Low valuation - what to do?

[Spiderhands]

We've been looking to move since March and due to specific requirements (school catchment and number of bedrooms) there hasn't been much suitable on the market.

We found a property last month and had an offer accepted, but our basic mortgage valuation has just come back with a lower valuation. We can still borrow what's needed on this basis but I'm not sure we want to! The valuation gives a range, the top end of which is 4% below what we offered.

Is it considered acceptable to renegotiate based on these valuations, or is this bad form? At the end of the day we really like the house, but it's not so amazing that I'm comfortable paying a lot more than its worth, and we can stay where we are for now and continue to save.

Would it be worth getting a second valuation? I'm not sure how exact a science this is? If a more detailed survey came back at our offer level I think I could live with it, but how likely is that?

Obviously we could just reduce our offer but I'm nervous of handling this the wrong way and losing the property. That could still be where we end up but we could still conclude that we'll pay the extra to secure the house.

Has anyone been in the vendors position with this sort of situation and can you give me any insight into how this would be perceived? Did you think it was fair enough, however annoying it might be, or did you think your buyer was a CF?

My view is you would be very unwise to disregard a report telling you that the property is over valued to that extent. In almost any Brexit scenario (apart from Revoke, perhaps, which would give some instant reassurance of the status quo) buyers and sellers will continue to be conservative. And that’s if the economy doesn’t go off a cliff in no deal. In our area (SE) very few transactions are taking place, very little on the market, and prices 10% down, and that’s before Brexit has even happened.

I think you would be generous to agree the top of the valuation and reduce by £20k. It’s one of the few genuine reasons to renegotiate at this stage. All in all it depends how much £20k is for you. If you want to guarantee this house for school catchments etc. maybe the premium is worth it for you.

Yes Zoopla says 509, although I'm aware that they'll increase their valuation if you say you're the owner and describe improvements works, as I did this (truthfully!) for my current property.

Hmm, I'm tending to the view it's a low valuation and I'm glad we didnt go in all guns blazing and demand a reduction although we might still ask for one. Will ponder further thank you so much for your input everyone

We're in the catchment already we just need a bigger house so we could sit tight for now.

I think we definitely need a 2nd valuation from a surveyor we have more confidence in

If it’s a case of a few hundred to save you tens of thousands on over-paying, I’d definitely get another valuation surveyor!

If you are getting a full survey just ask for them to do a valuation at the same time... will only be a couple of hundred more and they are working for you... not the bank or seller

We had this - a £450k house came back with a valuation of £405k! 😩

We negotiated down to £410, but we were then gazumped. I'm glad in a way as we were still potentially over paying for the house.

Remember you may still have this problem when you sell. And when you come to sell, your buyers may not want to go back for a second opinion (we wouldn't have gone for one, and our bank wouldn't have taken it into account anyway), then might just pull out / offer lower.

No I'm not satisfied that the valuation is accurate

I’m not being snarky, but what makes you think the price you have decided to pay for a property is the correct value, over and above a trained professional RICS valuer where you agree the report describing the condition of the house is accurate?

I'm not sure there is such a thing as a definitive 'correct' value?

I'm not saying I know better and the valuation is wrong. My concern is that this is a cursory valuation, its in the valuers interests to be conservative for obvious reasons, and I've learned today (thanks to this thread) that there is a tendency for these perceived undervaluations to occur on basic lenders surveys.

Given what they were paid to do the valuation, I am pretty confident that they didnt spend hours rigorously analysing the market and relevant comparables before coming up with a number!

None of which means they're wrong. But it doesn't fill me with confidence that they're right and I dont think that I want to derail my purchase just to potentially save what's a relatively small proportion of the overall price

Yes there is no ‘correct’ price - but the valuer did an internal inspection and compared to market comparables. You’re unlikely to get a significantly different answer with a different valuer.

You can chose to ignore the value of you can afford the cash difference, and you can be very happy in your new home, it can be worth this to you, but don’t kid yourself that the valuer has undervalued.

I would have thought that a low valuation was good for you as buyers, as it gives you the means to negotiate a lower price.

A property is worth whatever someone is willing to pay for it.

The purpose of a valuation is so the lender can assess whether or not they can recover their capital should you decide to stop paying them. The valuer will naturally err on the side of caution.

If your lender is satisfied that the combination of valuation and LTV is sufficient to recover their capital then they'll lend. If they aren't then they'll ask for a larger deposit.

If you like the house, can secure a mortgage against it and are willing to pay the agreed price then go for it. If you think it's too expensive then move on. Don't be surprised though when the next house you see also comes back valued at less than the agreed price.

Dont be confused between a survey and a valuation.