agreed price as bank will obviously only lend 75% of new valuation.

I'm also very loathe to pay more for a property than it has been independently and objectively valued at.

Just need some good vibes and a few thoughts or ideas!

Thank you

Surveyors will always value a house conservatively. We bought our house in a rising market at a time of easy to obtain mortgages - and the survey still stated that it was worth less than we were paying (which it wasn't - we knew exactly what houses were selling for, as we'd been trying to buy for several months). They will be even more careful about valuation in the current market. I don't think a survey necessarily gives an 'objective' valuation.

It's certainly worth querying the price, but I'm reasonably sure your vendors won't come down 50K (unless it's a very small percentage of the price). I think you need to consider what you are prepared to pay/can pay for the property, and go from there.

I've had the boot on the other foot. Our buyer got a surveyor's valuation which knocked 3.6% off the value of the house. The buyer asked us to reduce the price and we did - we wanted a quick sale and the survey was carried out VERY late in the process (cash buyer so didn't NEED one IYSWIM). It really pissed us off, though, and reduced considerably the effort we put into cleaning and making-good when we moved out. Everyone knew that the house was not over-valued - and that houses are, in any case, worth what people are prepared to pay. I do wonder occasionally what the Royal Institute of Chartered Surveyors is FOR exactly. Either houses are worth land + rebuilding costs OR they're worth what the buyer is prepared to pay. I don't think surveyors should have a hand in pricing, to be honest. Although I can see why lenders use them that way, of course... It's just that in my case there was no lender involved. Maybe a vendor would be more sympathetic than I was if they know that the reduced valuation means you can't borrow the money?

So, in short, you could use your surveyor's report to try to get the price reduced. Perhaps the surveyor found some work that needed to be done and you could negotiate over that...? The only other option is to accept that you can no longer borrow enough to buy the house, I suppose!

Our buyer's surveyor also down valued our flat by 5%. Our EA was fab at explaining to our buyer where the surveyor had been wrong, showing them comparables, etc. In the end the buyer did not even attempt to reduce their offer. I don't know what we would have done if they had, as we needed the money to buy our next house. When I move I will leave the flat super clean, with extra loo rolls, bulbs and a bottle of wine :)

That's quite a drop. What was the asking price?

Is the house unusual, are there any comparable properties?

Did the surveyor find any major problems? Are there any developments planned?

What was the reasoning behind their downgrading? Was it your independent surveyor or the mortgage surveyor? Mortgage surveyors are notorious at the moment for an over cautious valuations. They are paranoid about banks involvement with negative equity property. TBH I work in construction and know loads of surveyors .... I'm not sure that many of them know what they are talking about unfortunately !

The percentage devaluation would be more more enlightening: 50K is meaningless on its own.

Purchasers of higher value homes, usally have a comfortable buffer of equity, so a surveyor's valuation coming in short is much less likely to destabilize a sale.

I presume you had a valuation done because of the mortgage?

The bank needs to instruct a valuation to be sure they are not overlending on the property so that is what the surveyor is for, Mandy. If you were to fail to pay your mortgage and the bank needed to repossess they need to be as sure as they can be that they would be able to re-sell it to be able to cover the mortgage plus costs.

The RICS surveyor will have valued it at 'Market Value' which has a lengthy definition which basically says it is what a willing buyer and willing seller who are acting prudently and without compulsion and have a good knowledge of the market etc. so this is not necessarily what one person (who might have 'fallen in love' with the property) is willing to pay for a property but it as per the definition and to protect the bank's interests. Yes, the value is an opinion and often there is a range that the valuer could have chosen from but they can't just make up a value and do have to have justification for each and every valuation they do.

Assuming the valuer is correct then they have actually done you a favour. As you say there is no way you want to be paying 50k more than a property's Market Value.

If you feel the valuer is wrong, you can always try to approach them with evidence that they are wrong - e.g. transactions of similar properties. It may be that you need to go via the bank to do this as they will have instructed the valuer, not yourself I imagine in this case. You are not therefore the valuer's client, but the bank is.

That's a big drop! Are you buying a new build? Sometimes banks undervalue new build to account for developers mark up

Hi, thanks guys.

Okay, it's a private sale where the owner wanted £620 but agreed on £600. It has been downvalued to £550.

The problem lies in the fact that the bank will only loan 75% of LTV which means that we were borrowing £450 and now they will only lend £412, 500 so we simply do not have that extra £37,500!
Vendor is retiring, no mortgage, owned the house for forty years.

A friend of a friend was looking at buying a new build off plan. The co asked for £600K. The foaf offered £400K. The co refused. The market slackened off and eventually the co contacted the foaf and agreed to sell it for £400K. By that time, the house had been built and the mortgage co required a valuation survey before they'd sign off on the mortgage. When the surveyor came out, he valued it at £375K. The builders dropped the price.

I always baulk at the thought that there must have been other people who paid £600K for a house that was only worth £375K.

We had to drop £35K on our sale and our house was worth considerably less. just for reference!

The thing is, the house is worth 600K to us but we are trapped by the bank so even if we wanted to pay that, we simply can't anymore! We only have a certain amount of cash.

I think you have pretty good grounds for seeking a reduction from your vendors. They are likely to face the same problem with any buyer, unless they find a cash buyer. Stand your ground and wait for them to budge :)

The flat I'm in the process of buying was downvalued by 15k (almost 10% of the purchase price). I, like you, did not have access to extra funds, so couldn't pay more, even if I wanted to. To my surprise, the vendor has accepted the reduced offer.

Thanks again.

Yeah, I still think my vendor is getting a good deal. The house is stunning but needs 100K spent on it and you'd still find things to spend on it.

Sounds like you have no choice but to ask them to drop and you will either secure the house or lose it. The vendor won't necessarily face the same issue with another buyer as valuations will differ from surveyor to surveyor.

It's all a gamble, isn't it?

We are two weeks from completion so I hope they think a bird in the hand!

Has the house been openly marketed even though a private sale? If not openly marketed, then it is more prone to having been unrealistically priced in the first place. Where I live, house prices normally reduce by approx 10% from original asking price before they find a buyer.

Only two weeks from completion. Blimey, we had our survey done 4 weeks ago and searches are complete and we're not due to complete for a few weeks yet.

Hasn't be openly marketed for some years but the vendors told me £620 was the recent valuation, which I think it is worth but ultimately, as I'm not a cash buyer my opinion doesn't count, only the bank's!

It's a very long story!

Have you seen their valuation report and are the details correct?
What have comparable properties sold for recently?

If you feel the valuation is low then you can challenge it. You've nothing to lose except time.

If you feel it is correct then you'll have to try and negotiate the reduction.

go over the survey with a fine tooth comb - my parents moved recently, the survey came back with a similar undervaluation - the surveyor had missed 2 bathrooms and a bedroom from the report, which obviously made a fair difference to the price.

Nancy- that's what happened to us. They missed the 3rd reception, despite going in there to check for damp! Totally changed which houses you compare with for sold prices.

Our mortgage broker told us of one client where they didn't notice there was a garden- quite important on a flat in London!

Hi there.

We were in a similar position earlier this year. House we were buying was down valued by about 9%. As with you it was a significant sum of money which we just didn't have.

We spoke to the valuer - worked for one of the major firms who do mortgage valuations for the big lenders. He seemed to have done his homework, cited relevant comparables etc but the tbh there were not that many available given the nature of the house.

The seller was in a similar position to yours. She was very annoyed and was going to pay for another valuer to give a second opinion. However after a couple of weeks stalling appeared to be about to pull the house off the market. The EA did a bit of frantic negotiation and we ended up meeting half way. This was the absolute max we could pay given the mortgage shortfall but we did really want the house. Seeing the way the Market is travelling at the mo I am pleased we did get the reduction even though we are now shorter of cash that we would have been.

We had already had a structural survey too, which valued the house at the original agreed price. But tbh we felt that surveyor was quite broad brush in his approach to value - his job was to spot structural issues rather than do a full price analysis.

However DH tells me that one of his colleagues in a similar position managed to give the surveyor enough evidence of other properties sold locally to pursue him to change his valuation. So it's worth talking to him. Ours was friendly once we were able to convince him we hadn't just phoned to give him an earbashing!

HTH