Downvaluation help!

[Starseeking]

I've just received a downvaluation on the mortgage for the property I'm trying to buy. The difference is £30k, or 4% of the value I had expected, and I can't bridge the gap.

The house 4 doors down sold for £10k more last year, and a few others locally were £10-30k less last year. Any new properties in the vicinity are coming on for £50k more than what I've agreed, so basically beyond my budget.

Anyone had any success either appealing a valuation with the surveyor, or obtaining a reduction from the vendor? And if so, what did you say to get it?

We just had the same.

Apparently lots of properties in our area now getting downvalued when they get to valuation.

In our case £20k difference.

Thing is, once you get that lower valuation, it goes on the system. So if property goes back on the market or to another buyer, their lender can easily see it. They are unlikely to then agree to increase it. So unless you have a cash buyer or someone able to chuck that much more in as a lump sum knowing the property isn't 'worth that'

Depends what part of the country you are in too. Obviously from reports on here if you're in Cornwall you can probably expect to go way over a valuation?! Other areas much less likely.

Thanks for sharing. Did you have an extra £20k to plug the difference, did your vendor reduce the price, or did you walk away @ArtOfTheImpossible?

We're in a chain of 3 (FTB, our buyer, and us) and both properties being sold (through same EA) were downvalued.

Our house came back £20k under and our buyers asked us to reduce the price but we said no. They decided to continue so were either able to cover the shortfall themselves or moved the mortgage into a higher LTV bracket.

Our buyers buyer valuation came back lower as well but with the help of the EA they were able to get it increased (I don't know the figures involved) I'm assuming that the EA provided evidence of other sales etc to back up why the price agreed was realistic.

As it happens the FTB then decided to pull out anyway so our buyers had to go back on the market. They have found another FTB but we haven't had confirmation yet from the agent that the chain is once again complete.

We're still working through it, not quite sure where it will land.

That's interesting, if you can provide proof other houses have sold for similar, there might be a case for challenging the valuation.. I don't think we've considered this yet so useful thank you.

Ours was downvalued £30k and I wasn’t prepared to pay “more than the house was worth”. I wasn’t bluffing when I told the sellers it was a case of accepting the lower price or that we’d pull out. They accepted the lower price. Risky business overpaying IMO.

Rejoice. You've been saved from over-paying!

The trouble at the moment is that Land Registry online sales data is a bit patchy, due to delays from the pandemic.

Similar properties are now being advertised £50k more than mine has been agreed. I genuinely don't think it is overpriced, just that there is limited data available.

If I'm not able to secure this property, which is a 10-15 year home for us, I can't afford to add another £50k to buy the same houses, and will be priced out. Currently living with family following a relationship breakdown and desperately need to move on!

We lost out recently on a house that the EA said it was pointless to go way over (we offered 20k more) as it would be downvalued (apparently happening a lot).
We could take the 20k hit if valued under that but not much more so I thought pointless to offer much more.

But the sellers went with the highest offer so now I'm thinking some people are doing this & hoping to renegotiate at a later date?

Ordinarily I would agree with this, it's not the case for houses in this still hot market in my area (London).

Had a viewing today (in Cornwall) and the agent said that they were having lots of sales fall through due to downvaluations/ people getting cold feet about stretching themselves. He also said that where a few months ago they were getting 10+ offers per property, that's now more like 3 or 4.

I'm looking for somewhere long term so not that fussed if I overpay a bit - I'm more worried about leaving myself sufficient savings for any problems.

I was very confident in my overpayment because it’s a house I can live in for many. But there are more Downvaluations, and capital economics changed their predictions for the next two years. Starting to quiver a little

But, it’s what the BANK is willing to lend YOU on the property.

it doesn’t go on any ‘system’, someone else could offer asking price and have a salary/savings/deposit far larger than yours and it would be less of a risk that if it were to you.

it’s personal.

I was very confident in my overpayment because it’s a house I can live in for many. But there are more Downvaluations, and capital economics changed their predictions for the next two years. Starting to quiver a little

it's uncertain times isn't it. We are looking but i've dropped my budget as feel nervous. A month ago I was thinking max budget.

A downvaluation isn't about what the bank is prepared to lend you as an individual, or personal affordability, it's what they deem the value of the house you are buying to be. I presumed this was done on comparables etc, but I'm told they also do it on house price index plus general growth then chip a bit for "various factors unknown".

I know this to be fact, as the previous property I was going to buy (vendor changed their mind) the same bank offered me a mortgage of £60k more than would be for this one. Since then my salary has increased by 5%, and no other circumstances have changed.

Other buyers must be using cash or have a huge deposit (mine is only 20%), and making up the difference when valuations are coming in lower.

This is what I'll have to do if the second valuation comes in the same; I won't have a choice, as I'm already at the top of my budget. The mortgage payments will be 23% of my net monthly salary, and I don't want to go any higher in the current climate.

Could you not take a higher loan to value product out? So based on what the valuer has valued it at and what you want to borrow what is the LTV?

Lenders can't see previous valuations that have been carried out by surveyors

I think changing the LTV is still based on the same valuation number, if you see what I mean e.g.

80% of £800k = £640k
85% of £800k = £680k

Base number = £800k = bank valuation and doesn't change in both cases. I have to stay with this bank as I am porting an old product for the rate (plus the vanishingly small hope of getting my ERC back).

All that happens is you pay a higher interest rate e.g 80% is 1.49, however 85% is 1.99.

None of those numbers are my actual, but hope it illustrates the points @Jmaho.

Other surveyors can see the old valuations apparently. Someone else told me that there's 3 main firms who have the lenders valuation market sewn up across the country, so the same system will be accessed by the same people. Is that not the case @Jmaho?

Personal to the situation; not the property or you, just because they’d offer you X on house A that is worth a different amount that doesn’t mean they’ll still lend you X for house B.
What you are is a risk, when you borrow, that risk is ‘weighed up’ using the value of the property they see on that day.

When buying a newbuild for example;
Person A has 5% deposit, U.K. average salaries, using FTB incentive from gov.
Person B has 20% deposit, treble U.K. average salaries, no incentives.

same bank down values one but not the other, there are no prices for guessing who didn’t get downvalued..

You’re asking them to lend you 80/85/90 whatever % of the value of the house, they NEED to be able to recoup that at auction if it all goes wrong.

A surveyors valuation is based on more specific things (see RICS, Red book etc). there will still be error margins +/- X %, it’s not an exact science. But in the bank’s offer and valuation, it’s individual to the applicant and the property. As others have said they need to get their money back in repossession and sale.

example- property offer price £110,000. surveyor’s valuation of 100,000.

so the bank says ‘ok so the house is worth somewhere between 90k-110k’.

If your deposit is 80k, and are only borrowing £30k in your offer price, even if the house is only worth 90k, the bank will still get their money back. (90k vs 30k)

if your deposit is 10k, the bank would have to lend you £100,000 so the risk is much higher because they risk not getting their money back in a repossession. (90k vs 100k)

the sellers of the house don’t necessarily need a full cash buyer, they might just need someone with more cash.

I see what PP are saying about the properties and valuation, though my finances would seem to overcome that hurdle.

The difference in sale price agreed is 4% or £30k, and my deposit is £150k (20% of property price agreed) as well as my annual salary being close to deposit amount, surely the downvalue I've experienced is well within acceptable margin of error? Also seems to be enough distance for the bank to recoup their lent money, should I fail to repay.

I just need to be able to secure this house, as otherwise it'll take me at least 6 months to save a decent enough amount to catch up with the market again, and I'll have to continue with my logistical nightmare (working 1 hour away, 3 days a week in the office plus two different school runs).

If you can't afford to cover the difference you will need to negotiate with the sellers. Banks have become more cautious about lending recently for obvious reasons.

Lenders can't see previous valuations that have been carried out by surveyors

Our mortgage adviser who is very experienced, says they can, there is a system the valuers all use. That's as much as I know.