Valuation just been done

[Fern204]

Our house selling and buying process has been dragging on for a year now. We have our buyers and the chain is well advanced. I have asked our EA to update the chain this week to see where it is at. The house we are buying had been sold in December and their buyers were furloughed a few weeks ago. We put in an offer and had it accepted the day it was relisted. Searches ordered, mortgage application done. Valuation came back today as 5% down. This makes about 30k difference. However, the surveyor said it was likely to be valued higher by the end of the month, as there are no comparable sales happening right now. The bank are happy to lend what we want, as our LTV is about 45%.

We have a proper viewing on Friday, and haven't mentioned the valuation to the agent. What would you do? This is a house we will be in for potentially 10years plus. It ticks all the boxes. Their chain is ready to exchange once we are. Interested in views.

Fern, well it's good you're happy.

To be honest, I'd be amazed if cash buyers are offering right now at full asking price that was established a while ago. I don't believe your agent, but of course it's your choice.

It's difficult for you to remove emotion from it - you are in an established chain and want to move and have emotionally invested in it.

You could try considering if the seller entered the housing market today what price they would offer it at and if you were just joining the market today as a cash buyer, what you would offer. It might help you realign prices in your mind.

Or, if you're at peace with sticking with the original offer, then ignore all the above.

I completely accept emotions are involved. This is the 5th house we have offered on in the past year. We have lost three buyers over that time. I just want to move! And it's a great house that we can move straight into, it ticks all the boxes. No regrets!

A cash buyer is not going to come in and offer asking price right now. In fact, cash buyers seldom offer anything close to asking.

I suspect you're being had OP.

Maybe, maybe not. Brighton is always affected less than other parts of the country, and while I think there will be a downturn and prices will drop, they will recover in the medium term. This will be our home, not an investment.

@Fern204 "I completely accept emotions are involved..."

And why on earth shouldn't they be. It's not like you've ignored other considerations. If you'll be there long term (or if not you could still rent it out if you had to move on) then it's most likely any hit you take will be made back eventually 5-10 years? So if you need somewhere to live and this place will make you happy then why not go for it. Good luck.

I think this is the point, next door to me sold for £25,000 less than I’m asking. However we have a garage and mine needs a lot less doing to it. The next nearest house in comparison is a jump of £50,000 more than mine. It’s all about finding a peg for the hole. There’s one for everyone.

I can confirm salary wise people are not accepting less salary than pre covid. So there’s money still sloshing around. Let’s not talk ourselves into recession

Yes, but the fact remains you're still paying more than you need to.

Of course, the market situation is no ones fault, but you're choosing to take that financial burden off of your seller. In a few weeks they'll be breathing a huge sigh of relief (probably thanking their lucky stars that their buyer fell for it) whilst you face another 5 years or so on your mortgage.

It's completely understandable that emotions will come into this, but £1000's of pounds is a lot to throw away on emotions.

I'm sorry, but a bad financial decision is a bad financial decision. Buying at market price right now is just that.

Posters shouldn't pretend it isn't just because emotions are involved.

Even if it is a forever home! The same thing will be available in a few months at a significantly reduced price. A lot of people will be kicking themselves!

@Home2018 "I'm sorry, but a bad financial decision is a bad financial decision. Buying at market price right now is just that.

Posters shouldn't pretend it isn't just because emotions are involved."

Investing in property (or buying a home as some would have it!) is a long-term financial undertaking.

Out of interest where I wonder did the buyer get the 55% of the house value that they don't need a mortgage for?

Has your buyer come back and asked for 5% discount? What if they do - so you are paying 5% “above” and might be facing 5% short from your buyers - can you bridge that gap?

Expect your buyer to ask for this in exchange day - how will you handle it? Stick to your guns?

Feelinghistoric

Of course they are that there job to make the market look good!!

We are about to go In the worse recession the world has ever known,

If you are buying your forever home then it does not really matter, but if you are going to need to sell again in a few years, I would not buy at the moment. Because you might end up in negative equity.

@Nanalisa60 - I really don't think we are about to go into the biggest recession the world has ever known. Sorry to disappoint.

I heard biggest recession for three hundred years. Not saying I believe it.

Our buyer initially offered in January and then his chain fell apart. He came back 4 weeks ago and we accepted a lower offer, but still happy with it. We said at the time we woukdnt accept any later requests for reductions. This is as close to a forever home as it can be, maybe 10 to 15 years? We will be retired by then, so who knows.
There will be an initial recession but I dont believe it will take decades to recover.

@sbplanet

I'm not sure what your question is, but my analogy would be buying a car now for £10,000 that will be worth £7,000 next week.

Yes, you may drive the car for 5+ years, but that doesn't negate the fact you overpaid because you 'loved' the car!

The quantities that we're talking about makes this significantly more stark. Add interest rates to it and it further makes my point.

OP, remember, you can change your mind on this still.....right up to exchange.

People get cross about so-called gazunderimg , when people lower their offer. It can be a rather low trick or it can reflect changed circumstances such as survey revealing a significant flaw, or the market taking a significant change in direction......like now.

Some people will pay the intitial price they agreed because they feel awkward about reducing their offer or can't face the conversation with the estate agents. These are not good reasons for a big financial decision. Logical thinking and recognition of the realities of the current market is the way forward.

Estate agents clearly want the market to hold up regarding prices and sales. Their livelihood depends on it. They work for the seller who wants the highest possible price and they do lots of things to talk people out of reducing their offer - some unscrupulous, some just rather manipulative. As a buyer you have to look at it coldly and not be swayed by them or embarrassment about negotiating.

Fair enough if you'd just completed before Covid happened. No-one could foresee this coming and that we're probably buying at the top of the peak. Quite different to know the market is just starting to tank and still paying peak price when it's avoidable.

So keep thinking about it and watching what's happening and bear in mind that you can lower your offer if you want to. Some people will do it more than once. Doing it late in the day is always worse for the seller but in the current circumstances there will be a lot of that happening too which to be honest isn't unreasonable at the moment.

'Dear EA, in light of the recent announcement of the fact we are in recession, and the extremely gloomy economic forecast which will unavoidably hit both labour and housing markets, it is with regret that we feel we must reduce our offer for X to Y. We realise this will be disappointing for our seller but hope they understand it is in response to the declime in house prices which is happening and will continue for some time. Please can we emphasise how we love the house and are keen and able to proceed to exchange rapidly. Please would you pass this message directly to them and we will await their response.'

@Home2018 "I'm not sure what your question is, but my analogy would be buying a car now for £10,000 that will be worth £7,000 next week."

Lol! But that's what everyone who buys a new car does!!!

The point is that 'property' as it has come to be mainly known is actually people's homes. The place where they live. Viewing homes as property investment doesn't help the buyer make a true valuation in my opinion.

We just offered full asking price on the house we want. Offer accepted. Everyone's really happy. Sure, we could try haggling it down, but frankly it's a lovely house at a fair price.

How do you feel about giving your buyer a “COVID” discount - but not passing that hit up the chain?

I would ignore the EA. He is lying. I would go via solicitors - say you had to drop price by x%, valuation is -5% .... I would expect the seller to renegotiate with you. We are in your sellers position - we expect the buyer to come back with a lower offer v close to exchange - we will take up to max 5% off because the thought of going back on the market during COVID which will impact for at least 2 years and end up with 10% less is just nuts. There is no way we could market our house next month at the same price we initially marketed it for in Q3 2019. And we are is a much “safer” residential area than Brighton (Home Counties, older wealthier residents - mainly work in finance / IT with fat salaries and who had a lot of equity)

You're comparison facetious but OK.

Keep giving advice to offer pre Covid rates after ALL economists are giving the same warnings.

The sellers will be the only one lol'ing.

And if it is just a home, why pay £500,000 for something when you can pay £400,000 a few weeks later. That's about 7 years in a mortgage. This race to buy is emotional.

@home2018 "...why pay £500,000 for something when you can pay £400,000 a few weeks later."

You know that do you?

No you don't. And they aren't the figures being talked about. But carry on with your guessing game. The buyer has to live somewhere, they want the property they are buying currently and see it as a long-term home. I suppose they could just rent somewhere - are you a landlord btw?

ChrissieKeller61

Well let’s hope your wright and I’m wrong and that everything will be smelling of roses when the virus is under control and they have found a vaccine, and we have gone through Brexit.

I really hope you are wright, but I am a bit more realistic and I think if you paid for a house/flat now that was valued at pre coronavirus price you will end up in negative equity, as I said not such a big problem if it’s your forever home, but a nightmare if it’s just a run on the property ladder.

I would remember that your sellers are as keen to sell as you are to buy, if not more.

At the very least, I'd be passing that 5% up the chain.

Test the waters, you have nothing to loose.

And, there is no cash buyer! The agents are full of it and in it for their own benefit, not yours.

I just think if it's the apocalypse everyone is predicting bloody house prices will be the least of our worries,

Nope not a landlord.

But you might want to look at the statistics being shared by economists or even the bank of England.

You might even want to look at the bodies that support this whole thing, the banks themselves!!!!

15-25% reduction in mortgage offer amounts. Increase in 10-20% on the LTV of products being offered.

Or maybe its wiser to listen to people on the internet who are basing their predictions on what they want to happen.

Excuse me, maybe I'm the silly one.