How common is it for mortgage lenders to knock back value in London property hotspots?

[hyperspacebug]

Hopefully the title says it. We've offered on a house that needs a lot of cosmetic work, but located in a very popular street in the area. The asking price was unprecedented high to start with, 100K more than a similar house in May. In fact it's asking for only 5K less than the amazing extended house with loft conversion in same desirable location we missed out on few months ago.

I'm struggling to imagine that mortgage lenders would go with our offer value (if accepted) that is close to asking price. The estate agent said, banks never knock values on family houses but sometimes on flats. But you know...estate agents!

So what's the common experience? (fww, the house is not totally at the top of our budget, fortunately, but even so!)

Sorry to tar all estate agents with the same brush!
Just I want to check if it matches with your experience.

Surveyors used by mortgage companies are there to ensure the bank will get their money back if you default. They are therefore looking to value at the minimum they think it will sell at. They look at the last 3 or so comparable properties sold nearby and value based on that. Note that the property comparables must have completed. So the surveyor is often comparing with properties where the deal was done many months ago. We had a house undervalued very recently for those 2 reasons.

Do they only compare to land registry values? Land registry takes aages to get updated and the house prices here are rising weekly. (the last time a house was sold similar to the one we offered on was 3 months ago, for 70K less)

Good luck with progressing on your house!

Our surveyor downvalued our house by 31k - in London but a couple of years ago before prices were quite as crazy. It was mainly based on the fact that the sellers had bought for 55k less the year before and surveryor said appreciation was too high for that space of time. We managed to get the sellers to knock 5k off as a result but they wouldn;t budge more so we ended up having to get a larger LTV which was a bit annoying. Abd guess what? Surveyor was wrong, 2 yrs later looks like we got a good deal and house is now prob about 100k more than we paid.

But was annoying & expensive at the time but we are happy we went ahead.

Mine used land registry data. Tried to get him to talk to a local agent who had sold a lot of properties recently but was not interested. Same situation as Stokey in that his down valuation has resulted in a higher interest rate for us which was annoying!

Yes, I wouldn't really expect the mortgage lender to use unverifiable estate agents data.

Hope you both get better mortgage deals soon - you sound like you're both in with decent chance.

We'll find out tomorrow if our offer is accepted. Our 4th sealed bid and fingers crossed there are no developers with cash this time...

Good luck hyper! It's not easy out there

This just happened to a friend of mine (3 bed house in the SE but not London). The EA suggested a value/price of £475,000, the survey came back with a max value of £375,000. No problems with the house as such, just stupidly over-valued in the first place.

I shouldn't be surprised - but just wow. Didn't they appeal?

I wouldn't be surprised myself either if the difference between the mortgage valuation and our offer was 60K if they did only zoopla job. But I'm hoping they will take into account of the fact that the house is in catchment area of the school that's just been rated outstanding (at the end of last year).

Hope your friend offered a bit less than Foxtonised value though

It might not be a bad idea to try to get the surveyors details and tell them about the school. My surveyor did not know about a similar scenario.

The valuation on the place we were selling was knocked back 18k. But it's still worth £110k more than what we paid for it two years ago. That's London for you...

my word, our offer was accepted this time....there were 3 other offers apparently.

will let you know how bad the undervaluation will be))

That's great news OP! On the plus side, I bet if it does get knocked down a bit your vendors will be reasonable - we were prepared to be knocked down a little further still than what the surveyor came back with. It's totally worth being there and talking through the schools issue (I spent about half an hour with the guy looking at our place and discussing the local values in the four-five streets around where we are and I think it helped).

Thanks, lessonsintightropes, sounds like the buyers were lucky to have you as vendor. Our seller are the couple in their 70s who have been in the house for about 40 years.

Just thought I'd update.

The house hasn't been undervalued - so we got the full mortgage offer.

Couple of other estate agents have been calling me (to tell about new properties), they also confirmed that in our area of SE London banks don't knock back value at all. Mental.