HELP!! Our dream house has been down valued by £15k!!!

[BLOOMF]

Me and my partner have found our dream home! It was on the market for £200k which we offered and this was accepted.

We decided to go with HSBC as our mortgage lender as instructed by a mortgage advisor (a free one online). They have completed their basic valuation and come back with a price of £185k which means that we would have to come up with £15k ourselves to secure the property which is money we just don’t have.

The vendor is very much of the opinion his house is worth the £200k he has asked for so I think he’s going to be hard to sway! They have clearly spent a lot of money extending the property and it has been finished to a really high standard but it is a 3 bed semi in North Manchester and for this £200k is quite a lot!

We have decided to go with a different mortgage lender and have opted for a homebuyers survey as the previous one done by HSBC was a desktop valuation. In my opinion, I still don’t think the valuation will come back at £200k (although I’m more than happy to pay this - market conditions in the area wouldn’t agree with this sale price I don’t think).

In regards to comparable properties there aren’t any really. The last house to sell on this street was a bungalow in Oct 2019 and previous to that was 2016 so it makes it hard to contest!

We have accepted that we may need to walk away and we aren’t willing to pay more than what the property is actually worth but I wondered if anybody had ever been in this situation? Did the homebuyers report come back any higher than the initial valuation? It would be good to hear of others experiences!

Thank you!

Well the vendor is going to have this issue with any buyer if all the reports come back like this. So he may have to drop his price if he wants to sell unless he finds a cash buyer.

The first house I ever tried to buy was 25k and the mortgage company valued it at 11k. I walked away.

I agree with above. Doesn’t matter what the vendor thinks. If the company providing finance for the property doesn’t agree then it’s not worth as much as he thinks. What does the estate agent say? They should be managing the vendors expectations.

@VivaLeBeaver completely agree and these are my thoughts too! I’m just unsure how stubborn the vendor will be moving forward.

If the mortgage company have valued it at £185k then that's what it's worth. Why would you pay more?

This is your moment - your chance to shine by using your negotiation skills.

@Strictly1972 the estate agents are pretty useless to be honest. They valued it at £200k for him so I think they were surprised themselves when the valuation of £185k came back.

The mortgage advisor we spoke to today though (separate company but works within the estate agents office) has said that if the homebuyers report comes back again lower they’ll have to have an open and honest chat with him because unless he reduces it’ll never sell.

House hunting is so stressful

Part of the problem might be due to the valuation being a desktop one, they are not reliable. Be interesting to see what the other one come back at.

Hold out for the homebuyers report. Desk top valuations are limited in scope and if there isn't much in the way of comparable value property in the area this will have impacted the val you've been given. If the property is of a particular high finish etc. you might find that they up the value.

If the property has been extended to the back then the desk top probably wouldn’t have taken that into account. Also if the finish is good that wouldn’t have been recognised by the dt. Worth holding out for a proper valuation, dream homes don’t come on the market everyday. Is the loan amount quite high? Usually you can get away with overpaying a bit if you have a good sized deposit, maybe the lender is being cautious if they are lending a large portion of the cost.

I may have this wrong, but even with your homebuyers report inc valuation any lenders valuation is what they will use, regardless if you can produce an independent valuation. It is their risk appetite, they do the valuation to assess their risk. You may need to bridge the difference or adjust your LTV.

Great opportunity to negotiate the price downwards OP. This problem will crop up with other buyers so go for it, don't be nice about it.

The property is worth what some one is willing to pay for it. Not what a desktop valuation comes back as. Lenders will instruct valuers on their criteria and risk appetite and instruct them to value according. Anecdotal evidence online suggest HSBC valuations tend to be harsh, but a lot of their customers have bigger deposit percentage so a low valuation won’t make a difference,

Can you find properties for £185k and £200k and in between and go back to the valued to show why it's worth more like £200k?

Alternatively it provides more evidence to owner that it will never be valued at £200k?

Valuers aren't necessarily 100% correct. Certainly knew people that successfully got the lender valuation put up.

Thank you everyone! Hoping to have the homebuyers survey completed by the end of next week so will keep you all posted!

Ours was downvalued 5k. I know ot is less but we didn't have 5k to pay out of pocket with the work needed. Luckily our vendor saw sense and realized it would be a similar price from any buyer.

I wouldn't want to pay over the odds so if they won't come down I would walk away.