Homebuyers survey down valuing property

[hoagybar]

We’ve had an offer accepted on a house for £680,000 but had the homebuyers survey and valuation back today and it’s been valued at £615,000. We love this property but obviously this is concerning. The bank has agreed to lend but we are fortunate to have a quite decent deposit so I think are less of a risk to them if we pay over the odds.

Eeek. What do we do?! We’re considering getting a second opinion survey. We would be prepared to pay a bit over the value as we love it but that’s an awfully big disparity in a falling market. Is this common? Could the surveyor be wrong or is it more likely the estate agent and seller?

I’m so gutted 😞

Don’t have much to add OP, we are in the opposite position. We are selling and apparently the surveyor devalued our house by 30k although it’s not officially written on the survey…they apparently just told our cash buyers that over the phone.

As of tonight we have just lost them because they demanded the 30k off. We knocked £18k off but that wasn’t enough for them. We are devastated.

If you love the property and can afford it perhaps get a second opinion?

I’m really sorry SB. It’s such a stressful process and I’m not surprised you’re devastated. Did you have an onward purchase lined up? DH and I were just saying that meeting half way would seem reasonable so I’m sorry your buyers didn’t feel the same way. I was just reading about how in Scotland the seller gets the homebuyers report and valuation before going on the market - seems like a much better system. We’re so emotionally and financially invested at this point. Horrible process.

Yes we have an onward purchase. I think we need to ask (or beg at this point!) if they’ll give us a grace period to try and resell. The house we are buying is vacant and not part of a chain so I am really hoping they are kind to us as it was our dream home 🥹

Have you spoken to your seller about the survey? Or do you want a second opinion before that?
You might find if you talk to them to meet half way like you say they could definitely do that especially if they have a house lined up too.
You can understand why people only do this once in a lifetime! I haven’t slept properly in weeks!

This article is interesting:

https://www.ftadviser.com/mortgages/2023/09/04/down-valuations-increase-as-lender-caution-takes-hold/

I think a LOT of EAs are still over valuing properties and vendors are left in difficult positions.

In the last week of August, the difference in asking price of new listings and those sold STC was 16.5%. That's a lot of money and over optimism on both EA and vendors parts.

Another valuable seems reasonable to me.

Do you have the source of the 16.5% please?

YouTube, UK property markets stats show, week 34 of 2023. As well as discussing it in the video, you can download his slides from the embedded comment from Christopher Watkin.

@hoagybar you’d be mad to pay £65k over the valuation. Have you told the seller yet or revised your offer down to £615?
For the extra cost of another valuation, I’d get another valuation.

If you love the house and you want the house then the price of the house shouldn't be relevant. If the house is an investment and you are looking down the line then whatever.

I would not be paying £65,000 over a valuation. You need to renegotiate the price.

The £65k you're overpaying will work out about £110k with mortgage interest. I wouldn't offer £680k on a £615k property no matter his much I liked it

Very bad advice x

Maybe, but I read equally as many fuming with the buyer who has demanded a £40k reduction posts on here so can't have it both ways.

If you were taking about £5k or maybe £10k then perhaps... but £65k is a huge amount at money!
Are you really this cavalier about finances in your life? I suspect not - or if you are that you have more money than sense.

What has the report said is wrong with the house and how much is it going to cost to fix the issues?

when I was selling my house the survey undervalued which was a real blow to begin with but we were just as invested as the buyers and so accepted a lower offer on the house.

Renegotiate the price it is common place once a survey is completed. I would be tempted to offer 630k to show willing to the buyer. They will be expecting you to go 615k so psychologically this will be a win for them.

Hang on, is this the bank's valuation as part of the mortgage or something else? Is it a full red book valuation or just a market appraisal?

Proper valuations are harder to do at the moment because transactional activity has fallen by c.20%, so there are fewer recent comparables - particularly tough if there aren't many similar things in the local area. So I wouldn't take this 615k figure as the gospel truth straight off.

When you put your bid in, did you feel that 680k was stretching it for that property? Or were you comfortable that it was fair? Were you up against multiple other bidders? Did the survey turn up anything unexpected that would reduce the value?

You could turn around and say to the vendors that you want a reduction given the results of this survey, but with a 65k reduction I think the most likely outcome is that you'd lose the house. You don't say when you had the offer accepted, but mortgage rates have been falling since mid-July (more cuts announced yesterday by Natwest & HSBC), & we're heading into September which is a stronger selling season than the summer, so your vendor may feel that they are in a good enough position to just go back on the market, especially if they aren't in a great rush to move.

I would get a full RICS red book valuation & if that is also coming out lower than the agreed price push for a reduction, but don't expect you can get it all the way down to 615k.

Has any surveyor ever said ‘ ooo this house is undervalued, knock their hand off, you’ll never get another bargain like this’? I’ve been ‘active’ in the housing market for fifty years, and this is the only scenario I have never come across. They either think that if they don’t find any problems, you will resent paying f them, or they are protecting the lender’s speculative asset.

I can’t offer any advice about how to proceed, but I don’t think it means the house you want to buy necessarily has serious issues.

I used to work for building surveyors. They were not like this at all. Not saying this is the norm, but they were deeply honest and had integrity.

Thank you everyone for your thoughts.

The mortgage survey went through ok but this was a valuation alongside the homebuyers survey. Some stuff did come out of the survey but nothing major - the valuation is based on recent completed sales of similar properties and took into account the current market - so suggesting it’s been overpriced I guess. I think we’d felt we were probably paying too much but not £65k too much. We’ve offered to meet half way which I thought was pretty reasonable but that’s been rejected so we’re currently “thinking”. I kind of feel we've been fair and doubt we’re prepared to go higher. We probably should’ve started lower and negotiated up but I didn’t want to piss them off. EA didn’t seem keen on a second opinion valuation so I think they may be more concerned it’s accurate than they’re letting on. Subjectively though there isn’t anything nicer in the area that we can get for the money - I think the current market is confusing things.

Just worth adding that the whole point of getting a survey is to make sure a property is worth what you think it is.

In this instance I think I might just pay for another professional surveyor's valuation. It's a big difference. I;d also want to talk to the original surveyor and explore their reasoning.
Was the surveyor local? I prefer the valuation of a local surveyor, they understand the local market and things like whether it's a very sought-after road, rather better.
In the end, is it worth it to you? That's what matters.

Can you give me some money? You seem to have so much spare that pesky, small things like prices doesn't seem to matter for you. Asking as a first time buyer.

@hoagybar “We’ve offered to meet half way which I thought was pretty reasonable but that’s been rejected so we’re currently “thinking”. I kind of feel we've been fair and doubt we’re prepared to go higher.”
They will put it back on the market at the original price. It won’t sell. They’ll then chase the market down, and in 6 months will regret not accepting your very generous current offer.
Eventually it will go for under 600k.

Oh yeah, im rolling in the stuff. My point was if you want the house and you were willing to pay what was asked previously then it shouldn't be an issue. If the house is some grand future scheme then yeah, argue about the money. Home vs House.

@hoagybar how long ago was your initial offer accepted?

Who’s to say the bank’s surveyor is wrong? Especially as they have more skin in the game?