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.

And whilst house prices may be the least of our worries if the 'apocalypse' comes, debt certainly won't.

The reasoning is just becoming more and more odd.

@Home2018 If people are unemployed on the kind of scale required to cause enough people to lose their homes at 30% drops, the guillotines will be out .... nobody will give a toss about debt.

Seriously though, they cannot repossess us all.

Okay fine....

But back to original point, it doesn't negate the fact the OP can and should be asking for a reduction.

*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.*

This. And also that you have already taken a hit from your buyer - pass the knock up the chain to the top where they have had the benefit of decades of property boom and stacks of equity that we won’t see again for decades once we start paying for COVID in increased taxes, unemployment, economic decline.

Estate agents lie because their mouths move.

Cash buyer at full asking price is a fantasy.

Don't engage with the agent. They're not on your side. Pass on your reduced offer to the seller through solicitors. That's fair. Paying full price is acting like a charity, helping your seller but not yourselves, for no other benefit apart from feeling good about this business transaction. Misguided.

You really can't cut the estate agents out, if the sellers didn't want them to handle the sale they would have advertised privately . The sellers are paying the agents for a service, they should be acting in the sellers best interests that's the whole point. And that obviously works both ways

You have to wonder whether lots of posters have ever bought property! Lol.

Anyway the OP is wanting to buy a 'long-term' home. By all means try for a reduction in price but then it comes down to do you want to lose the home you're trying to buy...

Years ago my husband and I needed to remortgage and had a valuer in. He valued it much lower than we expected so we couldn't get the higher mortgage. Six months later I sold the house (my husband had passed away in the meantime) and if was valued at a figure considerably higher. A house is worth what someone pays for it. So to be honest if it's your dream home and you'll be in there for years then I wouldn't let a 5% drop bother me - the house will be worth the money you pay.

@sbplanet I am speaking from experience. Lots of it.

I'm nearly mortgage free under 40, and that's because I have always read the market and bought and sold cleverly, rather then take advice from people who give their opinion but not smart financial advice.

In honesty, I have also been lucky to encounter buyers that have made decisions that I never would, and those have clearly been based on emotion rather than financial intelligence.

To add, I have never listened to a single word an estate agent has had to say. The amount of offers I've made that get rejected and then accepted a week later is laughable.

Yes, I have 'lost' houses I was extremely keen on at the time, but regretting those losses vs overpaying is never a regret in the long run. Never. Actually, I'm very glad for every single house that I loved at the time and envisaged myself in 'forever' in the lead up to this.

Yes houses are a long term purchase, but so is debt and negative equity. That is the only point posters are making.

Pay the value of the house. Don't over pay when the value has clearly dropped and EVERY single person in property or economics is saying the same thing.

Call it what you want but the reality is on a financial level, it's not a smart move.

Of course, if finances aren't an issue do what you want, but I would reserve advice for cash buyers only. Maybe its telling that they're sitting in the wings and waiting it out.

What does the OP have to lose by asking?

Lol, 'upsetting' her sellers?

She has no obligation to give them an extra £30,000 or whatever because they don't like what the market has dictated.

Madness.

@ChrissieKeller61 I can confirm salary wise people are not accepting less salary than pre covid

Not really the point of the thread, but this isn't true. Obviously everyone on furlough is on 80% of salary and I'd say 50% of our family & friends (variety of industries, middle-senior management/professionals) have had to accept a temporary drop in salary.

I agree home. The Bank of England predicts that house prices will drop 16% and that is if we unlock now. The greater period the lockdown, the more the drop will be. Why pay more for an asset and increase your monthly mortgage payments when you can wait 6/12 months? Covid has changed the housing market and it will become more apparent in time.

I suppose if you are not unhappy about paying over the valuation of the house and you have a high deposit then that is your choice.
But would highly bet the estate agent is lying through his teeth.As if a cash buyer is going to be waiting on the edge with a full price offer.
Still at least it gives the heads up to other buyers that this is a tactic that estate agents will use to get a sale.

@Home2018 "Pay the value of the house..."

Your full of little cliches - here's another for you. A house is worth what someone will pay for it!

There's a difference between making a revised offer and taking the p*ss with an offer - that was the point all along. You have one view on property and I have another view on house buying.

The OP will decide what is right for them.

@sbplanet

If someone pays £50,000 for something that's priced elsewhere for £40,000, it doesn't mean that it's true value becomes £50,000.

Especially, if they'd lose that money and more trying to pass it on.

The house has literally been down valued. The bank will not lend as wanted because they do not think the value of the asset is what the OP is proposing to pay.

Dear God, if a down valuation is not evidence enough, then I'm not sure whatever reasoning you're applying is even worth arguing with.

The fact that you're not even pushing for her to try for a reduction shows just how much of an emotional decision this is to you. She owes nobody increased debt because she once made an offer that was accepted.

The market HAS changed. It's nothing but illogical to pretend it hasn't.

*@Home2018 "Pay the value of the house..."

Your full of little cliches - here's another for you. A house is worth what someone will pay for it!*

I think you are being quite disingenuous here sbplanet because this isn’t solely a subjective situation. The surveyor has since downgraded the value objectively by 5%.

This is a data / evidence fact that the buyer can choose to use.

Cross posts!

The bank has passed the risk to the op, that doesn’t mean they are 100% right it means they aren’t prepared to back the horse. But as many 100-1 horses do indeed win at times and the op wants the house it’s a risk they are prepared to take.

Hope that clears everything up

The OP needs to find simple
objective language and a calm process to communicate a request to renegotiate. She has the evidence from the survey and the fact that she has taken a hit on her sale - she can email that through her solicitor to put the the vendors solicitor.

She can then decide what to do next - if they agree - all good, if they say no she can accept that and proceed at the agreed price or she can make an additional counter offer.

She has nothing to lose by communicating.

She has £30K to lose by not communicating.

No need to talk with the EA at any point - just communicate via solicitor. EA will be trying only to gauge your vulnerability and undermine you for the benefit of their client.

OP in honesty, 5% is peanuts. It's the least you should ask for. Personally, I'd be asking for a hell of a lot more or pulling out.

Look at the property board threads and see the amounts banks are reducing their mortgage offers by, and the increased LTV rates they're now requiring.

If you're happy to pay 5% over the current price for a house that will be worth even less in a mere matter of weeks then go ahead.

The data is increasing day by day and a further 15-20% drop is likely. 10-15% reductions are already here.

Any Brexit comparisons are useless as economists didnt come out in full force and say the exact same thing. And, banks didnt withdraw their products and increase their terms dramatically.

This is happening now. Not in theory. Some posters are absolutely delusional.

A poster has just said Barclays will no longer lend to her at a 10% LTV rate, but rather 40%.

What do you think this will do to the market?

If I didn't want to lose my buyer then I'd break my chain, but I understand that is a very personal decision that depends on all sorts of practicalities.

However, rent payments included, it wont be a financial decision you regret like overpaying by 20%+ will likely be.

The economists are also talking about a depression not a recession. They do not take 5 yearrs to recover from like we've seen before. A 40% reduction is being discussed because of the global damage to industry, jobs and the entire fabric of our society.

People need to look at the whole picture. This is like nothing we have known and will take decades to recover from.

And agreed. Drop the agent out if negotiation is your weak point.

Your solicitors are allowed to act in this respect and will be significantly more impartial.

Your agent has already shown themselves to be untrustworthy, stop communicating with them altogether and direct your buyers to your solicitor.

@Home2018 "The fact that you're not even pushing for her to try for a reduction shows just how much of an emotional decision this is to you."

Lol! Where did I say that? You don't half make stuff up.

Interesting to read all the opinions expressed. If we walk away from this property, there is not an alternative on the market that we could switch to. We have been looking for a year and have offered on 4 other houses.
By walking away for the sake of 5%, we would then stand to lose our buyer. As previous posters have said, a house is worth what we are happy to pay.
The bank is lending us the same amount of money, they are not fussed either way if we renegotiate or not.
Yes, we might be paying over the odds, but equally I am very choosy about which house I buy.
We can afford it, we are not stretching ourselves. Our income is very secure. Appreciate that this is not the case for all buyers.
We are borrowing 45% of the property price, that is a comfortable level of risk for me.

@sbplanet

Your personal attacks are just coming across as a deflection tactic, and in honesty, they make me feel like I'm spot on with how emotive a topic this is for you.

There is not point me engaging and trying to use data, the warnings of economists, and the words of the BOE to convince you. Or, even the actions of banks themselves!

Whatever point you're trying to make is becoming more and more unclear with each of your posts so I'm going to leave you to it.

Sorry if I missed you advising the OP to ask for a reduction.

All the best to you.

Good luck OP!