Mortgage valuation super low!

[pastaislife]

First time buyers, mortgage application going through on our accepted offer of 325k.

Heard that the mortgage company are only doing a ‘desktop valuation’ not a proper one as we’re doing a 20% deposit. They’ve come back and valued the property at 300k so won’t give us the full mortgage amount, but our broker is saying they don’t have a valuation report as a proper one wasn’t done.

I know it’s not really anything to go by but Zoopla estimate is 305-340k.

Has anyone else had this where the valuation is lower with no actual valuation survey done?! I feel like we can’t really go back to the sellers and ask them to lower the price, as we don’t even have a valuation report with any reasoning as to this figure!

Our valuation came back with a large retention after an in person survey.

I phoned the bank and said their surveyor was on the take and that our independent survey came up with quite different problems, and offered to increase the deposit and reduce the size of the loan.

They waived their entire surveyors report on the phone and removed the retention. The whole thing was over in under five minutes.

You could phone and offer to arrange an independent survey or increase the deposit, if you can afford it should they call your bluff.

@pastaislife lenders are being very cautious at the moment due to the anticipated drop in values. You can absolutely go back and renegotiate! £325 to £300 is under 10% and given the climate they should be open to it. You don't want to be caught losing a huge chunk of equity because of falling prices.

Hi @pastaislife. I couldn't bear to read and run as my partner & I were in exactly your position just a week ago & it is truly horrible. Especially when you have your heart set on your new home!

Like you, we had our mortgage application in with a high street bank and they were due to do their valuation of the property. It came in at 10k under what we had offered (and had accepted) on the property. Luckily we have a 30+% deposit so the devaluation didn't actually impact our mortgage offer.

We were shocked by the devaluation and didn't really know what to make of it. We knew the house we were buying was priced a little bit more than similar houses in the area, but it had more going for it such as being a corner plot, anextension outside, newly fitted ensuite & kitchen etc.

I did some digging and like you, the bank was only doing "desktop valuations" which basically meant that someone would sit on Zoopla, which is notoriously inaccurate, and decide what they thought the property was worth based off nearby sale prices which, in our case, were 2+ years old! The reason that your bank cannot offer your a proper valuation report is because nobody actually visited and inspected the property in person to really judge it's value.

If it's possible for you to proceed with the sale regardless, I would urge you do so. My partner & I just received our survey back this morning, which included another valuation, and their valuation was far more in line with what we have paid so we feel very relieved.

If it's not possible for you to continue with the sale because of deposit funds and you really love the house, then you should contact the estate agent and explain the situation. I am sure they will be able to speak directly with your bank regarding the valuation and go from there in terms of seeing if the seller can renegotiate the price. Please have hope! It's highly unlikely that the seller will refuse to lower their price given that whomever comes in after you & has their valuation will likely have the same outcome. Banks are being notoriously cautious with their lending right now because of Covid 19 as they are pre-empting a financial/housing market crash.

Fact is - if renegotiating with the seller is your only option, the worst they can say is "no" so it's worth a try.

Good luck OP! Keep us posted please!

I experienced this, a local surveyor who also was an estate agent was undervaluing all of the other estate agents. I asked the Bank to use another agent. I suggest you do the same.

Sorry to take ages to come back - thank you all so much for your advice! I really don't think we're in a position to bargain down the seller, it's a 4 bed house in an AONB not too far from London - we're pretty confident we're getting a good price. Our mortgage advisor has advised applying with another lender, to see if their valuation is different, and if it comes back the same then we'll re-evaluate.

Really glad yours has worked out @CathyWuthering and glad your own valuation was in line with the price you paid! Our broker said he has seen lots of weird things coming back from desktop valuations, as it's semi automated and has only really started being used loads due to covid, so hopefully that's what has happened here.

Just to say this happened to us too recently with our remortgage. Lender's survey (which was in fact in person) came back £80K lower than the 2018 EA valuation of the property... Almost 20% down! Luckily we have good LTV and it didn't affect our finances. When all's said and done our place is lovely and I'm confident that this is an EXTREMELY conservative valuation, but it is definitely a weird phenomenon at the moment. Best of luck OP!