Mortgage valuation £10k less than agreed selling price - negotiate?

[Fleabag123]

FTB and not experience in this process!
Mortgage valuation and survey has just been done, they’ve raised concern about floors (dry rot etc) and have come back saying they think the value is £10k less than the agreed price.
I don’t think I can afford to make up the shortfall if they won’t lend as much. I’m waiting to speak to my solicitor but I’m guessing the next step is to go back to the vendor and see if they’ll negotiate on price? We are chain free and they are keen to sell so I’m hoping they will negotiate.

I’m sure this is a common thing, I’ve just never done this before. Any advice appreciated whilst waiting for solicitor/broker to get back to me
Thanks

Eek! I’d be careful about proceeding and certainly be negotiating.

Absolutely negotiate - that assessment is an indicator of the value of the house. I think I'm the current market it would be unwise to ignore it

It’s weird because the survey seems fairly laid back - mentions inspection and treatment is required but doesn’t make it sound like a big deal.
They only bought 2 years ago so I imagine something must have come up in their survey so this can’t be news.
Ok I will put my big girl pants on and speak to the agents about negotiating

Dont pay more than the valuation,,why would you?

Spoke to the agent today to that effect, they said they’ve left messages for the vendor but I’ve not heard back. Annoying to be worrying about it over the weekend but nothing I can do now - ball’s in their court

Wouldn't pay more than valuation and would pull out if they don't budge.

To be honest, strongly consider pulling out. Especially if there is any hint they knew about it from their own survey and just did nothing. That shows they’ve not maintained the property adequately.

Have considered pulling out - I do want to proceed because I think it could be a lovely home with some work. I’m more than happy to do the work, but not to pay the shortfall and then for the work to be done.
I guess there’s no guarantee they even had a survey - not everyone does - but they definitely got a bargain 2 years ago and have done very little work in that time as far as I can see

Remember that will likely come up in the survey of any future buyers so the vendor is going to have to accept they won’t get what they want at some point so you are in a strong position but if you don’t have the money to make up the shortfall, you may not have the money to fix the issue. I’d be very cautious.

If they've been there for only 2 years, and they've done nothing to add value, why is it now not the bargain it was when they bought? How much more expensive is it today that it was 2 years ago?

I don’t have 10k to hand now, no.
The dry rot is confined to one area, and from my brief research I don’t think it will cost 10k to repair, but might be disruptive.

The woodworm damage appears to be minor, and we had planned to have the floors looked at anyway before sanding and staining.

I’m hoping they will want to just go ahead - good point about anyone’s survey coming up with the same issue. The market is also pretty flat here and unlikely to jump up pre Christmas/Brexit

If they've been there for only 2 years, and they've done nothing to add value, why is it now not the bargain it was when they bought

They have done the bathroom, and in fairness they’ve done a lovely job. I think they’ve replastered and painted the walls. Possibly updated kitchen a little but the wooden floors are exposed and unfinished and presumably have been since they’ve been there.
If they accept reduced offer they will have made 30k.

They are separating so splitting any profit - not my problem I know, but they used that as an excuse in previous negotiations

Is £30k quite a large percentage of the value? If so, you've a decent chance of getting the price down to a more manageable level given the work that needs doing.

Their separation is not your problem and their need for a decent settlement each doesn't make their home more valuable. Be firm, and be ready to pull out if they dig their heels in.

It’s madness to prioritise renovating bathroom over woodworm/dry rot treatments though.

ShatnersBassom it’s about 8% of the current value

JanetLovesJason I completely agree! But, who knows what state the bathroom was in before. The floors aren’t riddled, but do need some TLC.

I haven’t met the vendors as viewing was with the agent when they were out. One of them has moved out already, I’m not sure how long ago they split, and whether that’s had any impact on the renovation

If was last sold 2 years ago, photos might still be googleable. We were interested in a house recently, it last sold about 3 years ago. Google came up with a Rightmove archive, and we could see they had done nothing and wanted £100k more for it (about £40/50k would have been fair given market here).

You can sometimes find the old photos on right move from when it was sold before so you can see how much they've actually done. 10k isn't a huge amount. We had the same when we bought, and I negotiated 6k off the total. Mortgage provided didn't have a problem with the remaining 4K difference. They said it often happens.

Sadly there’s only an exterior picture on Rightmove from 2016.

pattyhoo do you mean the mortgage lender increased your loan amount by the remaining 4K?

Hi, our dream house had just been valued 95K less than we have offered, and our mortgage still got approved! We did a quick search online, apparently it is very common (1 in 5 properties) for a mortgage vaulation to down value the property as the surveyor has been instructed to do so by the lenders (10k is usually common but not 95K). So we called EA up and found out apparently no one had been into the property to value the house! I guess our mortgage valuation was done by something called “desktop valuation”! We have instructed an independent surveyor to carry out a home buyer survey next week to get a more realistic valuation. We are so pissed off by the bank and speechless!

Wang... 95k difference wow. I would be amazed if there was a huge difference from the 2nd survey value tbh. The surveyor would have known about the number of beds and square footage... internal finishes don't make up a 95k difference unless you are looking over the 1m price range in my experience

Also if the mortgage was approved I assume it would be at a different ltv and higher interest rate?

Well them splitting up works both ways. As in they each only have to absorb a 5k drop.

Sorry to hear that @wangxiaosara. Ours was definitely an internal inspection as they did homebuyers survey and valuation at the same time.
Splitting the difference could be possible at a pinch but would also need some money upfront to do the works sooner rather than later so the situation doesn’t get worse

Oh Nico, I see what you mean, sorry misread your post.

Trying to keep busy this weekend and not fret about it!

Alexalee,

Our offer 295K, it’s a 4 bedroom terraced house. This property was bought by the vendor last year for 185k, however the condition was bad! Since then, the vendor did whole house renovation, including changed all the windows and doors, new kitchen, new bathroom (2 bathrooms), new wooden floor, new carpet, rewired the whole house, replastered the whole house etc. of course I am sure all of these works would not cost him 100K, but 200k valuation clearly was based on if the house is still in the same condition last year! Zoopla’s valuation is about 285K by the way.

Yes, our LTV is very low, we are going to have about 210k deposit (from selling our current house), so only 85k mortgage needed.

Our independent surveyor will be our next week and we shall wait and see.