Advice re: renegotiating price

[AnxiousMover]

Hi folks,

After some advice please. Our mortgage valuation has come back lower than the price we’ve agreed to pay, on a property we went sale agreed on over the summer. We really like the house and everything is progressing well with the sale, short chain and we are hopeful this is going to work out having been burned a few times in this process.

The bank will still loan us what we need as our deposit is relatively big so they are happy with the loan to ratio. So we don’t have to renegotiate the price but we’d like to.

The valuation is £30k lower (on a £700k plus house) and we would ideally like a reduction of £10-£15k. So to meet in the middle basically.

The house was on the market for quite a while before we made our offer, like several months. We don’t know though if the owners can even afford to reduce the price based on what they might need to afford their onward move.

So...we don’t want to scare them off and we don’t want to lose the house, we also don’t want to overpay and sabotage ourselves whenever we come to sell.

Any advice on how to proceed...?

Stick with it.

House price inflation is currently about 10% annually. According to Nationwide, house prices increased by 2% in August alone, which is already 15k on a 750k house. If this house falls through and you have to find another, it's likely to cost you a lot more than that.

Thank you! That's a useful perspective. Is it worth letting them know about the valuation...I'm also thinking about the final few hurdles we're likely to face, an indemnity here and there and trying to leverage some goodwill if that a direct financial benefit to us!

Did you bid over asking price?

You also may find another banks' surveyor will value it higher (or lower) so the other option is to try another mortgage provider.

We didn't - we offered asking price.

We don't need to find another provider as the bank are willing to loan us what we need to buy at the agreed price - we're just having a slight wobble that we are overpaying because the banks valuation is lower.

I'm tempted to agree with @WaggleToWarlock. Rocking the boat at this stage for the sake of £10k may not be worth it. Check out the 'gazundered before exchange' thread to get a sense of how people feel about this! Your buyer may pull out if you push it.

In your case I may make the vendors aware of the undervalue but say that you will be continuing in good faith. It may give you some leverage and goodwill later and make them feel grateful about how reasonable you're being!

We are having such a difficult time trying to buy something at the moment, if you have a short chain and love the house, don't risk it if you don't absolutely need to...

Thank you! Yes this all makes sense.

I'm selling a house that was undervalued when valued. It's not tho as we had several offers at that value. It's just the comparable evidence hasn't filtered through yet. There was a sharp jump up in prices where I'm selling.

I’d take it with a pinch of salt. Houses around here have gone up in value in very recent months and I don’t suppose mortgage lenders have kept up (most are pre-completion stage currently). It may be the same where you are. Also, I wouldn’t risk the deal for a potential £10K reduction, which is small in your case.

That’s all true too re: actual value, thanks folks.

I have a valuation degree. The valuers aren't being "wrong" as they need supporting evidence to justify their valuations, to avoid being sued. There is a time gap as sales complete, it was an unusual surge in prices due to the various factors this last year. Well, that's my theory...

Sometimes you need to be pragmatic if you want the house.

We probably overpaid by about £5-10k on our house. We knew this at that time. We'd had two sales fall through, and we were in serious danger of losing our buyers and missing the deadline of moving in time for primary school applications.

The sellers rejected our first offer and asked us to up our offer. We could have held out and tried to pay less. But we decided it was the pragmatic decision. I do feel cross about it as they did well from our money. I know from other house sales on our street that we overpaid. But I don't regret it. We moved, which is what we wanted.

The definition of value is "what a willing buyer will pay a willing seller."

It's very much both objective, linked to location, condition, etc but also subjective, so personal circumstances, time contraints, relative power between all involved. There is no one value, it is dependent on the people involved.

Long before recent events my husband and I remortgaged our house. In the space of four months we had valuations £200,000 difference (house £1.8-2m, depending on the valuer)! Even on my current street of similiar terraced victorians mostly extended out back and converted lofts sold prices vary between £900-1.25m, with no discerning reason why one is worth any more than the other. So while a valuation is based on comps, it is not exact.

My partner and his ex had their house valued twice last year, it was down-valued by 15% in only a few months, despite the fact that on the latter valuation work had been done which would have also increased the value.

If you want the house, I'd stick with it. The market is volatile at the moment and it will all even out in the end (assuming you intend to own it for some time).