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 😊

the above message saying
"OP: I think you are worrying about a problem that doesn't yet exist."

wrong, I have sold recently to almost 20% over asking price(London zone2) to FTB.
received 10 offers within couple of days, all of them FTB.
luckily the buyer had a massive deposit, still had to drop the price by 2% to plug the difference, buyer was honest with me from outset how much deposit has he got..etc.
if your buyer have a healthy deposit and willing to pay, then it's fine.
however, some buyers think since it is valued by the bank, that's the only price willing to pay.
I believe the latter is wrong, you don't overbid to secure the property and scatter the competition and come back with bank valuation.
you bid to buy not to negotiate, unless survey throws unforeseen things.

@mumsy27: I disagree, if bank valuation is lower, then as a buyer I really WOULD expect to renegotiate or seriously consider pulling out. Whether that’s right or wrong is debatable and depends on whether you are buying or selling at the time ...

That’s why the deposit makes a difference as if it’s goid bank will tend to let the valuation through

Our house was undervalued by our buyers surveyor, by a substantial amount.

They did try to get us to come down in price, we said no, our house like the sound of yours, was nothing like anything else in our road etc, they paid the original price we agreed, but they were cash buyers, like all of us in our chain, so we didn’t have complications of a mortgage involved.

Good luck OP, I hope everything goes through ok for you, it’s such a stressful time I know.

@FAQs we are very motivated to sell, we just can’t sell if we are going to get under the asking price. We literally can’t find any suitable properties to move to that are below our budget and our budget depends on getting the asking price (or very close to it) for our house.

rainingbatsandfrogs It has just dawned on me, our buyers don’t even have a mortgage promise yet! They have a broker who has advised them what they are likely to be able to borrow, but that’s not the same thing as an actual agreement in principle! So until they get the AIP I doubt they will be able to get the mortgage valuation done!

And my EA has advised them to hold off!

We did mention our concerns about them not having an AIP to our EA, as we had told our EA at the point of offer that we would agree to take our house off the market for our buyers provided they produced their ID, evidence of instructing solicitors, and their AIP. Our EA said he was satisfied with their broker’s mortgage advice, and advised me against pushing for more at this stage in case it put our buyer off.

The more I think about this the more put off I am! What’s the point in me searching for the perfect property, putting an offer in, getting emotionally invested etc when my buyers don’t even have a proper AIP or mortgage valuation...

I would tell your agent you are moving in to rented so the buyer can proceed. Even if you don’t intend to you can still say this. It means your buyer will get the survey done or at least check their finances whilst the other potential buyers may still be interested.
As for fixtures and fittings you can say it is too early to say as it depends on what is in the new property you move to. Buyers can ask anything, you don't have to answer. Of they particularly want something you could offer to sell it to them.

@clementine8 We did discuss with my EA the possibility of us telling our buyer we would agree to move to rented. Our EA said he would have to get us to sign a written guarantee that he could give to our buyer. Is that normal? Is it legally binding...?!

@DespairingHomeowner It's debatable as you said.
Then it is pointless to bid and increase the offers and then use the bank valuation at the end.
Purchased recently, received desktop valuation, it was undervalued. The owner extened the property by 130sm2 and the bank not even aware of the improvement

@mumsy27 What recourse is there if a mortgage surveyor undervalues your house because they haven’t bothered to research it properly? Can you ask them to come and re-value it properly, taking all your improvements into account...?

I think it sounds like your agent is up to something crazy all through this! It's normally all the other way round - the onus on the buyer to prove they can finance the purchase whichever way they intend to, the onus on them to get cracking with solicitor, valuation etc.

It depends, when I was buying my house, the valuation was £20k lower than the price. The bank just wanted me to increase my deposit. Problem solved.

The actual deposit increase was only 10k, as I wasn't borrowing the very very maximum in the 1st place anyway.

If your buyers don’t have a mortgage in place, don’t take your house off the market. Keep allowing viewings until you have an offer from a proceed-able buyer.

You may have over developed the house for its size / location / type. We’re planning on spending £75k+ on a loft conversion (for our famiy’s needs) but are pretty sure we won’t add that to the house value as we’re a semi and there is a value ceiling, and we’re pretty close to it.

Just sold a house in similar circumstances, although ours wasn’t even any better than the rest of the street, house prices have just gone bonkers.

I was terrified and convinced we’d have to reduce the price once they got the survey back. It wasn’t an issue at all and we moved last week. Hopefully it will be the same for you!

[quote Pegs11]@mumsy27 What recourse is there if a mortgage surveyor undervalues your house because they haven’t bothered to research it properly? Can you ask them to come and re-value it properly, taking all your improvements into account...?[/quote]
Not much to do, unless the buyer decides to go with another lender or increase their deposit.
You can opt for a "cash buyer"

Just wait and see, what will be will be and honestly its out of your control. Mortgage companies often do just drive by surveys but presumably they will have the sale details of your house so will be aware of renovations and houses may be going up in value in your area.
Start house viewing for yourself, could you accept a lower offer or will you be going to top of your budget and are relying on offer you received?
Annoying your buyers have been told not to proceed until you've found somewhere -you arent going to find out until you have put in an offer for somewhere yourself.

@Rootsmanouvre

Just sold a house in similar circumstances, although ours wasn’t even any better than the rest of the street, house prices have just gone bonkers.

I was terrified and convinced we’d have to reduce the price once they got the survey back. It wasn’t an issue at all and we moved last week. Hopefully it will be the same for you!

It is crazy out there, to be fair I didn't expect to get 20 viewing in 1 day, 12(revised )offers with 8 over asking price, mostly from FTB. They were all young and nice,pleading to pick them. I just told them, bid what you can afford, what you think is worth, the bidding went mad to the point I'm not kidding I was worried. How do you solve an issue like that. I know it is hard for FTB, but market dictate the price.

I would be seriously pissed off with the EA and be having a frank conversation with them. Were any of the other offers from cash buyers or those with AIP? If so then I’d tell agent:

• current buyer has fixed period (eg 2 weeks) to sort out mortgage, instruct solicitor and survey. You will not start looking for a property to buy until all this is in place
• ask agent to let your ‘runner up’ buyers (if they’re in a better position) know that there’s a chance your house may come back on the market after this fixed period and if so that you will accept their offer
• remind the agent that they work for you, not the buyers

Firstly, your agent doesn't sound like they have your best interests at heart. I think you should be having a conversation with them about this and if it can't be resolved I'd be looking to move to a different agent who does. I can't believe they've told you to take your house off the market for someone who doesn't even have an AIP in place!

Regarding valuation, we have just been in this situation. Our buyers lender downvalued our house; they sent someone round to value mid-December and then took until beginning of Feb to confirm their decision to buyer! We disputed and they have now revalued to the original amount, but it has added on an extra (very stressful) month to the whole process. Your buyers need to be getting their finance sorted ASAP, some lenders have got massive delays at the moment because of the stamp duty holiday and the sooner they join the queue the better. I think the downvaluations are common at the moment as prices are rising so steeply due to this stamp duty holiday, but also because the lenders surveyors often don't have the knowledge of the local market so they play it safe. It doesn't mean your house has been overvalued necessarily.

We are FTB and we wouldn't have been allowed to view any houses and absolutely could not put in an offer without an AIP and that's across about 5 different EA. Very strange that they've told them not to even get an agreement in principle.
It's weird but it sounds like the EA don't trust you for some reason? Definitely not acting in your best interests. I would ask to see proof of AIP within the week or put it back on the market. For what its worth, it took us 5 minutes to get an AIP from a broker so a week is plenty of time.

I have never heard of that from an EA. I would be speaking to them and saying to them and letting them know you are very concerned with their tactics as you are their fee paying client but they appear to be doing everything in your buyers best interest. I would also be reviewing your contract with them and seeing if you are tied in for a fixed period or if you can move to another agent. Maybe if you view a house with another local agent ask them if as a buyer with them would they do all this for you and see if they think its normal.

@meanmrmustardseed We may have over-developed our house a bit for the location... although our new neighbours opposite have just spent a small fortune renovating theirs - more than we did on ours - so it seems we did kind of set a trend for renovating (and at least now we are not the only house in the street who have done it!)

But whether we had or hadn’t spent so much on renovating, we still need to achieve a certain sale price in order to buy the kind of property we want... otherwise there’s no point in us moving at all, we may as well stay here if we can’t actually get somewhere better than what we’ve currently got! I am shocked at how much properties are... we can only move to somewhere with similar value to ours (and the only reason we want to move is because we hate our neighbours and they’ve made our lives a living hell...) so I thought well let’s move out of the city, we can get somewhere like-for-like but in a quieter area, and such properties are bound to be affordable if we are moving further from the city and into some backwater or other... but no, three are not, they are flipping expensive and we are really struggling to find somewhere!

We found one house that was just perfect and we absolutely fell in love with it... we stretched ourselves so hard so that we could offer the asking price... so it was very disappointing when our offer was rejected.

It really is a seller’s market at the moment, and as we are not cash buyers ourselves and they seem to be hoovering up the few decent houses there are out there, I’m beginning to suspect it’s maybe just not the right time for us to be trying to move, especially when our own sale seems so precarious and we’ve got a crappy estate agent who isn’t doing anything to help push our sale through. Maybe it’s time to give up and find some way of trying to tolerate our bloody awful neighbours 🥺

@CityDweller we did have a couple of other offers, and actually they were from cash buyers, but they were so far under the asking price we had to decline...

We cancelled a tonne of viewings because we said yes to these young FTB who offered over the asking price... on the basis of them being proceedable (AIP in place, ready to arrange their survey etc) and when we discovered they hadn’t actually done these things, our agent reassured us they were good buyers and made us feel we would be reneging on our deal if we insisted on them having an AIP because they had taken advice from a broker and that was good enough so far as our EA was concerned. Think we were a bit naive as we let ourselves be guided by him, as the “expert”... but now it really feels like he is completely mental, and after hearing what you guys have to say I’m seriously considering pulling out of the sale... it just sounds like it’s going to be even more of a ball-ache than house sales were before Covid came along and added all these further layers of ball-ache. Besides which we are really struggling to find somewhere.

We are ftb and have just had an offer accepted. We had an AIP in place. The sellers estate agent told us to instruct a solicitor and apply for the mortgage now, which we did within 2 days of putting in the offer. However he also advised not to get a survey until the sellers have found somewhere and have had an offer accepted.

I thought this was sensible. From my point of view the mortgage offer only lasts 6 mths from date of application so if they don't find anywhere in that time and we've paid out for a survey we'll be out of pocket by quite a bit.

Also, as I said our offer on the house we fell in love with was declined and we were heartbroken... but before we found that one we had put an offer on a different house but had pulled out when we realised it had been massively over-valued... the current vendor only purchased it a year ago, and it was for 15% less. We initially thought it warranted the price rise as we were told by the vendor’s sneaky EA that our vendor had completely renovated the house in the one year she had been there... then with a little due diligence we discovered that this was a complete lie and all the renovations had been done before she bought it! So she’s done nothing at all to improve the property, yet was expecting to make a 15% profit on it in just one year. When we discovered this, and also compared the price of the property to others in the street, we went right off it!

@Alexandrapeppernose did your EA advise you holding off on the building survey? Or the mortgage survey (valuation)? Or both? Building survey I can understand. AIP and mortgage valuation I can’t fathom.

Our buyers don’t even have an AIP, just a letter from their broker saying they are “likely to be able to borrow x...” but I don’t think that qualifies. Why on Earth can’t they just go ahead and get the AIP? Like you say, it doesn’t take long!

Anyway we are now considering washing our hands of the whole thing and waiting until the market has stabilised a bit.

I must say, I did think the valuation would be free for a FTB (it was for us when we ourselves were FTB three years ago) so didn’t see any reason they couldn’t go ahead and book it, especially as the current wait time for valuation is averaging six weeks! I guess I understand a bit more if it costs them a lot of money to get it done. But I really though banks waived the valuation fee for FTB. Perhaps that’s another thing that’s changed since Covid.

But still ... no AIP and I don’t feel confident in my EA at all anymore...

Another thing he said to us was that our buyer was prepared to wait as long as it takes for us to find a property, but within a few days he’d started applying the pressure on us, saying our buyers were being very patient with us and we had a short window to find somewhere (about 4 weeks) or they’d probably start looking elsewhere. It doesn’t take 4 weeks to find a property in the current climate, there are so few around, we were expecting it to take a long time and were shocked when our agent said we had four weeks until our buyer starts getting twitchy.

Honestly, what is going on with this EA!