Mortgage lender devalued house we are buying by 30k

[foodiefil]

Eep!

We offered asking price on a gorgeous property in our local area. £350,000 which is expensive for the area but after doing our current property up from it having a bird sanctuary in the loft to our beautiful home as it is today we wanted our next property to be a bit easier and it would be.

The couple have renovated it as if it was their forever home and have spent a lot on it in the last couple of years, it’s clear to see that. Now they’re moving away.

we offered asking price as we wanted it and I didn’t want to mess around (them or us).

now our lender has valued it at 30k less.

we are having another lender value it but from a brief conversation with the EA yesterday it didn’t sound like seller would budge.

even though we love it I don’t think I’m prepared to pay £30k beyond its value and take that financial risk in case our circumstances change.
i understand that they’re trying to claw back as much of their investment in the property as possible.

if second valuation comes back the same - what would you offer?

we have a buyer for ours, we are ready to go but won’t pay an inflated price for a property that isn’t worth what the buyers hope it’s worth.

we would add on an amount to cover some additional things included in the property price as it stands (oven etc).

any advice or similar experiences gratefully received

There isn't much you can do, if they are definitely unwilling to budge on the price, then it's really up to you and if you love it enough to pay that bit more. It is what you were expecting to pay anyway though, which is something to keep in mind.
Obviously, if it is specifically as an investment it may not be worth as much as quickly, but longer term eventually house prices will continue to rise.

I agree. If you have the extra money to be able to still afford it then it doesn't matter if it is slightly overpriced if you will be lovinf there for a long time. It may well be that it is worth the extra £30,000 to you.

We do love I’m just worried that our investment of X will immediately be reduced to Y and god forbid something goes wrong and we move to sell and we lose money.

I’m hoping a second valuation will be higher. And that the seller will see reason and consider an offer closer to its actual value rather than what they hope it’s valued or what it’s valued to them because of what they’ve spent.

Are there other comparable houses nearby that are priced lower? Not sure valuations are always that accurate.

If both valuations come in that much lower I’d go back to them and explain that’s what you’ll have to reduce your offer- if you get two valuations the same then it’s over priced and any other buyers will find themselves in the same situation.

You could offer to make up a bit of the difference if you have the money but I’d be very wary of paying £30k over asking and basically losing that money.

I also think if 2 valuations came back at £30k over then I would renogotiate. However I would maybe consider not reducing by the full £30k and suggest somewhere in the middle if I really wanted the house.

However if they want to stick to there guns not much you can do about it. Have you had a survey back? I successfully renegotiated after my survey flagged up lots of hidden issues and my valuation was less. Although I negotiated only a couple of % discount. £30ks a big drop.

Also was your lender valuation a desktop valuation? If they've done alot of work the lender might be basing the price on just general house price inflation since they bought rather than taking into account some pricey upgrades.

Has the valuer visited the property? i found many sit behind a computer and they go by “ zoopla” prices in the area without knowing a thing about the the improvements/work that was done on the property.If they haven’t physically visited the property I would insist on them doing that. If the seller considers the property it’s work the 350k they have no obligation to accept lower price

It was a desktop valuation.

They paid in the 280 region in 2020.

There was a property that sold on an adjoining street for 360 recently which was a bit bigger (extra bedroom) but hadn’t been as recently updated etc so I think EA may have looked to that price as well to get to 350 for this one.

Yes you need to know if the property has been valued. For example if you look at an online valuation of my home it's based on the last a selling price plus %rise in my area. However it's had an extension and a proper garden room built since then.

I don’t think so - desktop valuation.

It affects our loan to value and therefore the interest rate on the mortgage too.

If the second valuation comes back 30k under I would seek to take off £15k. It sounds like you love it so paying a bit over the odds isn’t mad. It sounds like the vendors have poured a lot of money into it and forgotten the golden rule that a lot of renovations are not good investments. But if it’s work that you love and you’ve had been prepared to pay £15-£30k for it over time then I’m be prepared to “overpay” now.

Unless you know there’s a tangible event looming it’s very unlikely you’ll be in a position where you suddenly have to sell and this amounts to a bad investment. Think about the more likely scenario where you’re in the house for five plus years. How do you feel about £15-£30k over that time frame?

Thank you yes that’s a good way to see it.

I would be happy to move half way and pay over the valuation but get closer to what they want for it.

thankfully they have lovely taste so we wouldn’t be changing anything either just quite disconcerting to have it valued nearly 10% less.

If the other valuation says the same I would suggest renegotiating if you can. They're only going to have to find a new buyer and the chances are the same thing will happen.

The problem will be though that they're hoping to get a decent profit after buying it not that long ago which explains the overinflated price. In 2020 when the stamp duty freeze was on people were clamouring for properties and they probably paid over the odds so are now having to sell at a higher price.

Have they made many improvements to it that may justify the value?

Desk top lender valuations are shite.

if you can afford it & really want it & thought it was 'worth it' before the lender valuation I'd still buy it. But if you can't borrow enough to buy it, I'd go back with the highest offer I could.

all presuming, of course, that you've had a full survey done!

I would disregard the valuation. If it doesn't affect your mortgage I'd buy it.
We wanted to remortgage and the valuation came back £200k less than what we both thought was fair (the house was about £2m). A year later we tried again and it was valued at £200k more! It had not increased in value that much - the valuation was incorrect in the first instance.
I don't understand if someone is willing to pay X for a property, then surely that's a very good indication what it's worth? I had a bidding war on one of mine - three people offered over asking, one was an investor. I picked the first time buyer as most procesable but his bank valued it £10k (selling price was £175k) less than the agreed price. We compromised as he couldn't get the mortgage high enough so I sold it at ask in the end - but I don't trust valuers, especially desktop. It's not accurate.

Yes they have made a lot of improvements. New kitchen and new bathroom. It looks a different house tbh and I think the move is unexpected and they want that investment back

It does affect the mortgage 😏 affects the rate and how much they will lend us. We have equity in our property so a larger deposit but it still affects it.

No survey done yet

Id wait for the other morgatge company to go back and take it from there. It they come back lower id definitely try and renegotiate.

A property I viewed last year was beautifully done, you could tell they had spend a lot on it, but it was overpriced by about 75k looking at others on the same road. It's gone STC three times I think now and came back on everytime I imagine this is what keeps happening to them.

When I viewed it the EA said straight away there was no movement on price.

If the second lender comes back with the same figures then I'd offer less based on the probability that any other buyer would have the same issues.

But I would try to meet them halfway and offer 15k more rather than 30k if I could afford it. That extra 15k over a period of time is negligible really, especially if you're staying put 15 years or more.

Im worried about this as we are paying £25,000 over asking for a house that went to competitive bids (it was underpriced in the first place but I worry it looks bad).
im getting my own survey/valuation as well just in case.

A house near me has been on the market since Covid because the sellers refuse to budge on the asking price. They periodically put the price up too because they want to recoup their renovation investment and benefit from the ‘strong’ market 😂

I’d put in a new offer for the highest of the two valuations. No way would I buy myself into negative equity. An extra bedroom is worth more than £10k no matter how nice the kitchen is.

If your circumstances changed and you needed to sell, their problem would become your problem.

That’s my fear 🙈 @StormingNorman

ive asked for a physical valuation now after this thread thank you

I wouldn’t get too fixated on the desktop price. Our house was valued by lower by a desktop survey and went for £100k over it!! It depends on how much you love it. Are you prepared to risk losing it over £30k?

30k over on a 350k house is quite a lot, nearly 10% overpriced. If it were me I would get an independent RICS valuation done. Not that expensive to do and will be more accurate. You might get a nice surprise in which case you can plough on happily. If you get another low valuation you have a very strong position to negotiate.
You really need to be careful about overpaying in the current climate. At current price inflation rates, assuming 1.5% pa, its going to be toward 5 years before the house is again worth what you paid, excluding moving costs. I wouldn't feel comfortable with that unless it's a forever, must have, home and I'm planning to overpay on the mortgage substantially.

Insist on your mortgage lender completing a full valuation by visiting the property and conducting an internal inspection, not just a desk top or drive by.
People can ask what they want when selling a property, but where a mortgage is required to purchase and LTV has an impact on interest rates/deals available to purchasers all other prospective purchasers will be in the same or potentially worse situation than yourself. The seller may need to lower their expectations.