Bank down valuation

[Mumbum2011]

So the bank downvalued the property we're hoping to buy by 15k. We've offered to meet vendors half way. On tenterhooks since 10am this morning waiting on a response from them.

Are banks down valuing a lot at the minute?

I think so - especially on timber frame newer houses. Our surveyor mentioned it a few weeks ago

We received our valuation results this morning too. The property has been valued 70k under our offer price (10%). We don't have the full report yet but now feeling very anxious about how things will proceed.

Why would you pay more than the bank thinks it's worth?!

Let's say there are two cars on auto trader that you want to buy. Exactly the same model, similar mileage, condition and spec. One is £10k, one £15k.

Now imagine that in order to buy said car you require a loan on which you will be charged interest on the value of said loan.

What you are doing is the equivalent of going to the owner of the £10k car and saying "tell you what mate, how's about I give you £12.5k for yours seeing as this other bloke has his on for £15k. I don't mind paying even more over the term of the loan seeing as I'm paying on tick"!

You are MAD.

There's a brutal recession coming which will probably have a serious impact on house prices going forwards, even in the short term, and banks know this and are pricing accordingly. Just why would you want to instantly put yourself into negative equity?

What a load of shite 👆🏼 Just pay what you can afford / think it’s worth , simple as that.

@Cailleach
I hope the vendors see your point of view and realise we're being more than fair. I know it sounds madness but we love this house and plan to stay in it a long time. We will be paying the mortgage off completely in 2-3 months once we get the proceeds of our current house anyway, but vendors were in a rush which was why we needed to go down mortgage route. Still waiting on a response from them......

We had this with our last house , buyers mortgage valued it at 15k below what they had offered ( asking price). They wanted it for that , told them to shoot off and put it back on market and sold it for 1k under asking right away 👍

@Chumleymouse
Did your new buyers have the same issue with valuation?

We were in a bidding war so we actually offered 15k about asking. Seems like original EA valuation was spot on!

No they were downsizing and mortgage valuation wasn’t an issue.

@Cailleach... that only works if there is more than 1 house/car available at that specific time

Same as if there is more than 1 buyer for 1 house...price goes to the highest bidder.
Problem you have op is that the bank have an interest in the value, they take less notice of the emotional side of things and value it on a purely financial basis

Our current house had been sold 3 times but fell through for different reasons , ( job loss, illness and buyers messing about )the sellers had moved to New Zealand , I knew it would sell again quick, it has great potential

So I offered 15k below asking and they came back at 13 below so I snapped their hands off , I’ve no idea how much I was worth as it’s a one off and hard to put a value on it , but I got it before someone else did and I was happy with that . If you want something bad enough, buy it before someone else does 😃👍

As an anecdote a my friend just sold her house for way over what it could conceivably be valued at using any comparable for the last 2 years
Sold for 420k, highest comparable in the last 5 years let alone 2 is 385, bank valued it at 380k fell through
Another buyer then offered the 420k but had a higher deposit and hey presto the valuation from the bank came back at 420

@Chumleymouse
I think you were lucky then based on their position. If one bank has down valued I'm sure the probability is that others will too.

We’re porting our mortgage (downsizing) - does a surveyor still come out to do a valuation? We assumed so

But not everyone is mortgaged to the max and some buyers have a bigger deposit ( cash in reserve) than others , just because a bank says something is worth x amount to them , it doesn’t mean it’s that to everyone. If someone is relying on most of the money from the bank and have nothing else to add then they can only do what the bank ( lender ) says .

Chumleymouse you have a strong interest in getting buyers to overpay for houses. Why is that?

You seem to be advocating for buyers to accommodate the greed of sellers. Highly suspect. Highly, highly suspect.

For those who had their offer devalued - was that at the asking price or did you / your buyers pay above the asking price?

An EA told me a couple of weeks ago that a lot of sales were falling through because people offered above asking price (bidding wars) and banks refused to lend.

I don’t believe any house has a certain price it’s up to the buyer how much it’s worth to them , its not just the house, it’s the area ,location schools transport links etc that are also factors for different people.

It’s a buyers market , if you don’t like the price , don’t buy it. Simple as that .

I myself have walked away from a purchase after making what I thought were 2 good offers , but the seller thought it was worth more so . Not a lot I could do I just offered what I thought it was worth to me.

By your logic people should be exploited because of their emotional response. This is akin to saying it is okay to rip off I’ll people who are desperate because in their desperation they may be willing to put a high price on a remedy that may be truly worth only a fraction of what they, in desperation, will pay.

It is immoral to exploit people who are being blinded by emotions rather than financial sense. Paying more for the house that it makes financial sense to do so is indicative of the person being led by their emotions. Exploiting them for that with this nonsense justification that the house is worth what they want to pay for it horrible behaviour. But karma exists. I would hope the extra those who squeeze out of desperate people lead to a marked change in their lives and circumstances. Often these rip offs are soon spent and no life changing outcome to show for ripping people off.

I think you’ve lost the plot 🤪

We had this happen back in July with a property we fell in love with! Turns out everyone else did based on its kerb appeal/road, plot size and high quality finish. It’s in a conservation area on a road full of huge Victorian houses but only a few 1930s semis are on the road and it’d been 4 years since the last one hit the market.

It went to best and final and we offered £425k (advertised at 395k). It ended up being valued at £400k due to no comparables. We ended up negotiating to £415k. In all honesty we’re not remotely bothered about paying over asking; we intend on staying there for many many years and it’s the perfect house for us.

@IrisPurple

The property was on for asking price of 279k and bidding war between myself and two others. Went to 295k. Bank valued at 280k. I have offered to meet in the middle, which I think is fair. We have no more money anyway 🤷‍♀️

If only Chumley, if only. The fact is greedy sellers think it is okay to prey on people’s emotions but there is karma. In everything play fair and don’t think you have a right to take as much money as you can squeeze from someone because of their emotional response that flies in the face of financial logic.

If you think that’s losing the plot, I’m happy with losing the plot.