Worried my house might be over-valued

[Pegs11]

Hi, I’ve just sold my house (subject to contract) to a first-time buyer, for a very high price compared to all the other houses in my street.

This is because we have completely renovated and extended it, whereas the other properties have not been. It is also in a highly convenient location, with a lot of new businesses springing up nearby.

We had LOTS of interest, and several offers. In fact it went to a bidding war! We accepted an offer that was over the asking price (and the asking price was already quite high!).

I’m now worried that it might not pass the mortgage valuation! I’ve heard that often the mortgage guy will just do a quick drive-by, or even not bother to come out at all and just go on what the other properties in this area have sold for. They are unlikely, from what I’ve heard, to know about the extensive renovations we have done (or bother finding out). I’m so worried because we need to find somewhere to buy and I don’t want to get financially or emotionally invested in a property if it turns out ours won’t even pass the mortgage valuation!

My estate agent, much to my chagrin, has advised our buyer not to make any moves (not even get a mortgage survey!) until we have found somewhere and have started spending money on the buying process! They never used to do this, but apparently Covid has changed things in this regard.

So... I don’t want to fall in love with a house, start spending money on buying it etc, if it turns out I can’t even sell my house at the price I was expecting because it fails the bloody mortgage valuation. I know that any number of things can go wrong with property moves but this one seems stupid. (Although I’ve heard it’s happening a lot at the moment, especially with low-deposit buyers.)

We certainly won’t be able to move if we don’t get the asking price... and I just want to know! Can I ask my current mortgage lender to come and value my house (so at least I know what I might have to deal with!)

Any advice would be appreciated, thank you 😊

You can just instruct a surveyor to value your house directly. However, a different surveyor may value it differently.

Even a valuation for a mortgage should include a visit and an appreciation of works. It's still subject to RICS professional standards and is relied on by the lender and the buyer and therefore getting is vastly wrong leaves a surveyor open to litigation.

A drive-by valuation is more things like Council Tax Bands, where there is a spread of possible values.

What does Zoopla price estimate say?

We had a potential purchase downvalued but the surveyor was right, it was overpriced so we didn’t appeal. If your price is appropriate for the work you’ve done and they can see that on inspection, I’d not worry.

The valuation is generally done as part of the Homebuyers Report, or whatever level of survey the buyer has done.
They will come and look, they need to give an amount that a rebuild would cost, for buildings insurance purposes.

Slightly bizarre that your EA, who is engaged by you to act for you, gave them that advice. From a vendors POV Best for buyers to ‘buy in’ to the process ASAP!

Tell your estate agent that you will move out and rent by X date. The buyers can therefore spend the money without the risk that you take ages and ages to find a house to buy - if you don't have a house purchase ready at X date, you'll have to go and rent.

My estate agent quite rightfully so told me not to take the highest offer I got as it would more than likely cause it all to collapse once it was officially valued. It was way more than it was up for.

@RainingBatsAndFrogs Yeah I thought it was weird too! They are supposed to be acting for me, and that’s what I’m paying them to do... I don’t understand why they are doing this, when I asked, they just said it’s all different now because of Covid.

@Fullofpudding I had six estate agents’ valuations done by six different agents! There was a huge discrepancy between the highest and lowest valuations. I went for the third highest because the agent (at the time) seemed the most professional and I had a few recommendations from people I know.

...but when I use one of those online valuation tools, it tells me our house is worth less than what it cost us to renovate it three years ago! 😲

When I made an offer, during Times Of Covid, the vendors EA, a well known high st chain, who have actually been really efficient and helpful, said that they would stop active marketing and viewings and the offer would stand for set period , during which I had to have engaged a solicitor and paid the deposit, and I think commissioned a survey. If after a certain period I had not done those things they would start viewings again.

If you find somewhere and your buyers start messing about, you will lose the place you are interested in.

I would talk to the EAs about this.

Don't use online valuation websites for this!

@MojoMoon I’ve looked into this but it just isn’t possible for us to rent. There are hardly any rental properties on the market at the moment (at least not for our budget!) and the very few I have found will absolutely not take pets (we have a dog and two cats)

If the valuation comes in at less can you accept less? I expect the same thing will happen on the house you plan to buy so you'll recoup any losses that way.

@RainingBatsAndFrogs yes I was expecting our estate agent to make sure our buyers were committed by getting them to spend some money! It’s so weird that he’s told them to hold off until we’ve found somewhere. It’s making me feel quite uncomfortable.

I was thinking of possibly changing agents and putting our house on the market again, but for a higher price, because I know our house attracts a lot of interest and well, selling it for a bit more will make it much easier for us to buy somewhere... (we are struggling to find a house we like that is within our budget as house prices seem to have gone up loads and we are simply priced out of most of the “nice” properties we’ve seen).

But again, marketing it for a higher price raises the same issue of, will it pass the mortgage survey?

Perhaps I should do as suggested and get a valuation survey done myself...

@StephenBelafonte it seems a bit of a risk though, accepting less for ours and hoping that whoever we buy off is in a similar situation.

I think I will see if I can get a mortgage valuation done myself, on my house. Because frankly if we can’t get the asking price for our house, we simply can’t move. And I’d rather know sooner than later!

Re the valuation: its likely to be more of an issue if the buyers are FTB/low deposit

I am in the reverse situation, realise I have over offered (because I did not know the area). As my LTV is only 40% the valuation came in fine, as even if it were repossesed & sells at a loss, the bank gets all their money.

Disappointing for me, as if the mortgage valuation was less I would have renegotiated.. So, to avoid collapse, your EA would need to find you a buyer who is putting down a fair bit. This has also been the case for other properties I have been interested in.

That's ridiculous behaviour from your EA. They are supposed to be working for you. In the current market nobody will take you seriously unless you are a cash buyer. Until your buyers know one way or another if they can buy your place, nothing can happen. You need to instruct the EA to push the buyers to get started on getting everything sorted.

I am involved in selling one property and buying another ATM. Our EA is very strict about only dealing with viewers who are in a position to buy, and we've missed out on a few properties because we weren't cash buyers. IME of trying to buy EAs aren't bothering to keep you up to date on potential properties unless you are in a position to make an offer.

@DespairingHomeowner yep, our buyer is a FTB. At first I thought great, no chain! But now I’m not so sure.

Even a valuation for a mortgage should include a visit and an appreciation of works

Maybe it should, but it often doesn't. We had our mortgage valuation done recently, by a major high street bank, and they didn't even do a drive by; just a desktop valuation. (We had a separate full structural survey done, but just for our own peace of mind- the bank didnt care about it for mortgage purposes).

Not sure what doing your own mortgage valuation would achieve, OP, unless I'm being thick. As surely if your buyers are using a different bank then they may well value it differently, so it wouldn't necessarily bring peace of mind.

When we sold our previous house, the valuation came in a lot less than the price we had agreed; but we had been told to anticipate this as the house had gone to a bidding war. From memory, I think the house was on at 140k, we accepted an offer of 162k (we had something nuts like 9 offers over asking price) and the valuation came back at 140k. We met the buyer halfway, but were lucky that they were able to find more cash to cover the difference in the mortgage.

Your FTB may be an issue if the bank under value the property. It's less of an issue with buyers with a small mortgage as they can choose to bridge the gap themselves. What was the position of the under bidders in your bidding war? You may end up wanting to go back to them if your initial buyers don't work out.

Am I correct in thinking that most banks won’t charge a FTB for a mortgage valuation? If this is the case I don’t see why our buyers can’t just get on with it

The other thing our estate agent did which I didn’t like, was they let our buyer - a few days after we accepted their offer - ask us a load of written questions about the condition of various fixtures and fittings and what we would be taking/leaving! Surely this is stuff that you do later down the line? I did give them answers as didn’t want to put them off by appearing cagey, but made it clear that my answers weren’t legally binding, because it’s the solicitors job to ask these questions. And surely the EA should have advised them this was the case instead of letting them put those questions to us at that point?!

Mortgage offers have an expiry date before they have to go through the process again, ok it’s six months, but you haven’t found anywhere yet (are you actively looking and viewing) and your purchase might involve a chain, it’s possibly sensible to see how motivated you are to sell before wasting your buyers time.

@Pegs11 a building survey, presuming they have one isn’t free.

[quote Pegs11]@DespairingHomeowner yep, our buyer is a FTB. At first I thought great, no chain! But now I’m not so sure.[/quote]
Hmm... make sure you find out quickly if there mortgage is agreed. I was worried about mine for this reason, it took about 7 weeks to find out. Then only pay for survey on your house once their finance is agreed to manage risk (if you can)

Your EA should have spoken to their mortgage broker before your offer was accepted to confirm they are likely to have the borrowing agreed. Mine did for my purchase (onward), & tbh your EA is pretty motivated to make this sale to get his fees...

I’m in a similar situation (house went to bidding war has gone over asking and highest on street). I trust my EA and would hope they’d have said if any offers were a concern - they’ve got to sell it to make their commission! Will wait and see I suppose, but I’m keeping at £10k contingency (that’s how much over I feel it is) just incase and deducting that when looking at properties.
With regards to them holding off starting searches I think that’s reasonable. All the EAs I’ve spoken to wouldn’t let us view houses until we’d sold, so whoever we purchase from will almost certainly be in the same situation unless the house is empty. I will not be starting searches etc. until I know they’re completely motivated to sell - so have found somewhere or agree a timescale before considering renting. The market has gone quiet here and I’m happy for our FTBs to wait for us to give the go ahead. It’s giving us time to look and worst case scenario, if they pulled out we had numerous other offers on the house so it’s obviously desirable and we’d hopefully find a buyer ASAP.

OP: I think you are worrying about a problem that doesn't yet exist.

You can get your own valuation - but it will probably cost you about £600. Maybe less, because that includes the whole Homebuyers Report. But they are professionally backed by RICS surveyors.

No, your buyers cannot get one done for free, either.

I think it is fair enough for your buyers to ask what you intend to leave or not, so that they know what might be in with the price, but yes, the fixtures and fittings form will be issued by the solicitors as part of the contract.

Look: a bird in the hand and all that. If you sack your EA and lose these buyers, you won't be able to look at any properties. Just tell the EA that you want to offer the buyers a period during which they need to instruct a solicitor and a Valuation / survey.

Meanwhile, call every EA in your area and tell them you have your house under offer and what you are looking for. Don't wait until they appear on the websites. tell them you are keen and be specific about what you want to buy.

You probably can't change contracts to a different EA until your current one runs out - look carefully at the T&C of your contract with the EA.