House valued at 50k less than I’m paying

[Sheerdetermination]

The mortgage valuation (done by computer algorithm, not an in-person visit) valued the house I’m buying at 525k. I’m paying 575k. I’m minded to stick with it, and not risk renegotiating, as the house suits us and is a good school. But, at the same time, I’m feeling worried I’m throwing money away. Have you ever experienced such a big gap between valuation and actual price you were paying? Thanks.

@Starseeking Well played. What did you say to the sellers? Sounds like you were in a similar position of not wanting to lose the property.

@Twiglets1 yes, maybe if I ask for 25k, I’ll get 15k. That would feel better.

@Inapicklee Good luck, and enjoy your new place!

@mummabubs Thanks. I’m glad you’re still happy with your move.

I initially approached my vendors with the outcome of my first valuation, says it had come in £35k under, so I'd have to reduce my offer to match as I couldn't afford to plug that shortfall. My mortgage is 85% LTV on a huge number, so it was my absolute maximum, and I could afford the total cost of the house, I was depending on securing the 85% mortgage to fund it.

It was actually my vendors who suggested I should seek a second opinion; I didn't realise you could. I asked my lender (Santander) about it, and they said they were fine to do it, but this time I'd have to pay (first valuation was free, second one was £180).

Luckily the second valuation came in at £20k less than the agreed purchase price, so I approached my vendor again and said I'd have to reduce to this new number, but my vendors said they were relying on specific numbers from the sale of their current house to fund their onward purchase, so could we split the difference?

This was about 2 months into the process, and they were comfortable that I wasn't going to drop out (I'd already had a purchase in the same area collapse). I thought it was very reasonable of them, so agreed it as it meant both parties had to find an extra £10k. Any more than that and I'd have had to pull out, as I had no free cash. It all worked out in the end as I'm sitting in that house now!

Were you part of a bidding war @Sheerdetermination? I'd be nervous of asking for a reduction if that was the case, as they could in theory just approach the next person on the list.

If not, I'd be upfront and let them know what the valuation has come out with, and explain you'd like to discuss a reduction.

Not such a big gap but we had a 10k downvalue on the house we are buying but we have a healthy deposit from the equity of our house sale and we are fortunately able to move money around to take that into account.
i know some try to negotiate but our vendors wouldn’t budge which is fair enough as we made the offer over asking price as there was other offers. It’s a house that ticks the boxes for us and we haven’t seen anything else we liked remotely as much and as our plans are to live in the house as a family home for many years we weren’t worried about negative equity.

as others have said a house is only worth what someone is willing to pay

Zoila doesn't take into account extensions and updates either.

Zooola even!

Yeah exactly - worth a try

We’re about to exchange on a house that the bank valued at £450 when we’d agreed on the asking price at £495. Needs a pile of repairs doing, which will cost around £30k. Thankfully we’ve agreed a reduction to £460, but this was more based on repair issues than valuation as they weren’t really wanting to budge on that aspect. EA had to lean heavily on them to accept our lower offer pointing out the recent change in market.

Our own surveyor was confident in its price and saleability as it’s in popular area on a 60s estate where houses don’t come up often and go quick, so we’re willing (& able to afford) to go above bank valuation to secure it, even though it’s making DH nervous! But then he’s a typical Yorkshireman who never likes to pay over the odds 😆

good luck with your negotiation, worth a shot

Well done - and thank you!

LOL.