Homebuyers survey value house £40000 less than agreed price

[fredafortycoats]

Not sure what to do.how can the difference be so much❓do we risk losing the house trying to negotiate a lower offer or just suck it up❓£40000 is a huge difference 😳

I definitely wouldn't pay £40,000 over the actual valuation.
I'd renegotiate and risk losing the house unless it's your absolute dream house, you're intending on never moving again and you can comfortably afford to pay over the odds.

How do I go about negotiating ❓do I start with asking for the £40000 off❓

I would contact the estate agent, tell them your valuation and tell them what you're willing to offer on the basis of that valuation. They can contact the seller then and make the offer.

What can you afford? Why has it been valued so much lower?

I guess you go back to them and say that it's been valued at X for y reasons so you're only able to pay X (or X + whatever you're willing to pay over to secure the house) and see what they say.

Does it give any indication why?

Our house sale was also under valued by exactly £40k at survey, we would not enter into negotiation, and would have re marketed as the prices had risen in that time and had masses of interest in our house.

Our purchasers went ahead at the originally agreed price. However, they were cash from sale buyers, not dependent on mortgage etc.

Depends how much you want the house, if you intend for the move to be a long term one & if to you it represents good value at the agreed price.

Good luck.

Yes of course you start with offering 40000 less. If your valuation came up with this so may anyone else they try and proceed with.

Although depends upon: how quickly houses are selling where you are; how much you really want the house so are you willing to meet part way?; how much you were planning to do to the house when you got it - if it's completely renovated to a high standard already then the valuation means you will struggle to add value, if it's a project to improve plus live in for a considerable time then you'll likely cover and exceed that value.

I would just say to the estate agent that the valuation is 40 grand under and how would the sellers like to proceed (as you're not going to cover that yourself).

But be prepared for the sellers to get cross and pull out.

That's what my concern is,them telling us to get lost.It would be on ongoing problem fo them though wouldn't it as other surveys would show the same

@fredafortycoats

That's what my concern is,them telling us to get lost.It would be on ongoing problem fo them though wouldn't it as other surveys would show the same

Of course it'll be an ongoing problem for them but they'll still push for the asking price and someone will be willing to pay it in the long run.

The question is whether you're willing to pay it.

It’s a side effect of this market. Things are valued at £100-150k more than a year ago, and/or people are making insane offers over. Someone told me more than half of houses are being down valued. I think it tells you the lenders think that prices will shortly drop or stagnate to the degree it’s too risky to lend against current values (the market may not subsequently agree but no one can know for sure).

Your options are to negotiate and if they refuse either fund the shortfall in cash yourself, or pull out. Some vendors will just remarket at the original price, and only accept cash buyers who don’t need a bank valuation.

How much did you offer, and what issues did the survey highlight?

@fredafortycoats

That's what my concern is,them telling us to get lost.It would be on ongoing problem fo them though wouldn't it as other surveys would show the same

It won't necessarily be the same on subsequent surveys unless there is a solid, tangible reason why.

We had exactly the same situation earlier this year on a prospective purchase, a house that had been on the market longer than usual for the area, vendors refused to budge. As there was nothing else on the market for us we stuck with as they hadn’t found anywhere, however we jumped ship when something more realistically priced came along (and we were in danger of losing buyer if had waited). It came back on market at slightly reduced price but still 30k over valuation and has since had another sale fall through- which is three in total . They may get their desired asking price eventually but it’s now 10 months and waiting.

You can ask for another survey I think if this is affecting how much you can borrow? At least then you know if it's right or if the valuation is out of step? How do you think the price compares to other recent sold prices.

soupdragon the lender doesn’t need a reason if it’s a down valuation, other than they think you’re paying too much and they won’t fund that risk. The house can be a blemishless new build and still get downvalued to that level.

What about your lender’s survey? Or was that it?
Surely you can’t proceed if the mortgage company considers it worth less… unless you’re cash buyers of course

We are cash buyers,hence the dilemma.I know if we were getting a mortgage it would have been rejected.But do I need to pay £40000 more just because I am a cash buyer❓

Is this your homebuyers survey?

What type of valuation did the lender do? Did they visit in person, or was it desktop? Did they agree with the price it was being sold for?

It's often possible to get another surveyor (or lender, when it's the lenders' valuation that is too low), and they'll come up with a different valuation. Whether that would close the gap on £40k depends on why it's been downvalued to that extent. If it's a big issue, everyone might come in similarly. If it's the surveyors opinion of the market, they may not.

Our next-door neighbours are selling for £890k. The buyers' first choice lender valued the house at £840k and said the increase wasn't viable as it was the effects of the stamp duty holiday... they changed lender, made a new mortgage offer and it was then valued at £910k. Whether that was smart on their part is a different question!

The survey was more thorough than I expected it to be,it took into consideration the state of the house,other similar properties in that area and outlined lots of things that needed doing.it has been along term rental so needs lots of updating.

Can you afford to do everything that needs doing if you buy the house at the asking price?

It will be along term process

As a cash buyer, you're probably in a better position to negotiate. If it's a mortgage issue, the vendor can think a cash buyer is the answer. They may be less bullish with you as you are already in such a strong position.

I'd decide how much you are willing to pay, taking into consideration affordability, the current market, and the opportunity cost of missing out and losing a house you want. You may end up meeting the vendor half way.

What percentage is the undervalue? £40k on £250k and £40k on £2m are a bit of a different calculation.

£40k on £315k