So in the current market, what happens when a mortgage valuation comes way under sold price?

[Februarymama]

Hi everyone,

Looking for a bit of advice if that’s OK! We had an offer accepted on a property back in April, and tomorrow is our mortgage survey and valuation. Our accepted offer was 30k above asking. We sought advice from estate agents at the time (independent estate agents not associated with the sale) who suggested the property was worth about 15-20k over asking, so we’re hopeful that this is what the valuation will suggest.

If this does not happen though and the house is valued at or below asking price, we are in risky territory with our mortgage. We’d need to change our LTV rate and potentially not be able to afford monthly payments.

So what happens in these circumstances? We’ve spoken with family and friends who have all suggested that the norm in this situation is for the vendors to accept a lower price more in line with the valuation, but I don’t see how that can apply in the current market where people know that the price they’re offering is above market value (because there isn’t anything on the market and we’re all fed up of being outbid!).

What would you expect to happen? Does us bidding in best and final really mean that.. so no renegotiation regardless of the survey? If that is the case though we might not be able to afford the mortgage at all with the new LTV rate 😕

@Tippexy inclined to agree!

I agree with the above. Sellers need to understand that the market is going to change (and has in some areas) from being a seller's market to a buyer's.

@Februarymama - I think the agreements have varied. Some buyers have managed to find the extra money and seem happy to pay more than the valuation. Others have negotiated, some successfully, others not.
I have to say that I think it is very risky to pay significantly more than the valuation at a time when asset prices are expected to fall.

Our house was undervalued by £16,000 but the bank said they have a 3% buffer so still lent us the amount agreed without increasing the LTV. This was about 2 weeks ago.

I'm waiting for a valuation. I think today's FED rate rise and QT starting will be making lenders nervous. I'm expecting a valuation of lower than my offer.

I think a couple of lenders have already raised their rates and no doubt they will be feeling cautious as you say. I wonder if the BOE will continue with their 0.25pp raises and let us all watch the £ continue to plummet. 😓

@Februarymama how did it go?

@WallaceinAnderland well if that's just me then ive done something right as I've never paid over market value on any property. That's why now I have no mortgage.