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 😪

Hi all - ive had a sleep and heres where i stand :

We are not going to ask for £90 - i dont want the sellers to think we cant pay the next set of fees - because we absolutely can. That was a shit idea!

Sorry to drip feed - but the affordability is ok! We actually got told we could borrow up to £420k (which is unbelievable because those repayments were just ridiculous and would be irresponsible IMO). We are being realistic with the repayments on the 350k house and not stretching beyond our means. Both in stable jobs - im actually even due a promotion which will mean a higher salary in next few months too.

I think the issue is our deposit when looking at it against this low valuation - thanks to all who helped explain that. If the valuation came in at 350k - we would be fully steam ahead still with no problems or worries. This low ball really was not on our bingo card!

The plan for now is to either apply for a mortgage with another lender or pay the £180 to Santander to get another opinion from a different valuer and continue to use Santander for the mortgage.

For the second valuation the estate agent is poised ready with a set of comparables to hand over. They show sales from within this month, within 1/4 mile, that are smaller, in a more "used condition" and more expensive. So our house should look like roses in comparison.

If the 2nd valuation still comes back at 325k, we will pull out and take it that it was not meant to be!

I will keep you updated 🙃

The mortgage companies valuations are not the executors guide - they should have had a couple of valuations from EAs who will have given a probate value - they may have paid for a red book valuation. These figures will have been submitted to the probate office.

In reality HMRC are never going to look at this, but the executors have a duty to the beneficiaries to get the most they can.

The lenders valuation is based on the price they could safely realise in auction at speed to recover their funds, its not the same as a EAs valuation.

Hope it all goes well for you! If you do pull out it just wasn't meant to be and something better will come along :)

Don’t get why you would pull out if the 2nd valuation comes in still £25k lower. You have already said it’s way better than anything else you have seen, you don’t think it’s overpriced and it’s a forever home.

Because they can’t afford to cover the £25k difference!

Are there any 100% mortgages any more?

Yes there are - my friends just done one and got a lovely house from it.

But she said in other post that they could get a bigger mortgage.

I think you need to look at this then, save the deposit.

That’s not the issue - the bank have only valued it at £325k so they will only lend 95% of that in this situation - the OP would need to cover any amount over that in cash, which they don’t have.

Even with a 100% mortgage, the OP doesn't have the additional £25k to make up the difference.

I thought she did with the deposit and savings

She borrows 325 on a 100% mortgage and uses the 18k and the 6k she has in savings

more or less

Why would you sell something, the obvious route is that the seller drops their price, in this market their next valuation could be even lower.

https://www.mortgagestrategy.co.uk/news/mortgage-rates-spike-as-lenders-pull-hundreds-of-products-moneyfacts/

A lender/valuer thinks it is overpriced, so it is probably overpriced.

How many other offers did your seller get?

I bought a similar property that was an inheritance. The problem with these is the beneficiary is often in no hurry as they do not need the money for another house. My own had been sat empty for four years due to the stubbornness of my seller. The valuation came lower and she wouldn't budge, I did pay as I really wanted it but like I said to the Estate agent at the time, she's lucky I'm not a first time buyer with limited deposit as they would have had to pull out and that's exactly why it had been four years to sell. If its what you really want and you can meet halfway it's worth it if no intention of moving anytime soon. Mine has more than doubled in value in 15 years.

"Mine has more than doubled in value in 15 years."

That is because interest rates were cut to near zero to save the banking system, it won"t be increasing in value now, the OP isn"t going to double their value, they have more chance of negative equity if they try to overpay.

I beg to differ, if they aren't intending on moving and its where they want to live for a long time the monetary value isnt really that important. I've bought and sold quite a number of houses over 45 years and even in the 1990s when mortgage rates reached 17% my house value had increased by 35% over about 5-6 years of ownership when I sold. Its a bit like the stock market, to make money you have to be in it for the long haul🤷 if you know your going to want to move in a couple of years then I agree it's not wise to overpay.

@Mossstitch I agree - is it a home or is it an investment?

Agree!
A friend yesterday was musing about whether chasing the layout of her house to be more suitable for her would ‘add value’.
Totally irrelevant as she doesnt ever intend to move.
Same with my house / irritating when I do a renovation and people say ‘that’ll add value’ -I don’t care as I don’t ever want to sell…

Good luck op, if the le der co.es back saying it is still overpriced in my experience these properties where the vendor won't budge often sit on the market for some time. Leave your reduced offer on the table with them in case they change their mind. We've ended up with 2 houses that way. In both cases the vendors took over 2 weeks to come back to us and accept our reduced offer, although both houses had been sat on the market for a few months prior to thet. Don't give up hope yet. Buyers who geniunely want a sale will eventually drop their prices in a falling market.

I beg to differ, in the 90"`s in many places you could buy ex-council houses for less than 15k, people!"s debt levels for housing are ridiculous now, the stock market is liquid the housing market is illiquid, they are two completely different asset classes and should never be treated as "similar" investments. So someone wants to live there for a long time? If they overpay with cash, fine, they are happy in the house and can absorb the loss, but with a mortgage that is 30 plus years of monthly debt costs at the mercy of the bond markets, much better to get the house as cheaply as possible at the start, especially with a mortgage.

On your comment about the Executor having to pay Council Tax, depending on the local authority and when they got probate, they may have a certain period of grace, e.g. six months to a year before the estate has to pay anything, especially as the funds will go into trust for children. I would just ask your broker for a bank or building society that doesn’t use the same valuer. Never used a broker, just called my bank last time.

Santander are not going to change their valuation, does the OP mean they should approach another lender?

I read in your OP that you are both first time buyers, so why are you paying stamp duty!? If you can put this towards the deposit, it'd help loads. You also mention another £6k, I would put some towards, and then renegotiate with the buyers to pull the house price down. They may go with it as they will face this issue with every buyer if all the mortgage companies provide the same valuation!

You can also find mortgage brokers that don't require a fee (e.g. Mortgage Brain).