Overpriced on survey

[Sitdowncupoftea]

Had a full survey on a property were buying. The full survey has said the property is overpriced. We didn't offer the full asking price. There is a 40k difference in our accepted offer and the survey valuation. We are happy with everything else searches etc but now stuck at this hurdle. Initially on viewing I did say to estate agent regards the price. The house is a rural property in a small village of 50 properties and there are hardly ever any that come on the market. Any properties that have recently sold have sold years ago. Any advice on what to do. 40k over the survey valuation is a lot of money.

Sounds like you would be paying the extra for the location, rather than the actual house . If there’s not much chance of you getting another property in the area then you pay it or walk away .

It depends on what this means for you? Does this mean the mortgage company won't loan you as much? Can you cover the difference? If it is an unusual property it's not likely to be very accurate.

If not the you may have to renegotiate the price but you risk losing the property

Go back to negotiate the price. It could be that it’s a popular enough area that the sellers will wait until someone will pay full market price or you might have to pay the additional £40k yourself but worth discussing it.

Irrelevant unless you need a mortgage and the mortgage valuation says same.

You pay what you’re happy with, unless the bank disagrees too.

@LividLaughLurve No its not mortgage valuation its the survey. We had a full survey no issues just the price. To be honest I'm shocked as its a large detached house with a large garden. I viewed lots of properties in the area and the survey price seems a pretty low valuation.

Then don’t worry about it.

We lost a house when it was downvalued but needed the mortgage on it.

Doesn’t matter if the bank agrees with you.

@LividLaughLurve how on earth do rics and estate agents get such a valuation difference. I have a phone call to solicitor tomorrow to discuss it. I'm quite shocked as we've viewed lots of properties. In reality if I had offered the asking price there's a 65k difference from EA to RICs.

Estate agent just wants the highest price for their client.

@LividLaughLurve EAs have always overvalued however to me the survey has undervalued.

If you are happy to pay the price you have offered then stick with it if you think others might be happy to snap it up. If you think it might otherwise be slow to sell then you could think about a bit of further negotiation, but you risk putting the buyers' noses out of joint, which probably would not help the process.

EAs actually test their prices on the market, surveyors don't. Not to say the surveyor is wrong but it's an art not a science and if it's not the bank's valuation, personally I wouldn't worry about it. You felt it was the right value when you offered.

Value is what somebody will pay. If you are willing to pay the price you offered then thats what its worth. If you can get a mortgage dont pull out because somebody else thinks its worth less.

I've just found out that it is the mortgage valuation too. That's a 45k difference.

I approached EAs over price but we had a professional survey and valuation done. We are now in a quandary as it means us putting 45k up outside of a mortgage if the seller does not lower. I've never had a property thats been overvalued for before.

Do you have the extra 45K needed?
What % deposit do you have (LTV)?
How secure are your jobs?
How much do you love the house and location?
Are you comfortable over paying so much?

Personally I wouldn't want to buy a very overvalued property during a mini housing boom. Looking at the ecoomic outlook it is likely that prices will either fall or plateau next year.

I've heard surveyors are under valuing on purpose. Possibly because they think process may go down and to protect the bank.
If you're able to can you say how much was offer price or how much it was on for?

If house prices go down

If the mortgage valuation is low that is different and I would be tempted to walk away if they won’t negotiate. If I had the cash I would pay a little over for the right property if it was a forever home, but not that much.

@InescapableDeath I do have the cash to buy but I'm reluctant to spend my money on it as it wont be coming off the mortgage. In total as we did not offer the asking price the house has been overvalued by 60k . We offered lower than the asking price as I did not think it was worth the full asking price. In total we now would have to pay 45k difference. I'm not happy as we have had everything done all searches etc and we're looking at moving dates just hanging on for survey. I'm not green behind the ears and the low valuation is a shock. I did ask EA why property was priced high initially and was told that the valuation was correct for that house in that area. I have to wait until next week to do anything but I'm doubtful the seller will drop 45k off asking price. I dont want to pay more than what a house is worth and im totally deflated.

Problem is that there’s no good comparisons! Survey vales can be very different from sales prices, particularly when market is busy and property has a rarity value (certainly I’ve found that round me just now). Where and what are the alternative houses?

Is £40k a years salary or 3 months’ salary? What about your car - do you have a car that’ll last 10 years but cost £6k, or a car that’ll last 10 years but cost £46k?

It’s a difficult situation op, do you really love the house? Is it your forever home or just a temporary one. You could reduce your offer by 20k or just pay it if you don’t want to lose the home.

In my very limited experience the surveyor might cover a wide area and not really know the area he’s surveying so might guess at the value. My last house was on the market ten years ago and I was home when it was surveyed. The surveyor, unprofessionally, told me my house wasn’t worth the asking price because the identical house next door had sold for £30k less. I pointed out that the next door house had been sold by a 90 year old woman and the new owners had put in double glazing, two new bathrooms, a new kitchen, electrics to bring up to the standards of my house and that if anything my house was undervalued. I can only assume he upped his valuation on his report because we sold with no problem. Anyway my point is just that surveyors don’t always know the marketplace.

Why dont you ask the surveyor for the detail behind his valuation. You can then decide whether you agree or not

We are contacting surveyor on Monday to ask why so low. No houses in area have sold recently its a very small village.

Sounds really difficult as you obviously really like the house and have spent money on it already.
EA definitely tend to overvalue and I have seen some particularly high valuations recently. In fairness, it sounds challenging to value this particular property from what you have said. Surveyors are apparently down valuing a lot of properties at present, presumably because of the economic outlook and because the think EA are over valuing a lot because of the boom.

All you can try to do is negotiate. The seller may decide they would rather proceed with you than re-market now.

It’s likely your surveyor is being overly cautious if there are no comparables. As others have said, the value of any house is subjective. It’s worth what ever you are willing to pay for it ultimately. How much is the house on for?

This is a sign of the times more than anything. A lot of houses are being undervalued as the banks are nervous lending. There is a view that lockdown creates a bottle neck of demand and so prices are artificially inflated.