Downward revision of property value

[Anewname20]

Hi

Has anyone had the experience of the bank revising the value of the property downwards? If so what did you do as the buyer or seller?

If it happens, which we think there is a possibility because of the insane increase in house prices, we may have to walk away if the seller does not revise the price.

[Anewname20]

If the valuers value it at what we offered then great but I will go with what the experts think about the value. If the EA and the valuers are in sync, then I will go with their view on value rather than what the seller thinks.

I want a fair transaction. I don’t want to be ripped off and I don’t want to rip off anyone. I think there is a possibility since prices are high and the seller went well above what the EA advised as the asking price.

[Anewname20]

The seller put the house on the market for £59k more than the EA advised. I assume she went with the EA who gave the highest valuation. So when you stack it up, the bank may not share the same view as the seller. We did not offer above the asking price. We would never do that.

[notheragain4]

Happened to us last time, our seller let us buy for the bank's valuation, we couldn't offer more as needed the mortgage. He knew it was likely to happen again with anyone who needed a mortgage and didn't want to start again. So it doesn't always have to be down to the buyer to make the difference.

[notheragain4]

( I should add and just as well as we sold 3 years later and what we sold it for was less than what we were initially buying for, but slightly more than what we paid, so the bank's valuation was fair in our case).

[Alexalee]

If there is no evidence of similar property sold within the last 6 months and within half a mile to support the price then the valuer won't value it at the price
I think you have been very naive in your offer from what you have said
How do you know the ea valued it at 59k less... no way did the agent tell you that
Is this a reverse?

[TazMac]

Not all will use the same mortgage company

Don’t valuations go on record?

So buyer number one walks away due to valuation being less than asking price. House goes back on market, new buyer found. New buyer has valuation done and the valuer sees the recent valuation done on behalf of buyer number 1 and (unless there is something obviously wrong) values it at about the same.

[Anewname20]

Alex, I have no reason to lie. What would be the point? That’s what I found out.

[RandomMess]

I saw it happen when prices were genuinely rising and they were buying at a fair/reasonable price but not many similar properties around to compare it too. Was a cheap purpose built older 4 bed mid terrace. The buyers looked up similar properties and 3 bed equivalents that were only a few k less than what they were paying. It got revalued upwards.

I think in your circumstances I would walk away, ok maybe a couple for k as a sweetner if you absolutely love it but it sounds like you could be seriously over paying.

[pollypork]

If a mortgage down valued a house I was purchasing & it wasn't an incorrect valuation in any way that could be easily debated (missing out key facts, not considering recent refurb work or whatever), I'd 100% reduce my offer the same amount, in the knowledge that any other buyer will have exactly the same issue.

100% & I never understand the attitude of just ignore it & pay the higher price.

[Saz12]

I’m in Scotland, so a different system, but is the valuation not part of a standard survey? Or do most people not get one? (Is that not a bit risky?). Genuine question!

[RandomMess]

The mortgage lender gets a valuation survey.

[RandomMess]

Buyer gets their own survey which includes value and other stuff depending on level of survey.

[TazMac]

Entirely up to you OP but is it worth leaving it 6 months to see what happens to prices?

A lot of banks have pulled their 85% LTV plus mortgages, which could indicate that they are predicted a price drop of around 10-15%. Barclays have gone one step further and pulled their 75% LTV mortgages, again, this could indicate they are predicting price drops of around 25%.

[paniquer]

@Saz12

I’m in Scotland, so a different system, but is the valuation not part of a standard survey? Or do most people not get one? (Is that not a bit risky?). Genuine question!

The seller in England do not provide a home report. The onus is on the buyer to have surveys done.

[Saz12]

No, I understand that buyer gets survey done. Bit from comments on this thread it reads like most people don’t bother to get the standard mid-range survey, which includes a valuation?

[Anewname20]

We are getting a house survey but that’s different from the bank’s valuation which determines the mortgage and the cost of the mortgage.

If the homebuyer survey uncovers things that were not factored out into the price then we can negotiate but that isn’t my main worry. I wouldn’t necessarily walk away if it’s stuff that is cosmetic or easily fixed.

[Pipandmum]

I renovated a house and put it at what I thought it was worth - agent said £160, I said let's go in at £169,950. Within a week I had two offers over the ask. The agent played them off each other and top offer was £172,500. The agent said not to try to get more as both buyers needed a mortgage and as it was higher than any other house on the street had achieved the valuer would not value it that high. And he was so right. The bank came in at £165 (which was still higher than top sold house, but mine was mint). The buyer them said he'd only pay £!60! I said no way - we finally agreed at £168,500, which is about what I wanted originally.
If the house is worth it to you and you will be there long enough for the market to catch up, paying over the odds isn't always a bad thing. But it doesn't seem like you love this house enough to pay more than what you think it's worth, so walk away.

[mumsy27]

what is the point of offering then, since you will only settle for bank valuation, which by the way banks always do, never give the real value.
they use a buffer in case repossession.
so you are saying to any buyer go very high, scatter competition away then come back with bank valuation.
it may work for a desperate seller or you loose your potential purchase.

[milienhaus]

We had this just before Covid - first mortgage valuation came in 10% under the agreed sale price, so we went to a different bank and got one at the agreed price without an issue. No noticeable impact on credit scores. First valuation was well under the market value as we knew from viewing >10 comparable properties in the area (though maybe they saw ahead to Covid and Brexit and actually had the right idea, hope not though!).

[Handsnotwands]

Valuers aren't just people in banks sticking fingers in the air, or looking at what next door sold for, they are Chartered Surveyors, they have to adhere to the RICS standards for valuation and are legally bound by those standards.

A desktop valuation isn't just looking at nearby sold prices and thinking "oooh that's a nice leafy road", it's a complex formula accounting for a myriad of variables, most of which are so above and beyond what the actual bricks and mortar of what they're valuing is. a synopsis of the book of valuation methododgy and standards is available here.

Anyone who thinks they know their local market, or have taken account of the farrow and ball walls to determine a better idea of what a house is worth than a independent chartered surveyor is kidding themselves.

If you want to pay above the market value, if it's worth it to you, knock yourself out, but it would be very foolish to think that your / your estate agent's estimate of value is more accurate than that made by a Chartered Surveyor, even from their desk.

[Handsnotwands]

That should say red book

[Anewname20]

Handsnotwands, I completely agree. That’s why I wonder why people think going to a different mortgage company would lead to a vastly different outcome.

The banks used the same handful of valuers, whose surveyors will be working to the roughly the same standard and using roughly the same algorithms. There may be give or take some difference but not massive. The seller can take the chance of putting the property back on the market, finding another buyer who uses a different bank and who will somehow use a valuer that’s different and the surveyor comes up with a very different value.

I can’t get my head round paying big bucks above what an independent RICS surveyor from the valuers say especially if they were physically visit the property. No house is objectively worth more than it is worth. There is always another house.

For the house we are selling the surveyor also did a physical inspection. As Covid restrictions lift more on-site inspections will happen.

[tentative3]

We recently offered asking price and the bank valued it 25k lower. Sellers initially came back with 10k lower, then 15k and then finally the whole lot. The agent tried to persuade us that it was because comparable properties hadn't been updated in the sales data yet, and that might be the case, but the bank did a physical inspection rather than just desktop so we felt it was hard to explain away a 25k difference.

[mountains76]

Our recently sold house went to best and final. lots of interest with multiple bids over asking, in the end we chose a couple who where not the highest big (about 10 K over). Their mortgage valuation came in at our offers over price, ie exactly 10k lower, so we met them half way.

I'm sure some valuers take the original price into consideration. It's certainly not an exact science and a lot of it is dependant the valuer.

[mountains76]

@Handsnotwands

Valuers aren't just people in banks sticking fingers in the air, or looking at what next door sold for, they are Chartered Surveyors, they have to adhere to the RICS standards for valuation and are legally bound by those standards.

A desktop valuation isn't just looking at nearby sold prices and thinking "oooh that's a nice leafy road", it's a complex formula accounting for a myriad of variables, most of which are so above and beyond what the actual bricks and mortar of what they're valuing is. a synopsis of the book of valuation methododgy and standards is available here.

Anyone who thinks they know their local market, or have taken account of the farrow and ball walls to determine a better idea of what a house is worth than a independent chartered surveyor is kidding themselves.

If you want to pay above the market value, if it's worth it to you, knock yourself out, but it would be very foolish to think that your / your estate agent's estimate of value is more accurate than that made by a Chartered Surveyor, even from their desk.

It's not an exact science though, and alot of it is down to the individual valuers discretion.

plenty of accounts when a valuer clearly has got it wrong, but they are incredibly rarely willing to agree to revalue, as they are not willing to admit they got it wrong in the first place.