Surveyor valued less than offer agreed price

[FunPinkSwan]

As above, the surveyor has valued the property at 6k less than agreed price. originally, that was my offer which was then refused by vendor then it was pushed up by 6k.

the house requires a lot of modernisation which I’m taking into consideration it’s an ex rental and hasn’t been well maintained.

it’s also a 1975 house so things will need maintenance etc

my question is where do I go from here , I’m thinking of advising the EA I would like to renegotiate to my original offer but I’m thinking they might just come back and say you knew it would need repairs etc …

has anyone been in same situation?

Many people have overpaid for a house they love simply because some houses are unique in type or in location.

A mortgage down valuation can impact the mortgage loan you can raise, so it may not even be possible for you to buy it at the currently agreed price but, if you have a decent deposit, then it may not matter. It might still affect your loan rate though - if you now miss a loan to value percentage hurdle and it puts you in a higher rate bracket.

Of course you knew repairs were needed. This is different. This is saying the value as it stands - what you are buying - is worth 6k less.

Personally if the situation was that I had a choice and it wasn't particularly unique, I'd reoffer at the new valuation and if they won't accept so be it. Move on. Unless its Blenheim Palace there will be another one out there for you.

If you try to renegotiate the price cos of the valuation and it’s refused so you then pull out and try to buy another house then you risk the same thing happening on the next house you then try to buy. However that could also happen to the vendors of the house you are trying to buy. It’s worth trying to get it for the valuation.

Are you prepared to lose the house if they decline the renegotiation attempt?
I think it's very reasonable to try to pay the valuation price and no more, especially as it needs a lot of work and is an ex rental so you are likely to uncover more than you expect.

Questions:-

1. Can you still raise the offer amount?
2. How “special” is the house to you?
3. If you pull out of the purchase then will you lose your buyers and if so how easy will they be to replace?

I would definitely try to get some money off in this situation.

I would tell the EA about the valuation being 6k off the agreed price and say that the valuation is making you nervous about the price being worth less than you agreed to pay for it.

Start talking as if you're considering pulling out and then say you will proceed if the vendor will agree to meet you in the middle with a 3k reduction.

The EA will be very motivated to sell a 3k price reduction to their client.

Thanks all - if I reach out to the EA should I mention a few of the highlighted issues that will be costly to fix or is it not worth rambling on ?

I was going to include a summary of a few major things alongside the valuation amount to back my case so to speak . Will that help or is it not needed ?

I should say the mortgage valuation of current price has been agreed with lender and they will lend me this. I can’t see this being an issue if price was to go down. It’s my own surveyor who I hired to carry out a level 2 survey who has valued it lower than. (Sorry should have mentioned this!)

Funds are all sorted for current price , that’s not an issue it’s purely that my RICS surveyor valued it lower. And now it has me thinking.

I wouldn't get into a big discussion with the EA about it @FunPinkSwan

Just point out the valuation has come in 6k under and that has worried you. I would give a couple of examples of the red flags on the survey but not waffle on too much.

Ultimately, you are being very reasonable asking for a reduction. The sellers don't have to agree. But they may well do so if you suggest a compromise of meeting in the middle. They will be aware the house has issues but 3k is not a huge amount... they would be daft to lose a sale over that amount.

Thanks @Twiglets1

Where are you in the chain? I am involved in a chain where the FTB around 8 weeks in had a down valuation of £5K. We had all spent quite alot on conveyancing, management packs, searches. surveys etc by this point. We split the £5k across the 3 houses, by reducing the selling prices and kept the chain intact. Is this something to consider?

A friend had similar recently, when their lenders survey downvalued the property they were buying. I believe that they agreed to split the difference to keep the sale.
However, since your lender has accepted the valuation for the mortgage already, the homebuyers report is really just for your benefit. Depending on the percentage difference in valuation to offer price, unless there is anything major wrong with the property, I think I'd just suck up the difference.

How would the surveyor really “know” the market value? The value is always subjective and often depending on who’s looking to buy at any one time. Your surveyor is only one person and he’s got it wrong, because you’re willing to pay £6k above his valuation, so it’s worth more than he thought!

Sorry, I don’t think this is means to ask for money off. It would be different if the house was sold as move in ready and then the survey picked up roofing issues, for example, but personally I wouldn’t be impressed by a buyer wanting money off because some Tom, Dick or Harry plucked a number out of the air that’s less than the current offer.

House pricing is so very nuanced that I struggle to see how the surveyor could arrive at a -6k valuation without having actually viewed the properties being compared in person.

Property 1 could have all the windows rotting inside
Property 2 could be 6 houses further away from a really noisy, main road
Property 3 could absolutely reek of cat piss and need all the floorboards and carpets replacing
Property 4 could have an outbuilding in absolutely mint condition on a road where a lot of them have deteriorated to only being usable to store plastic garden furniture

Those are a few examples of the differences between houses in the same 1/4 mile area I've viewed over the last 18 months. So, really, what one house is worth to me and other buyers locally is something only I know, having traipsed around the lot of them.

It's also really important that your surveyor is from the area. If you go back to the EA and say 'it's 6k under', the first thing the EA will want to know is where they're from. You have to be in the market area to know the market.

I wouldn't split hairs as your lender will lend you the full amount. I wouldn't mention it, but if the sellers start playing silly buggers with negotiating about anything else later on down the line, I'd keep it in my back pocket as a trump card, and slip in the fact that 'I've already overlooked a 6k down valuation.'

Negotiate on all Amber and red areas of the report.

Ensure their EA has a copy so all issues should be revealed for prospective buyers if you withdraw.

6k is peanuts, why bother?

I would be bothering to try to get a 3k reduction. That’s a very nice holiday or something more sensible.

When I was in an almost exactly similar position my mortgage broker (arranged through the estate agent) negotiated the £5k down valuation off the price for me. I was very impressed. I’d been going to just grin and bear it.

Quite common that valuers down value properties, basically reduces banks or building societies risk. You can ask to renegotiate, but i suspect you paid the market rate and if you don’t buy someone else will