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 see you are now saying you've had a survey done. I've never known a surveyor who has valued the property at the price it's on the market for. I've bought and sold seven times and on each occasion I've had a full structural survey and the surveyor has valued each house at around 10% less than it was marketed at. Surveyors are always pessimistic because they don't want to get sued. I've bought despite that — and I've never lost money on the property market.

Happened to us, but not £40k, think it was about £9k. Vendors would even contemplate budging; we pulled out as it was a starter property. I think I would consider it if it was really a “forever home” and you have the money above and beyond the mortgage, otherwise you’re starting in negative equity.

£40k on £315k

That's quite hefty I would definitely renegotiate

That is a large percentage based on the sale price, our house was under valued by £40k, but our sale agreed price was £555k.

Is there a chain involved? If so if you try to knock money off that may cause impact down the chain. Think about what price is acceptable to you OP, and try to renegotiate but I doubt if the vendors will or can drop by £40k.

You must know the local area and prices property are going for, I doubt you would have offered £40k more than you think it’s worth?

I hope works out well for you, it’s a really stressful process I know. Good luck.

We had this from both sides.

My DP's house was one of the first surveys done after the housing market reopened last year. The valuation was a joke - originally prices were expected to fall so the surveyor was conservative. Obviously prices rose rather than fell but it got undervalued from £230k to £210k. The CFs came back saying they'd pay no more than £190k.
We ended up selling to a cash buyer for £225k who didn't want a survey as he was going to extend it.

Our onward purchase came back at between £40k and £65k undervalued. It was on at £400k and surveyor said it was worth max £360k when certain issues were sorted. We felt that this was way too far to drop as they'd already begrudgingly agreed £385k. We decided to offer £360k and they accepted after we sent a few extracts from the survey. In hindsight there is much more wrong with it than we expected and the lower figure would have been more appropriate. I'd hate the house much less if I'd paid £25k less than we did .

Op, be careful. Read the survey carefully.

My house was valued at well below the asking price and I had to choose to walk away, at which point the vendor came back and agreed to the lower price.
Since then, I have had to have the house rewired and a lot of other work that had been botched DIY. Lower valuations are usually for a very good reason.

Sorry forgot to mention that the onward purchase wasn't at the same time as our sale - we moved to another house for a while. The reduction in value of the purchase was just down to the house being in much worse condition than expected.

OP, are there any really serious points made on the survey or is it mainly aesthetics.

@Shedbuilder

You say that you've had a Homebuyer's valuation and you also say that you're a cash buyer. You only have a Homebuyer's valuation if you're applying for a mortgage. So something's not right. Did you pay for a full structural survey,? If so, and if the survey has thrown up problems, then you can renegotiate with the buyer.

A lot of Homebuyer valuations are carried out without anyone visiting the house. Some valuers will park in the street and have a look at the front, otherwise they use Google Maps and Street View and base the valuation on recent sales in the area. They can be some way out and because they are valuing on behalf of the lender (the bank or mortgage company) they tend to be fairly conservative.

If you could afford the £40,000 last week and this is a house you really want because it suits you and you plan to live in it, then why not buy it? You might struggle to find somewhere else suitable and in the meantime prices may continue to rise.

That’s not true. A level 2 homebuyers report normally includes a valuation. A building survey doesn’t. A mortgage valuation can be carried out on a laptop (ours was) or a 5 minute visit (like my buyer’s was) but a homebuyers report involves quite a detailed look at the house.

Agree with @Mintjulia. I don't think we paid enough attention to our survey. There were things on there that seemed a bit silly (ie internal doors in poor state of repair - yes, they're really old they'll be fine - turned out they don't even close and hadn't just been left open because of Covid as we'd been told on viewing).
We've also come across far worse things than the survey picked up such as rotten floors with huge chunks of the joists missing.
The electrics and plumbing are also very dodgy and there's a terrible smell of mould/damp that wasn't there when we viewed.

That's a huge difference in percentage terms. Personally, I wouldn't buy a house that was so undervalued. House prices have shot up so much that a lot of sellers/ agents are being over ambitious with their pricing. As a cash buyer you are in a really strong position to negotiate from too.

firstly did you make your offer knowing what work there was to do ?

or has that come as a surprise ? Do you have the funds to do the work ?

I think I would start a renegotiation of the price because you are in a good buying position so you have nothing much to lose ?

IS this a long term house ? if so then the undervaluation might seem a lot now but not so much in the future .

how much do you want the house ?

you could say to the agent - there is a lot more work than we anticpated and it has been downvalued by £40000 - however we really want the house and are ready to proceed so we wish to make a revised offer of XXXX as long as the sale goes thorough quickly.

@GivenchyDahhling

Happened to us, but not £40k, think it was about £9k. Vendors would even contemplate budging; we pulled out as it was a starter property. I think I would consider it if it was really a “forever home” and you have the money above and beyond the mortgage, otherwise you’re starting in negative equity.

They have 100% equity because they've bought it outright for cash!

Subbaxeo, the Op has clarified that they had a survey (presumably by a surveyor) and the survey is valuing the property at £40k less...

Every surveyor I've commissioned has given me an opinion on the value of the property. They tend to be pessimistic because they know that most houses will have hidden issues.

@Shedbuilder, that’s interesting because ours didn’t. We got a level 3 building survey. If we had wanted valuation, it would have been considerably more. It didn’t matter to us anyway as we kind of felt we were overpaying but houses in this road don’t come on the market very often and our lender didn’t care as we have a small
mortgage.I’ll be out of here in a box!

I've always commissioned my own surveyor for a full structural survey and always asked for a valuation. They haven't necessarily put the valuation in writing but when I've asked them what value they'd put on the property they've given me a number. It's always been lower than the price agreed but that's because surveyors are risk averse. I work with surveyors: they always cover their backs.

I agree with you that if you find the right house and are planning to stay in it for more than five years then paying a bit over the odds isn't a problem if you can afford it.

We have mates who were buying a place in West Didsbury in Jan/ Feb but the valuation was lower than the price agreed and what with lockdown and worries that the economy would tank and inflation would go through the roof they decided to drop out. Now they're kicking themselves. They reckon it's gone up in value by £50k and they ended up with a house they don't like as much as the original one. I know it's a volatile market at the moment and prices can go down as well as up, but it's worth bearing in mind.

I'm always of the view that if you offered over asking, against other bidders, and bid high to be able to secure the house then you don't really have much of a leg to stand on if it's undervalued.

This is why house buying & selling is fraught! It's crazy people think like the above.

As I say, I want the maximum I can for my property, certainly wasn't impressed by someone offering high to secure the property and then trying to haggle later on.

Even if there are reasonable reasons why they are trying to haggle later on?

What does the "maximum" even mean?

I certainly wouldn't not negotiate in the OPs position.

The idea that the OP should just proceed & ignore the big difference in valuation because she offered X is crazy imo.

It would have to have been a very serious issue for me to have reduced (a specific problem on the survey that neither of us were aware of and that wasn't already reflected in the price) and if that's the case for the OP then that feels a bit different to just reducing an offer because a surveyor has valued it down. As a few people have said above, surveyors nearly always downvalue and that's mainly to protect themselves.

Yes surveyors are conservative but this is 40k on a 315k property, that is significant. I'm just saying to not stop & question that as opposed to proceeding is crazy. You can disagree.