Overpriced or undervalued?

[YouAreACactus]

I'm a first time buyer.

The owner accepted my offer of 82,500. The owner believes the property to be worth 85,000.

The Homebuyers' Survey valued the property at 75,000. Owner will only go to 81,000.

What do you do in this situation?

I love the flat, but I don't want to pay the owner more than the house is worth. Can property be undervalued at survey?

That's a large percentage difference. Unless you are planning on staying there for ever I would be very cautious. What does your mortgage company have to say about the situation?

£75k is the value the bank will lose if there is a repossession. Something like a house is only 'worth' what you are prepared to pay for it. You say you love the house but perhaps you are starting to question the value of it because not everyone see's it the way you do i.e. the bank who do not have an emotional attachment to it. You say the owner believes it to be £85k but will go to £81k! Therefore might as well offer £75k and explain in writing why it is worth £4k less than they think. In negotiating if the seller does not say no at least 2-3 times you may of paid too much for an item or service. You as the buyer hold ALL the power so remain patient and polite but do not overpay.

Typo - £5k less. That is your first offer and the negotiations can go from there!

Typo £6k less !

You need to work out if you are prepared to lose it. Or if the seller is prepared to lose you. Was there a lot of competition for the property or not? Offer to pay what it's worth. I think at the moment there is much less confidence that prices will rise; more if a feeling they will drop slightly, so in your case I agree with PP you hold the power. You presumably don't want to pay more than it has been valued at by a expert professional !

Our house is worth less for the mortgage but market value is higher because of the area. Surely if they've accepted your offer that's what it's worth? They can't then ask for more!

We were in this exact situation, but it was during the housing boom back in 2006, and there was so much interest it went to sealed bids. We won (by 50p!) and the valuation then came back at £7k less than we'd bid. Estate agent refused to negotiate with the seller so we wrote to them directly, outlining exactly what the surveyor found and why we were the best buyers and they should accept our new offer in line with the valuation. It was a huge gamble, but they went for it. It's highly likely that if one surveyor comes up with that price, others will too, so the seller may have no choice but to accept less than £81k!