Mortgage valuation came back - 60k below asking price

[wannabehousebunny]

We are first time buyers and had an offer approved on a property in a commuter town outside London. Our offer was a bit more than we had hoped to pay (but still below the asking price by 10k) as we really liked the home but we were aware that the property wouldn't appreciate much in 5 years. At the end of the day we are looking for a home more than an investment but at the same time we don't want to lose money in the long run either.

The mortgage survey came back and valued the property 60 below the asking price, 50k below what we were willing to pay! The seller is refusing the budge so we had to pull out.

Is it normal that the banks devalue property to this extent? Or is this maybe due to the uncertainty of Covid etc.?

Bummer OP, but you don’t want to pay a 3 bed price for a 2 bed plus airless broomcupboard!

Does anyone know if the valuers are given the price of the offer before they survey?

@wannabehousebunny

Thanks *@Cranton*

You make such a good point there and after the initial disappointment of not being able to proceed with the house we do feel like we dodged a bullet. Ultimately we trust the surveyor more than the estate agent and the seller.

In regards to the third bedroom it is too small to be legally called a bedroom and the very small window could not be used as a fire escape.

Thanks for all your replies on this. We looked into getting another valuer around but even the EA didn't think it would change the value much and they are going to wait for a cash buyer..

If the 3rd bedroom wasn’t legally a bedroom then the estate agent is misrepresenting the building. I would complain.

Anything advertised as 2/3 bedroom is a 2-bedroom price with a bit of a premium, not a cheap 3-bedroom, if you see what I mean. Lifts are the classic example - presented as a ‘room’ but not meeting building regs.

You’ve been lucky - apply the lesson to your onward house hunt!

Lifts = lofts!

Bizarre that they think a cash buyer wont get a valuer in. Cash buyers aren't mugs. They wont buy an overpriced property either.

We have just sold our terrace house. It was advertised as 2 bedroom with study as the 3rd bedroom as it had been made smaller. This was advertised at £350;000, which is quite a bit less than if it had 3 good sized bedrooms.

The sellers were trying it on...probably pushed by the estate agent as well to market their home as a 3 bed...

Now they know their third 'bedroom' is not going to pass inspection so they need to advertise their home as a 2 bed with an additional small room/office or something. And the price will have to come down.

I personally would walk away just because I don't like sellers/estate agents who try to fudge things...

This sometimes happens with leasehold flats too - the lease is either short or onerous which devalues the property for mortgage purposes....sometimes to zero!

Both you and the mortgage lender have potentially avoided negative equity if you only had a small deposit. This is why the valuers do what they do. Disappointing....but as you say you've dodged a bullet and when you look again you'll be more aware of what a genuine 3rd bedroom is. Hope it doesn't take long to find one.