Mortgage Valuation - likelihood of down-valuing?

[TranquilBlue]

We haven’t bought a house for 25 years, but are just about to.

Mortgage application is in and the lender’s surveyor just called to book the valuation survey next week. They stressed they are a RICS surveyor. Does that mean they will be doing a full structural survey?

Our last two purchases, one a much older house than this one, we had full surveys done ourselves, but the lender valuation was a very quick survey, akin to a homebuyers report. Although admittedly both were in the 90’s, so a long time ago.

Has anyone had a lender valuation survey recently, since they started tightening up on lending? How comprehensive was it and did they downgrade the value.

(For info, there was no bidding war or anything as it’s the purchase of an inherited share and the price was agreed after a full structural RICS and 3 estate agent valuations last December.)

I am worried, based on a few stories I have read re banks down-valuing sale prices, that they may down-value compared to the previous surveyor and that is going to cause family friction, because we will only pay the percentage of the true value as agreed by the bank, because that’s it’s true valuation, therefore what they have inherited, iyswim. (Obviously same goes the other way and if, by some miracle, they value higher we would adjust their percentage upwards accordingly. We just want it to be completely fair to both parties.)

They will be doing whatever survey your lender has asked for, which, unless you have requested (and paid) for any extra will be a basic valuation, try not to worry

Thank you. I am more worried about a family falling-out than financial issues. It’s complicated by the fact the house is our home and we have lived here for almost 20 years. It’s all been extremely stressful so far and relationships are very strained at this point.

We had our own RICS/Level 3 survey done in December, as part of the inheritance valuation process and they didn’t find anything scary. Some recommendations for the next couple of years, for which we decided to absorb costs, even though we might try to renegotiate if we were buying from someone else. We agreed on that survey’s valuation in the end, as the estate agent valuations were all over the place (as in £50,000 difference between highest and lowest, with the highest saying it would go to a bidding war and go for more if we chose to sell).

I have heard quite a few stories of houses being down-valued based on the lender’s valuation recently and if that happens, renegotiating would stir things up again. Just want it all done and dusted, as it’s constant stress, but everything is taking forever.

We are in same boat - my mortgage broker rang me today to say the valuation is happening on Thursday and just panicking - I’ve looked at homes around the area and it seems within the range - also we got for £5000 below the asking price (that had already been lowered) but it’s the waiting! I hate all the waiting xx

@WoWsers16 it’s horrible isn’t it, all the waiting and feeling like you have no control over what’s happening?

Ours looks like it’s in range price-wise, but there are no other houses like ours locally. Our road and postcode include property starting from ours (which is arguably the cheapest locally, as it’s quirky, tiny and needs A LOT of work done) to much higher end, impressively extended and renovated 3 and 4 bed semis and several multi-million pound properties. (We are Midlands, not London and our area is a bit of a property bubble.) The closest in style, size and standard to ours did sell for our agreed price in November last year, but only finalised this February, so on the sold price listing it looks like it only sold a couple of months back.

I have literally no idea what to expect. Trying to stay busy and not stress, but it isn’t easy.

Good luck with yours, hope it all goes smoothly from here.

Just realised where we may be stuffed. The executors just pulled a figure out of thin air, for Land Registry purposes, when adding the beneficiary names to the title deeds. That figure is £30,000 less than our RICS valuation and £49,000 less than our highest EA valuation. No other history online and no previous value with the Land Registry as the property has been in my family for so long.

If the bank’s surveyor’s starting point is that figure, it could really mess things up

Can you contest a down valuation if you have evidence and a legitimate reason why it could be wrong?

I think you can contest it

Martin Lewis money saving site has a great forum about mortgages and things so well worth a look!

Our valuation came through and it is the value! Phew!! X

Fantastic! I am really pleased for you. 😀

Another week to wait for us, so we’re using the time to do a deep clean, sort and tidy and fix a couple of things that our own surveyor noted, as minor and of no significance, but might help with the overall impression.

Waiting is totally the worse!
less than 24 hours after valuation come through we have the news our mortgage has been approved too!! Wahooo!!

yes we are using this weekend to have a bit of a sort as the survey on our home is next Friday x another hurdle!!

Hello we got the valuation back this week and was shocked to see it less than 20k of the price we offered and we thought we were getting a good deal
we had to re-negotiate with the vendors

We’re remortgaging so different but had to have a valuation. I went off zoopla and the surveyor came and said I’d underestimated but he was happy.

@Parkingt111 Did your offer the asking price or less?hi

@NeedAHoliday2021 Bizarrely, given we are buying someone out, ours is classed as a remortgage as well, because I already own 50% equity.

Zoopla’s valuation doesn’t seem to know what to do with ours, as it hasn’t been sold since the early 70’s and there’s nothing similar in the area. We agreed a price based on three EA valuations and a level 3 RICS survey at the end of 2020, so I’m hoping we won’t be too far out.

@TranquilBlue we offered 2k over asking price
I believe there were higher offers but the vendors went with us as we had a big deposit and chain free. it's a crazy market where I am with houses going a good 10k over asking price
but it's a 4 bed on a huge plot so the downvaluation certainly came as a suprise

@Parkingt111 I don’t understand how houses are being valued at 20k under asking when similar properties in the same area are being fought over and going for 10k plus more.

Our area is the same, it’s always been a bubble/hotspot, due to local schools and now nothing is coming on the market, so when something does it’s a scramble and fight to highest bids. I honestly have no idea how they are going to value this house in such a weird market.

We’re fortunate that we have the equity, but if it comes in lower, it will destroy family relationships unless essentially we pay the other party what they want, which will then, effectively, be over the share they have inherited and I will inherit less than my share. I would just do that just to keep the peace, although truthfully, we need the extra equity to extend and do other work, but as it’s dh who is actually paying, he has said absolutely not, so I’m stuck in the middle.

@TranquilBlue ours was built 19 years ago and we have been here 5 years, fairly standard new build style 4 bed family home, so zoopla was in line with others in the town. Next door sold for £100k less than you’d expect but that was an inheritance that was then sold to a family member cheaply so that didn’t really help get an accurate price. With the equity you have you are fairly low risk I’d have thought.

We are nervously waiting on a house remortgage to buy land.

I think you may have an issue here @TranquilBlue if this property exchanges for more than the probate valuation, the tax man has years to come back on that one

Watching as we’ll be in the same position very soon. I’m pretty nervous as we paid waaayy over asking price but that’s what everything else in the area has been going for so didn’t have much choice.

@stayathomegardener It’s far more complicated than that. The propery has been held in a fixed term trust for a long time, so we have only just inherited.

Obviously the probate valuation was done way back when the executors were dealing with the will, but we only inherit, ‘absolute’ at this point, once the person who had ‘an interest’ in the property for the duration of the trust had to legally hand it to us at the end of the fixed term. We have had tax specialists involved, so we understand that side of things.

The value the trustees added to LR when they transferred the deeds into to my and the other beneficiary’s name in February, was just their best estimate, as no previous value had ever been added to LR and LR wouldn’t complete the transfer until a value was added. Unfortunately, it was way off the survey and EA valuations.

It sounds hideously complicated.

Well the valuer has just left. No major issues found.

They said they then take three recent sold prices from our street and evaluate ours against those to come up with the final value. That will be interesting, as nothing of a similar size has been coming on the market in our area for such a long time. Estate agents were begging us to list it when we had our valuations done just before Christmas, as there are no three beds for sale in the area at all, so there is a bidding war and they are gone straight away when they do come up. No three beds have been listed since then either.

There are three houses that sold between September 2021 and February 2022, but only one of those is even close to similar to ours. They were all on for our RICS value or considerably higher, but their sale prices aren’t listed on the internet yet. I suppose they may have access to the sold prices professionally though, as they have all completed and the new people have moved in.

She said the report will be submitted to the bank today, so I guess that means we won’t hear until next week now.

Thought I should come back and update. We finally got our mortgage offer through this morning. It has taken forever for them to process for some reason, but there was no problem with down-valuing and they have offered what we hoped for. Huge relief!

You got lucky.
The house we bought was down valued by £120k. We ignored the survey and bought it anyway

I think it helped that we are in a longstanding property bubble, so prices are always high here and currently holding fast with a shortage of our size house in particular. Also having a relatively low LTV makes banks less jittery.