How common is down valuing?

[MsClavel]

We are trying to make a big move 3 hours away from where we currently are to be closer to family (we have two young DC). We accepted an offer on our house several months ago but really struggling to get an offer accepted on a house.

We have recently offered on a smallish house with a great location. They have multiple other offers in place. All except ours is a cash offer, i.e. we're the only ones that need a mortgage. However we have one of the higher bids. It is still below what we could afford, so we intend to offer more as it's the only thing we can do to make our offer more attractive. We have a decent deposit, the ltv would be around 62%.

However, I'm worried that the lender could down value the property (obviously the lenders may be nervous about this too which is why cash buyers have a big advantage). But I don't think it would be a big risk to the lender because of the size of our deposit. Is that taken into account when they do the valuation? I'm not sure whether we should just cut our losses and duck out.

Don't know how there are so many cash buyers 😔

@hannahcolobus thank you for this. I hadn't thought about just being able to borrow more, that makes a lot of sense! I think we could still afford it but it's a bit tricky at the moment as banks are changing their mortgage rates more often. I guess once we start the application process they'd be fixed though.

I think we may as well go for it and see what happens

And yes I figured there are a lot of people out there with a lot of equity etc but was surprised that out of so many offers only one needed a mortgage!

I don't hold out much hope. I'm fed up of all this stress in this market, if this one doesn't happen I think I'll be saying to DH we need to leave it a year or two.

Are you sure they are all cash buyers, a cash buyer is someone who can proceed without selling their property, I got caught out by so called cash buyers when selling DMs house, if someone is have to sell their house they do not have the cash available

@User46489 that's interesting. We've been told that the other bidders are all cash buyers and chain free.

we lost out to two cash buyers despite good LTV. Downvaluing is common where i'm moving too & I think they think cash buyers can take the hit

@giggyb depressing isn't it. We've lost out several times to cash buyers too. One house we didn't even bother offering on as they told us they had a cash offer in place and I felt they were just going to use us to push the price up. Maybethat's what's happening here too 😩 and I'm just more blind to it because I like this house a lot more.

Quite common and getting more common I believe, obviously with prices in a bubble and interest rates rising banks are going to protect themselves.

@DeadHouseBounce thanks. Do you know whether they take into account the size of the deposit when doing the valuation? I think this would make sense as presumably they only care that the house value isn't going to drop below the amount they lend?

If they did that a street of identical houses could be valued differently depending on the various deposit sizes of the potential buyers! That would be dodgy practice and open to legal action possibly, safer to just value it using a set of criteria and their present knowledge of the market and let people decide for themselves if they want to make up the difference.

@DeadHouseBounce ah yes that makes sense! It doesn't matter anyway because as expected they went with a cash buyer.. just a bit frustrated they took so long to decide and that they reassured us that they we were really in the running despite not being cash buyers. I hate this market and think we'll just give up now.

Would imagine the "down-valuers" in the EU are sharpening their pencils tonight.

Did the valuation come back yet?

@DeadHouseBounce our offer was rejected in the end so it didn’t matter!

Maybe you should try again, but lower this time?

www.thisismoney.co.uk/money/mortgageshome/article-11134241/Average-two-year-fixed-mortgage-rate-goes-4-time-nearly-decade.html

We just purchased a house that was down valued by 20k it came as abit of a shock as we weren't expecting it but as we had a large deposit we were fine