valuation survey came back too low, what now?

[TheVeryHungryPreggo]

Our valuation survey was done last week and we have had to chase for the results - it's downvalued the property by a huge amount. The amount we can borrow under the new value is still not enough to complete the purchase.

This happened us before a few years ago where the survey reduced the mortgage by 10k, but we managed to come up with that. In this case, the value is £150,000 less which is the biggest downvalue our broker has ever seen. We can't magic up that kind of money! We thought it must be a mistake but the surveyor genuinely thinks that is the right value. I know this is a huge difference, and the starting price is high enough - but it's in London, in the catchment area for two excellent secondaries and a good primary, with a long garden and close to a mainline rail station which are the biggest attractions for me and DH. I know the house itself isn't fantastic and needs an upgrade, but the amenities nearby are really important to us and houses in this area don't come up often, so we are really keen not to abandon it.

Is there anything we can do?

It sounds like you are willing to pay a massive premium for a property that ticks your boxes but isn't actually worth that much.

The surveyor is acting in the interest of the lender and has to go with what the market says it's worth not what it's worth to you.

What have similar properties in the area sold for?

Unless you can find some very similar, very comparable sales in the last few months there's not much chance of appealing the surveyors valuation.

You could potentially try with a different lender but you might get the same surveyor or another survey might say the same thing.

Grr- lost the last bit of that- the first thing to do is go back to the vendor with a reduced offer reflecting the surveyors valuation.

I've no doubt they will be very reluctant to accept a lower offer but, if you don't buy it, chances are the next person will find the same problem.

Have you spoken directly to the surveyor?

Presumably the valuation is based on prices of similar properties and not because there is something fundamentally wrong with the property (like subsidence or imminent roof collapse etc).

What percentage of the property price does the 150k represent? Did you offer over the asking price?

I know our vendor purchased the property above us at £75k more than the valuation. And I'm not in London. I know the area quite well and have seen the house on rightmove. I don't believe the surveyor got it right. The house went back on the market at the same price, and our agent (who's not selling that house) told us that what they bet on is a different surveyor will value it differently! In the end, our vendor stumped up the difference with a larger mortgage.

I know it's not any help to the OP. But I think you should negotiate with the sellers and see if they can lower their price. There's nothing you could lose by asking, is there?

So this kind of thing does happen.

Thanks for the advice. We offered below asking and came up a bit (still below asking) but the sellers did have another offer on the table. The agent said he has already given the surveyor details of comparable properties in the area and the seller had a valuation done for a remortgage in 2010 which is very close to the agreed sale price. So there's a reasonable chance the surveyor has erred in estimating it so low - but that means it's all resting on what a second surveyor might say.

I've seen the surveyor's comments and they're all a bit "well yeah but".. For example one of his concerns is that the property fronts onto a noisy main road. And that's true; I noticed that when I went to do the viewings but I also noticed that from inside the house and from the back garden you couldn't hear any traffic noise at all. And there is no junction nearby so you will never hear screeching of brakes/acceleration noises - these things I notice now after being burned before!! So I don't think it's quite as off-putting as the surveyor thinks it is.

I might be wrong but I'm pretty sure that if the survey was instructed by the mortgage company, you don't have the option of having a second survey.

The original surveyor will fight his corner and, ultimately, the bank don't want to get their fingers burnt so are unlikely to overrule him.

Unfortunately for you, valuation is not an exact science and he will have examples to quote the reason and method for his valuation. You challenging that means he'd have to admit he was wrong and that's not likely to happen (my last mortgage broker had never seen a successful valuation appeal in 18 years).

If you still want to pay the agreed price, I can't see any other options than renegotiating the price or starting a whole new mortgage application and hoping that the new lender doesn't use the same surveyor.

I think we can instruct an independent surveyor if the bank agrees and the bank will take the higher of the two. The risk seems to be that we would have to pay out of pocket for that and if the second surveyor says the same, we are finished and will have to abandon it (and lose the fee of course). Aaargh.

That happened to me, the vendor would not move, I moved on to another property.

Really

I find it quite hard to believe a bank would accept a second opinion if it potentially puts them a risk in these days of FCA compliance etc but i am willing to stand corrected.

Are the houses that have sold for similar prices really comparable?

Are you sure you're not being blinded by the pros and totally overlooking the cons of this house?

You can only go back to the surveyor with your evidence and ask him to justify his value in comparison to similar properties I think

Don't me, I'm only repeating what our broker told us this afternoon!

But it will be very difficult to find comparable properties - it's a fairly unique layout in an area where not much comes on the market. Due to the presence of the schools etc, it's a bit of a "forever home" area - the families who live there now have teenage/young adult children so there's not much movement. The problem is that it's perfect for us - but then, as everyone's pointed out, what's great for us may not be so good for a lender.

I'll where I like thanks, it just means I'm very sceptical about what you/ your broker said.

If you don't like that then that's your call.

It'll be very interesting to see how this all pans out as I genuinely don't see a lender upping the value of a property if their own surveyor doesn't believe it's worth it but it will be interesting to hear if it does happen.

From my experience (albeit I don't know who your lender is) the only way a lender will change their position if the valuer does. I have seen situations where a 2nd valuation has been obtained (paid for by the purchaser) and has then been sent to the 1st valuer. He was then asked whether he stood by his original valuation (he did).

I would ask what a lender's policy is in this scenario. Firstly they might not take any notice of a 2nd valuation, but even if they did, they may be obliged to take the lower of the valuations in any event.

Have you spoken to the surveyor personally? They are often more forthcoming on the phone than in writing. We've always had a homebuyer's survey which has made us their client as well as the bank (?) so we always see what they will add off the record.

My only experience with arguing valuations with evidence is with cars, so it may be different, but the problem I had was they didn't accept asking prices as evidence, only sold prices. You can get historical house prices but they aren't much help for a current valuation, and current prices got rejected as not being evidence of actual price paid.

We had exactly this issue on a very unusual property, (so no comparison to use locally). We asked for a second survey, which we split the cost of with the sellers. The bank were fine with it as we used one of their other approved surveyors. Th e purchase went ahead.

Thanks Mutton that's good to know! I thought the bank must have a panel of surveyors rather than just one guy, so we could ask for someone else. The seller has had the property on the market for a while so he may be happy to split the cost.

Bimbly funnily enough I did actually tick the box on the mortgage application form for a Homebuyer's report, but this wasn't done - and when we asked for it the broker said that Santander don't offer it anymore, just a basic valuation but haven't updated their application forms. Annoying.

If we do end up getting another survey, I'd want a Homebuyer's report especially as it's a non-standard property (and we had some problems with our last purchase).

That sounds promising. Mutton do you live somewhere really cool like a windmill ?!

Have you got evidence of similar houses on your road or directly adjacent roads that have gone for a higher amount? I think that's the only way you could convince them to increase the valuation (from conversations I had with the surveyor who valued our house for a re-mortgage, it seems to come down to similar houses on the same road).

Another option, if you are absolutely convinced the property is worth your purchase price, is to look at restructuring your finances.

The lender will only lend a percentage of their valuation but it is possible for you to make up the difference if you can afford to.

For example, if the property was £1m and your deposit was £400k you could restructure it so you pay the £150k undervaluation difference and then have a £250k deposit towards the remaining £850k ie still a £600k mortgage.

Obviously this has a detrimental affect on the rate you can secure as you go from a 60% LTV to just over 70% but it might be an option if you really are happy to pay the agreed price.

Gabby I have asked the agents to look into it. Part of the reason this house is so attractive (to us) is that it's surrounded by school playing fields and parks, and is fairly secluded/low density for the area. The road only has houses on one side so not many of them and they don't change hands often. However I have heard that 2-3 houses on road have been sold for higher figures, it's just going to be tricky finding ones in a 3-month window as the summer has been slow.

Bear we did look at that, but the maximum LTV we could get is 85% of the lower figure (we're already at about 70% of the higher figure) and it just wouldn't be enough to cover the shortfall. It's just too much cash to come up with. We are renting out our flat instead of selling it, so we don't have as much equity to use as we would otherwise. Our other option is to suggest that the seller gave us a bigger discount. He may not be inclined to do that, but then again, his options aren't fantastic either. He has had another offer but I don't have any information on that and it may be lower.

Why are you so anxious to "magic up" 150k more than the house is worth? And school playing friends are being flogged to developers all the time...

Because I think it's worth more. DH and I have been house hunting since January and have seen a lot of properties in the area. We have a fair idea what we are looking for and in size and potential for expansion it's a good bet. We have plans to extend it in a few years and have seen that what we want wouldn't even require planning consent because of the current layout.

The agent thinks it's worth that (though they would say that). The current price has attracted a lot of interest and we are not the only offer on the table.

The seller has given us his own bank's valuation and they too think it's worth that.

I'm not so interested in paying over the odds for shoddy goods as I am in seeing if we can get an assessment to agree with our viewpoint - but if we have to let it go, we will. I've seen many houses in the last ten months and offered on 3 (outbid on two, this is no 3) so I'm confident we will find something somewhere that we would be happy to live in. This isn't necessarily "the one" just the one that meets all our needs.

Does not matter if you or the vendor - who will always thing its worth a lot! - think how much a place is worth.

Its the bank's money. They are the ones taking the risk til the mortgage is paid off.

If you think its worth more than you'll have to put more cash in.

On the subject of what the vendor thinks its worth, have you tried looking up what they paid for it on houseprices.io? Then get them to explain why its worth more than they paid for it.

I think it's worth flagging up TheWild's point again:

"Presumably the valuation is based on prices of similar properties and not because there is something fundamentally wrong with the property (like subsidence or imminent roof collapse etc)."

I think as a minimum I'd want to commission my own survey rather than rely on the estate agent' view, if only to check the property is fundamentally sound. On the positive side, the cost of a survey is small beans compared with £150k.