New build valued alot lower than price

[Rae444]

Hi all,
Im in the middle of buying a new build, it'll be one of the first done on the estate. Its priced at £489,995 and they company are paying stamp duty and throwing in around 5k of 'extras'.

We have just had the evaluation back from Santander and they have only valued it at 450 because of the following 2 reasons:

-Purchase is not supported by sale of properties in areas
-Close to public sector housing

The house is in a good area and I guess as its first to be built the first reason sort of makes sense however 40k less is alot.

Santander have said there is no right to appeal.

Any suggestions? I can't see the developers dropping 40k off!

Try another lender?

First thing is you go back to the developer and try to renegotiate. They'll have seen this thousands of times, especially at the start of an estate. They may reduce the price, they may offer you more perks to reduce the cash lost to you (but there is a limit to how much they can do this due to lender rules). They will be reluctant to set a precedence for the estate by going too low so I would manage your expectations.

If they don't meet the value of the difference (or indeed any of it) you have 2 options:

1. try another lender
2. make up the money yourself.

Yes. go back to the developer and tell them.

Then get another valuation. If it's higher than the £450 one you could either take the property or use the second valuation as a negotiating tool.

I certainly wouldn't pay more for a house than it's been valued at.

Are you desparate to move?

The builders will want a "high" price registered for the first sale so the sales of the other houses can be "proven" to be worth that amount. So you are expected to pay an inflated price.

The surveyor/valuation has seen through the ploy.

We were in a similar situation and I went back to developer and they reduced by 20K.

ALso consider using a broker who can get more interesting deals.

I would get an independent RICS valuation done as quickly as possible and take both to the developer to renegotiate.

I would not pay more than the valuation says it is worth.

Never pay more than the valuation. You will end up in negative equity. The same thing happened to me in 2008 just before all the prices tanked. Originally advertised for 265k we reserved for 250k (neighbours in identical houses paid 265 and 285) valuation came back at 215k! After lots of going back and forwards developers agreed on 215k. Then all the prices dropped dramatically and when we wanted to sell it took us a couple of years and we sold it for what we paid 215k.

Also if you do buy a new build get an independent professional to do the snagging list for you. I spent 18 months liasing with the developers to get snagging issues fixed including it taking 18 months for them to “develop” our second parking space whilst the development company were clamping cars daily that were not parked in spaces.

Issue is lender uses Countrywide Surveying Services which are valuers for alot of lenders. Going to seek advice from a lender and have approached developer.

Good idea about independent survey though.

Have a chat. Unfortunately the mortgage market is rigged. Ours was undervalued by 100,000. Talk to another company or a broker.

Walk away. Why would anyone hope to get a higher valuation? That’s just more debt to carry.

Don't pay more than the valuation. You will need to negotiate with the developer.

Update: developer has exchanged on the same property for asking price and has lots of comparable properties but valuer just didn't ask. They also state they have cctv of him doing the valuation and aren't happy with it.

Has asked for a a post valuation query with lender however is there a way to force an appeal? Ive read on lots of threads that people have done appeals and been successful but not that the lender has just said 'no' when asked to do one.

The fact they are "paying" the stamp duty and giving extras means the house is worth the asking price less these, at a minimum.

Builders will throw all manner of things in with the deal in a downturn rather than reduce the price. The lender is pricing correctly x

Well the developed would say that.
Can you approach another lender and ask for their valuation?

The initial surveyor would have looked for comparables themselves as that is part of their job.

You didnt do a RICS independent ? The developer can't complain about the first valuation if a second is the same !

I am an RICS valuer and chartered surveyor - Countrywide are Santander's panel valuers so they won't use anyone else. They can raise a PVQ with the valuer but if the comparables show that the price agreed is too high there's not too much to be done, your only trump card is the exchange now having taken place at the same asking price. Developers keep their headline prices high by offering incentives as you've noted and if those incentives are on the higher side it can smack of (effectively) bribing the buyer to pay a higher price. The CML cracked down quite hard on this but it can still happen. What does the site office say?

Apparently they didn't ask for comparables and they weren't local. Having looked for my own comparables I think the price is fair.
Site office is disappointed. Rates have moved on anyway so have gone for a different lender now. Hopefully turns out better!