Lender valuation and RICS valuation differs by £20k

[areyouhavingagiraffe]

Guys, have been house hunting for several years, and pulled out of a purchase last Summer but to illegal loft conversion. Fast forward to now, offer accepted, mortgage secured, chain complete, searches submitted, and had a Level 2 survey (by a chartered surveyor) a few weeks ago. Have got the survey report, few things which need looking at but no massive issues which would make me pull out. Surveyor has been fab, talked me through things, a few structural things that can be solved, nothing significant.
Lenders valuation was 578K, my offer 582K, was pretty happy with that. Surveyor valuation is 560K, he has called me to say that he thinks I am overpaying, as he has spoken to some agents about two other properties on the same street. He is suggesting that I speak to EA/ Vendors. Guys, I don't know what to do as I am sure they will tell me to bugger off, and I am at the end of my tether. Why are the two valuations so different? I have sold during the pandemic (now chain free), living with family, so I have the spare cash and I guess could argue I sold at the peak also. I will be staying in the property for the foreseeable! Do I just suck it up. After house hunting for so long I am aware it is a SELLERS market!

Yes, got them. I don't think they compare. Properties have smaller extension, one has a sun room, not an extension, they are not in great cosmetic condition, further from station, one sold under Homewise (discounted scheme). I could carry on!

Oh and the layouts for two of them aren't what I am looking for (through lounge) so I would need to remove load bearing wall, repair wall, ceiling and electrics

No bi folding doors on extension, or roof windows. I would have thought these things add some value!

Yep. And I agree with @Puppylucky that surveyors who are independent don't always have their finger on the pulse of the current market.

You're an engineer so you're in a much better position than most to understand structural issues. I'd ignore the surveyor's price estimate and go with the people who actually have a better handle on current valuation

@Clymene , my main concern was significant movement, subsidence etc, but none of this reported.

Wouldn't the lenders valuation be more accurate? We were buying recently and worrying that we may be paying over the odds really does your head in. Once we moved in, that was all forgotten and I'm just relieved we moved when we did, so we could get on with our lives. How much is not having to start again worth? Especially if you are sure it is the house for you.

Just let it go.

Your vendor will tell you to get lost if the lender is happy. The survey hasn’t flagged any issues to actually hang a reduction on. You took a punt with your offer, the bank agreed… unless the market flips tonight in buyers’ favour you just have to accept it.

Plus I agree that he is not an expert in valuations. And that’s bloody weird advice to claim the lender just wants your business, given the number of down valuations at the moment.

weve Been here as the seller

mortgage and estate agents valued house a £100k less than what we felt it was worth

didnt budge and sold in a week

All they do is look at similar houses - they take no account of cosmetics

we simply felt we’d rather not sell than to sell cheaper than we wanted

the buyer went through with it anyway as nothing remotely similar price or standard in area

Thanks all. I am not going to seek a reduction, 3%, got to suck it up. And I am not convinced on his comparisons. I may get a structural engineer to look at the wall, just to get an idea of remediation, which may not be required as could be historic. I think these surveys highlight absolutely everything and anything

I think the surveyor is fishing for business.

Pleased you are sticking to your guns.

If lenders were touting for our business they wouldn't bother with valuations!

I think EAs like to over value and surveyors undervalue. When I put my flat on sale, one EA gave me a huge figure, and tabled all these properties which were sstc for similar prices, but the properties were not comparable (larger, more bedrooms and balconies)

Probably think they are telling is what we want to hear, but it has to be justified with a sound basis

It isn't a huge difference between price and surveyor's valuation. He's valued it at something 3.5% less than the EA and the bank. Does that help you get it in proportion? I think surveyors are often much more conservative than EAs and owners.

If you really like this house and plan to stay in it for at least 10 years then suck it up. If you're comfortably ensconced with family and there's no hurry, I might wait. I'm old, I've seen several booms and busts. This feels to me like 1990, when house prices had gone up crazily, people were borrowing to the hilt and then interest rates started to rise. I bought a property for £85k in 1989 and two years later it was valued at £68k and mortgage rates were 15%. It was a buyer's market, people were losing their homes to the banks and people sitting on a good-sized deposit were able to take their pick.

Thanks @Pluvia . I plan to stay there for the foreseeable, it is a fab location. I'm also not getting any younger, and it ticks all the boxes. The only thing which will make me move is if I finally meet my husband and we buy a nice place in the country :-)

Also, I am sitting on a good sized deposit, and yes I guess prices may go down slightly but rates also going up. Swings and roundabouts. Guess no one has a crystal ball

Sadly no. It will be interesting to hear what it is about the other two houses in the road that the surveyor is going on about.

Location is such an important point: I suppose that's what has pushed the price up. The surveyor won't necessarily be aware of that. If you can afford it, and if you'll still be able to afford it if interest rates go up to 6% or 7%, and it doesn't matter if in 18 months' time it's valued at 10% less than you paid for it, then it seems like a good bet in the longer term. Good luck with both house and husband.

How much have you saved in the months between moving and buying?

Even if this is in effect dead money, as you say, you sold at the peak and have limited outgoings so you are not necessarily worse off in the long run.

Keep I up your sleeve as a useful bargaining tool. You could let the sellers EA know you've had this information but want to push on with the sale and honour the price agreed.
It will make them even keener to push it through as suggested remarketing would be an unwise move. May also help good will when it comes to fixtures and fittings