after a bit of advice form mortgage types re: valuations please
me & the gf had offer accepted on house at £250k, absolutely top end of what we thought it was worth - if not £5k more, but nice house in an area where not many come up and we’re right at the bottom end of the entry point for the Peak District so happy to pay a bit more. House also needs £10k working doing on it straight away.
now mortgage co is valuing it at £240k, issue is less making up the shortfall in lending, more spending £20k (incl work) than the valuation. Are mortgage valuations on the lean side these days? Used to be they value whatever you’d offered pre crash, but has it swung to the pessimistic side or are they in the whole fairly accurate (not bought in 15years).
leeds building six if that helps
cheers
£250k, absolutely top end of what we thought it was worth – if not £5k more
mortgage co is valuing it at £240k
Theres your issue.
The house is only worth £240, but you're willing to pay an additional £10k
Banks are only going to lend you what they think they could sell the house for if you defaulted. You could try a different lender to see if the valuation changes (it probably wont) or reduce your offer to £240k
If it was me selling the house i'd have added on £10k expecting to be bargained down.
I would query with the bank how they arrived at their valuation, was just a quick check of local prices, a drive-by survey or a proper one? If not the latter then maybe ask them to do a proper valuation (likely to cost) or get one done yourself and assuming it's £250k+ send it to them as evidence.
It's an increasingly common issue though, the current bubble is going to burst (or at least deflate) sometime and banks are getting are getting wary about lending requested amounts that have been arrived at usually by competitive bidding rather than sensible valuations. What was the house originally on the market for? You'll also likely have this issue if you end up putting an offer in for more than it was advertised at.
What was the house originally on the market for?
House se was originally listed for £265k, then dropped to £260k after 2 months of little interest. Vendor was clearly trying it on and the agent let slip in the negotiations that they’d valued it at 250k
as mentioned, less of an issue about the lending as mortgage offer only reduced by £4K we we can just about get together, more nervousness of buying an overvalued house in the short / medium term (it’s in a pretty village in the peak so highly unlikely the price would go down long term)
I’d be comfortable at 250k if it didn’t need the work doing on it (kitchen floor needs levelling and new kitchen as old one is farked)
Am I overthinking things? Have asked the vendor to see what they’re thoughts ard and sent them the valuation letter from the bank - let’s see what comes back
Sounds like you can negotiate some more off the asking price if you ask me; they could refuse and put it back on the market, but the next prospective buyer is likely to hit the same issue.
There was an article on the on the BBC the other day. They are starting to predict the bubble is going to burst due to brexit and so house valuations are coming up lower at the moment in general.
Doesn't really help you though.
A house is about more than just the cost - its your home. If you have the money and think it is worth it then you might just have to suck it up. £5k in £250k is only 2% - might be worth it if it is where you want to live.
Thanks for the input so far
have sent the mortgage valuation to the vendor and they are currently “considering their position”
not expecting anything though as they stuck to their guns all the way through the initial negotiations. Looks like I’ve got some hard thinking coming up. I don’t like hard thinking!
Are mortgage valuations on the lean side these days?
Yes, they can be. See https://www.bbc.co.uk/news/business-44202542
It does seem to vary by area and company.
When we bought (2years ago) TSB took our purchase price/the home report valuation as fine (In Scotland).
But in Edinburgh it’s very common for houses/flats in the city centre to sell higher than they are valued at. Even at the low 1 bed end 120-130k flats commonly go for 15k above value/listing.
if its a house you really like and want to stay in for a long time then is the extra spend worth it to you? I would say yes. I paid top money for my flat - but 25 years later I am still in it and its worth a lot more than I paid for it
In the process of selling at the moment and the bank undervalued mine by 2.5k
My decision was to hold firm and the buyer had to make the short fall as I had 3 people offering the same and I got away with it. Ultimately I've found the banks have a bit of software they all share so all other lenders would have the same conclusion.