Mortgage valuation £20k below offer on Victorian semi, what next?

[ThatAgileMintBiscuit]

Hello all,

I’m Just looking for some advice really. We are first time buyers. We put an offer in on a lovely 4 bed Victorian semi detached in Greater Manchester. It was on for £460,000 and offered full asking price. We have applied for a mortgage through TSB and they have independently valued it at £440,000.

We have no extra cash to pay the difference so it’s now in the sellers hands to decide on sale.

Not sure why I’m posting just feeling alittle deflated.
Anyone had any experience of down valuations? Or sellers reconsidering after a down-valuation.

Thanks

So banks will only loan you what they think the property is worth? Did you have a mortgage in principle before making the offer?

Down valuations are quite common at the moment.
All you can do is discuss the situation with the sellers and explain that you need to reduce your offer. I would be extremely wary about over paying at the moment.

Yes mortgage in principle was for £460,000. But now it’s at the valuation stage they have said the independent valuation is £440,000 so that’s the amount the are prepared to lend us.

There is nothing you can do apart from wait to see what the sellers decide. However unless they want to hold out for a cash buyer or someone who loves the place so much they are willing to pay over the odds they will have the same problem with every buyer that comes along.

We were in a similar situation 10 years ago.
Luckily the vendor realised that anyone who had the property valued would come up with the same number and sold at the down valued price.

I worry this will happen if I ever manage to buy the house I’m trying to buy.

@rainingsnoring, are down-valuations particularly common at the moment? I do see quite a lot of over-priced houses just languishing on the market.

can you approach other lenders and see what they lend you?

Don’t think there’s much you can do.

I don’t think the sellers have to wait for a full cash buyer, they might just need to find someone with enough cash who really want it.

if the house is valued £440,000 but you have a deposit of £220,000 (exaggerating the numbers), the bank would probably still lend the full amount to offer price (£240,000)

wanting to buy it at the higher price is a whole other question

It’s not as simple as just asking another lender for more money.

It would require another application and credit check then a new valuation, which will incur fees.

And the outcome could well be the same.

A bit confused! Are you going for a 100% mortgage with no deposit?

I don't know what the statistics are like on this. The banks will be more likely to be cautious about their valuation in this situation with (probably) a low deposit as FTB. As you say, there are lots of houses not selling and have been for some time. It is v likely that the current geopolitical situation will have a v negative effect on the economy in many countries before v long.

Very good advice.

There also another thread running on the same issue OP-it's just the way the markets are right now.

This.
There is a similar thread on here at the moment - so seems like a theme.

One approach would be to just offer them 20k less, the more sensible approach would be to just press pause for a while as the house will likely get even cheaper, you have to predict when demand will kick in though because then you might be in competition with other buyers.

Hello all,

Thank you all for your advice. Sorry I should have said we have a 10% deposit so TSB have said they will lend the difference up to the valuation (up to the £440,000).

Estate Agents have let the sellers know - they are very disappointed but keen to sell. They have asked if we can meet them in the middle at £450,000 but sadly we don’t have much wiggle room. We have offered £443,000 today. That would technically be a £17,000 drop for the sellers so not expecting much. Such a shame.

I assume the sellers will get back to us in the next couple of days. I’ll let everyone know outcome ☺️.

It's upsetting, of course but you will regret over paying at the moment imo.

My son's mortgage valuation was actually more than he'd offered.

Wow! How did the sellers proceed? Did they just agree and move forward?

Yes we are in two minds. We really love the house and throwing the extra £3000 in was a gesture of good will really.

looking at the Sold and under offer property’s in the area I can now see how the valuation is under. Like I said its a semi detached Victorian property on a desirable road.But for £100,000 less just around the corner you can get a large driveway, large garden same number of rooms etc so it’s a no brainer really.

The house has been newly renovated and I think that’s where the estate agents have over valued. Spending in doesn’t always equal out.

Sadly I doubt there will be a spring boom on the property market. So looks like we will be renting for a while longer.

Edited for spelling mistakes

Good that you are researching your local area. I'm sure there will be more properties coming to market over the next 6 months or so as there always are at this time of year. Good luck!

Yes, overpaying now could be a big mistake.