Help! The house we are buying has been downvalued by 20k

[ballsdeep]

We are in a small chain, everything has been lovely nicely. We are looking to exchange by the end of march. We had our valuation for the house we are (hopefully) buying today and it's come in at under 20k lower than asking.
The estate agent has said they won't come down. We are trying another mortgage company but I don't know how I feel about it. Where do we go, what can we do?!?

I never understand these threads. Why overpay? Offer them what the lender says it's worth, because that's what it's worth, and most other lenders will say the same.

If they don't accept it, time for them to find another buyer....and good luck with that at the moment!

This happened to us. 10 years ago. We challenged the valuation. Like your info on the corner plot there wasn’t a comparable property, so they had benchmarked against (In our opinion) non comparable properties.

We negotiated with the surveyor who agreed to increase the valuation by 10k (Initial valuation was 20 k lower) and the sellers accepted a 10 k reduction. Similar to you the estate agent had said they wouldn’t accept a price reduction but they did - I suspect that the 10 k brought it very close to other offers and they knew the effort that we put in to get the revaluation so they probably knew we’d not waste their time on the process - we were serious. We did not go back and request anything else to be paid/reduced throughout the process though (Unlike our buyer who put various 11th hour demands in!).

Good luck. It’s such a stressful process.

There is no way I'd buy an overpriced house, if you need to sell it in a hurry for any reason you'll be stuffed.
I waited until my current house had come down by £40k before putting an offer in it and got another couple of grand off.
It had been on the market for over a year before the price started coming down bit by bit.

@StephenBelafonte

how much did the current occupant pay for the house?

200k! It's gone up 100k in 4 years. They've done a lot to it, but no extensions etc just all internal decoration

@ballsdeep

Use this website, remember to select your region: www.nationwide.co.uk/about/house-price-index/house-price-calculator

Do remember that the vendor will not want to lose the sale, they won’t get the stamp duty holiday on their next purchase if they try to get a different buyer. Do you know how much their onwards house is?

@ballsdeep

Your last post makes it crystal clear the place is over priced!! Please please don't pay it, the vendors are being greedy.

Hi Op,

It's worth getting a second valuation, working in the industry one valuation is one persons opinion but if you have two valuation which reduce the price you have a little more info to fight for a reduction. Unfortunately if you can't get a valuation at the offered price the only options are :-

• reduction in price
• paying the difference- larger deposit.
• Meeting in the middle.
• or pulling out.

Unfortunately the valuations will look at comparable information. For example a 3 bed in a particular area will always be worth XYZ it doesn't matter what cost they've put into a kitchen ect but sellers fail to see this sometimes.

25 years ago we were in the same position.

After two years of looking we found the perfect home for our family, but it was overpriced by at least £25,000. The surveyor told us that he'd been generous with his valuation. Fortunately it didn't affect the mortgage offer, but it certainly made us think long and hard.

We decided to proceed anyway, and 25 years later, it's still our much loved family home. It was certainly worth taking the hit in our case, although it does depend on your plans - if you're intending to stay there for years, it might be worth plugging the gap if possible.

OP what is your current loan to value? Assuming you are under say 85% you may just get a slightly worse mortgage deal.

I don’t really understand these threads in which people say the only options are to pull out or increase deposit? Surely it all hinges on the OPs loan to value?

[quote LemonadeFromLemons]@ballsdeep

Use this website, remember to select your region: www.nationwide.co.uk/about/house-price-index/house-price-calculator

Do remember that the vendor will not want to lose the sale, they won’t get the stamp duty holiday on their next purchase if they try to get a different buyer. Do you know how much their onwards house is?[/quote]
It's over £500k so not a small price!

@mountains76

OP what is your current loan to value? Assuming you are under say 85% you may just get a slightly worse mortgage deal.

I don’t really understand these threads in which people say the only options are to pull out or increase deposit? Surely it all hinges on the OPs loan to value?

It's 80%, we are paying a 20% deposit from our equity.

£100k increase in 4 years ! I didn't earn that much by working every day of the year! Nah, I would pay more than it was valued at they should bloody well he grateful their gaining £80k plus what they would have had to pay in rent for 4 years!.

That's a 33% increase in 4 years. Did your property increase by 33% in 4 years

33% increase in 4 years does sound like a lot bearing in mind there hasn't been a huge increase generally in the last 4 years because of Brexit uncertainty. Has there been a big increase in your area to justify this sort of increase?
I think you need to negotiate hard. Bear in mind that the seller won't want to lose their onward purchase and that prices are falling a little at present as stamp duty holiday ending soon (unless government decide to extend at last minute)!

It’s a 50% increase in 4 years.

@ballsdeep

It's over £500k so not a small price!

**
So if they have to find a new buyer they will lose £15,000 in stamp duty relief. Even if someone comes along with another asking price offer they would only be £5,000 up on if you demanded the whole £20,000 reduction. Then they’d have to go through valuation again and the new values may put the same value on the property.

Right had to write this out as I was confusing myself. Here are the sums:

Original sale price £300,000
Onwards purchase price £500,000
Stamp Duty Relief if they complete on their purchase pre April 1st £15,000

So their shortfall between selling and buying if you agree to keep paying the asking (even though the bank thinks it’s not worth it) would be £200,000. £200k + 0k = 200k

They obtain asking price £300k from someone else, don’t complete before April. 200k + 15k = £215k

You reduce your offer to £280k based on valuation and complete before April. 220k + £0k = 220

They are calling your bluff but saying they won’t negotiate. Max I would pay would be £5k over valuation and even then that is a judgement call. They’d be mad not to take it as they would be risking the sale to be in exactly the same financial situation come May or whenever a new buyer would complete.

Of course @ForensicAccountant, quite right!

Did the sellers respond @ballsdeep?

Valuing a house is not a science. When my husband and I remortgaged, it was valued at, say, £800k. Then four months later we had it revalued and it was valued at £1m. Nothing had changed in the four months other than a different valuer (different mortgage company).
If you live the house and it will be your long term home than you could always pay the difference. If you don't have the funds then you will have to pull out.
Personally I don't think I've ever had a valuation other than the price agreed.

'OP, with 80% LTV you shoud be fine to get another mortgage deal at a slightly higher LTV, so doesn't sound like the end of the world, assuming you still want to pay the same price.

@StephenBelafonte

£100k increase in 4 years ! I didn't earn that much by working every day of the year! Nah, I would pay more than it was valued at they should bloody well he grateful their gaining £80k plus what they would have had to pay in rent for 4 years!.

That's a 33% increase in 4 years. Did your property increase by 33% in 4 years

It's totally irrelevant how much the vendors are set to make I feel. Perhaps they were lucky enough that it was undervalued when they purchased, doesn't mean they should accept a lower price now. The mortgage valuation currently is 1 person's opinion. Doesn't mean it's correct. I'd definitely ask for a physical valuation if one hasn't been done. If it has, and as you say, the house appears to be worthy of your offer, I'd try another mortgage provider.

@Cailleach

I never understand these threads. Why overpay? Offer them what the lender says it's worth, because that's what it's worth, and most other lenders will say the same.

If they don't accept it, time for them to find another buyer....and good luck with that at the moment!

So how do you explain the process of offering, you get few offers some of them over asking price, you decide to offer higher than anyone else to secure the property and scatter the competition away then come back with the logic "sorry lender won't match my offer".

it is irrelevant how much vendor purchased the property, purchased recently over 500, vendor bought it over 60, good luck to them.
op saying vendor done a lot inside, do you know how it cost to do whole kitchen/diner/bifold with wall removed, you won't get much change in 100k(southeast)

now, removing ego and emotion and adding stamp duty deadline if not extended, we have a Mexican standoff who is going to blink first

Really? They’ve gone up 14% in a year on average.

Hasn’t aged well with the house prices going back to normal malarkey

Some mortgage companies use horribly inaccurate ways to value a house- think not even driving past the house, basically looking at zoopla, disregarding improvements or advantages such as big gardens etc (this is optimistically called a “desktop valuation”). When we were selling our buyers’ valuation came in more than 20k less for this reason but we (and the estate agent) knew it was wrong. In our case the buyers made up the shortfall without so much as a complaint because it was worth the money but I’m sure if they had got a different company it would have been fine. Now (2 years later) houses on the same street are selling for 100k more.

I am just looking for some answers as I'm in the same position, only I am a vendor. We are selling our house for 260k . We have had lots of offers on our house, 2 of them came over the asking price. We first accepted a highest offer but 4 weeks later it fell through as the buyer didn't have actually enough funds to buy it, so we agreed to sell for a slightly lower price. Now, we are 10weeks down, all searches were done but the surveyor came and valued our house 20k lower than asking price. Buyers offering 243k but I don't think this value is correct. It is very hard to compare the houses in my street as it is a long street with mixed houses, flats, terraces and so on. Our house is semi-detached property which is a corner plot, massive garden, garage, parking for 3 cars and on top of that we have done massive renovation in the past 2 years, changing windows, gutters, new loft insulation and so on. Zoopla value goes between -245-271k so 240k sounds really low, as other 3 bed detached properties on my street goes for that price doesn't have this massive plot, also are in need of huge renovations. We have no neighbors at the back or one side, it's just lovely trees shrubs. I am just a bit unsure what to do now. We have agreed to lower 3k but I don't want to go lower.