Mortgage valuation £25k below offer: worth paying for second valuation?

[StrawberryElephants]

We just put an offer on a house - over the bloody moon it was accepted. The house is chain free and vacant - we are first time buyers. The property was top end of budget at £350k but we honestly felt like after lots of looking around anyway- we had found a £370k house for an absolute steal.

However, the bank just did their valuation and listed it as £325k - £25k less than we offered. I am stunned. Estate agents are stunned. Bank obviously wont lend us the amount we requested because its not valued high enough.

The valuer said in their report that there wasn't enough evidence of similar properties selling for the same price nearby. It doesnt appear this way to us - but what do we know right!

I can pay £180 to have a second valuation done. The seller wont drop £25k off the asking (its inheritance for teenagers - sad situation, apparently they won't budge). Ive asked the estate agent to tell the sellers what happend and she suggested asking them to pay £90 (half each).

I guess what im actually asking is - any chance the valuer is wrong and have you had experience of having a property valued a second time round and getting a different awnser. Or - maybe it is what it is... Help 😪

OP is the valuer looking at sold prices rather than asking prices? They can be very different at the moment.

Hi :) I didn't want to read and run. Please please check your figures as just reading this, you seem to have a super small budget. We are currently in the process of moving house and it is expensive and we haven't even moved yet! Have you considered all your costs? Have you had a survey? Is the house completely ready to move in to?
I like that you've broken it down, but have you considered the unexpected costs that you can't see? What happens if the boiler is serviced and you find it needs replacing instead? Decorating costs? Furniture?
I'm just trying to be helpful, but with such a small budget, I'm worried for you (if I've read this right!) x

You can buy house buying insurance
cost around 80 100 depending on the level you require and it covers you for stuff like sellers pulling out and you will lose money

I would go to a whole or market broker like London and county
they are free to use and they make there money from the mortgage company

and if you tell them you don’t want to use Santander they will find you a different offer

You'll have to pay the £180. It's nothing in the grand scheme of life and you'll never get over it if you don't.

I understand searching in an area with little stock. It's not like buying when you have a big choice.

Either it comes back the same and you improve your bargaining position or it allows you to proceed on the house you want. You have to know.

It sounds like this is a long term property so the value matters slightly less than if you were buying a flat and wanting to move up the ladder in a few years. If you can afford to overpay the mortgage, even by a small amount, it also helps offset this risk.

This would be our plan - we hope to make overpayments over the years to pay more off.

And yes, this would be our forever home - I love it because its so large we wouldn't need to bother moving or extending. So it feels like a bargain in terms of - its better to pay 350 and be totally sorted - than buy a smaller property for 320 - but with that "yes but at some point we need to extend" hanging over us. When building prices and bigger homes are even more expensive in 10 years time.

This happened to my son when he was buying his first house. There was £15k difference. He rang EA who spoke to sellers who lowered their price £10k and ds paid £5k extra.

Santander do not want to lose money if you default on the mortgage. Your deposit is very low and that is why it’s a problem. Surely the cat getting sick or your car needing a part will not cost you £5k. I would have a £2k as a safety nett. I think you will,find that any other buyers will have much more than a 5% deposit so the £25k less valuation will not affect tethering mortgage offer. I do feel for you.

I have to agree. I think the op needs to back out of this one for three reasons. Firstly the LTV is too high, secondly the house is probably overpriced (definitely worth paying for a second assessment at £180 or even better an independent RICS valuation - if its downvalued again the seller may capitulate). Thirdly we have another round of inflation and cost of living increases coming - which will include an increase in mortgage rates and pretty much everything else. They could be in negative equity by the end of the year - as home prices will either slump or remain static at best.

I wouldn’t be asking them for half of £180 in the scheme of buying a house. But I would delay putting down the deposit they can see that you’re committed to buying it just get on with your appeal.

Hmm... well ive done my best! It must be surprising to see when so many mumsnetters just appear to be absolutely loaded when they talk about their savings and expenses on here. This is a look at Joe average 🤷🏼‍♀️

To actually have any savings at all and no debt is actually something I am proud of - when so many are in a much less fortunate position.

I'd also assume that @StrawberryElephants has saved this money while paying rent that may well be higher than the mortgage.

Buying houses is expensive. Most people clear themselves out to do so and then start trying to build a safety net again.

All of us would rather have more. Yes OP will be vulnerable in the first few years to potential negative equity but it's a long term home and she's said she plans to overpay the mortgage. It's a risk balanced against waiting even longer and, as they are slightly older first time buyers it may reduce options to extend term etc if required.

It is really tough when you see your forever home!
But if you feel like that and your jobs are relatively secure then do what you can to bridge the gap with savings, borrow from parents etc.
Very unlikely a different valuer will go with the higher value.
And recent sold prices are now history with the war/oil crisis/ useless government situation which will make lenders more conservative in offers.
Your deposit is low and you also risk that as mortgage interests rise over the next few months you will get a worse deal from lenders.
Re-home the cat? Downsize the car? Take on weekend job?

Also OP, you need to consider the possibility that the second value comes in even lower than the first. That would make your valuation gap even harder to bridge.

Your and PP’s assumption that a second low valuation would force the seller’s hand to lower the price is flawed. The property is a probate sale, not in a chain. There maybe no immediate need for them to sell the house and they may well decide to just wait for a buyer in a better financial situation I.e. not a first time buyer with a very low deposit or even a cash buyer.

Going for a second valuation is quite risky imo.

Your problem is your deposit is smaller than the valuation gap.

This.

I would think it’s very unlikely the bank will be prepared to be potentially in negative equity from day 1.

Their lending decisions have no emotion, they are purely commercial.

And its not the Vendors problem either, the bank need to know they can get their money back quickly in a fire sale situation, if the OP was borrowing less, it wouldn't matter.

The executor is not going to come down £25K, there will be another buyer, its not a concern to them.

Its tough, but that's how it is.

I would add that if this is your perfect house that ticks all the boxes then you run the risk of other buyers thinking that too.

I agree with this, we had a fantastic broker both when we bought our house and when we had to remortgage. I met the surveyor and he said that his job was so hard currently as sales are really down and finding like for like properties sold within the last year we’re like gold dust, ours was valued less than expected but we were lucky as it was only a remortgage and we had decent equity.

If it’s your house it will come to you. I’d definitely ask to split costs but I think if it comes back the same, you might need to look at a different lender.

Absolutely, I've been an executor in a non rushed situation, this sounds like the proceeds are going into trust for teens - the executor has an obligation to get the most they can.

I would never be interested in a mortgage providers valuation, only a valuation from a local agent. Assuming the executor is following protocol they will have had several valuations, they may have had a red book valuation (especially if the executor is a solicitor) and they will use that as their guide.

They also won't be paying £90 towards the OPs second valuation - if the sale did not proceed they could in theory get backlash for wasting that £90.

Agreed

And OP you say that the beneficiaries are only the seller and the children but believe me, everyone else puts their two penn'orth in and chips in about what should happen etc.

The children I presume have a mother also, and while she may not be a direct beneficiary she'll want to know what is happening to her children's inheritance. If she's still with their father, the seller, she'll also have a view on whether he should take this or not.

I don't understand splitting the cost, its not the vendors problem - and if they are an executor of a deceased estate they have to account for expenses, giving away £90 to someone else's mortgage provider is not something they should just do.

Don't embarrass yourselves by asking for £90 from the sellers for a new survey.

Maybe the surveyor can see that putting right a few carpets, mould spots and purple paintwork doesn't add 25K to the value of the house.

Yes I agree that £90 isn’t really the sellers issue and it seems like they are happy to play hard ball so the onus is on you to get it sorted quickly.