Saturday, Apr 04, 2009
Proof that anyone buying in the present market is stupid
BBC News: Buyers blocked by low valuations
Homebuyers are being prevented from buying many properties because lender valuations are coming in too low, say estate agents. One buyer, Chris, wanted to purchase a one bedroom flat earlier this year in SE London, which was on the market for £175,000. However his lender's valuation survey came back at £140,000. [In the radio programme, it transpires that other flats in the development were repossessed and sold by the banks at auction for £135,000. Chris can only negotiate his down to £160,000. So why doesn't he buy at auction???] The CML said some flats have lost a lot of value, and lenders are concerned that the only resale value they'd get is through a forced sale. Countrywide (surveyors and valuers) said many sellers still have unrealistic expectations of what their property is worth.
14 Comments
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1. drewster said...
The segment on MoneyBox live is five minutes long and it's worth a listen. BBC iPlayer: MoneyBox 4th April 2009 (fast-forward to 15:26).
There's also an interesting segment following this one, about "cash-like" "less risky" and "capital-stable" funds. The mind boggles....
2. Mrmx9 said...
The whole thing is laughable - people being prevented from buying properties with mortgages that are worth far more than the true value of the house. Surely people should be applauding the banks and surveyors for not getting people into massive negative equity before they get the keys.
3. phdinbubbles said...
'Chris Shaw, managing director of surveyors and valuers Countrywide, said many sellers still have unrealistic expectations of what their property is worth.
"People still tend to look at the asking price of unsold properties nearby and base their expectations on these figures instead of known sales. Houses that are priced correctly are selling," he said. '
I want to have your babies Chris (even if the foetus will have to gestate in a box)
'One buyer, Chris, wanted to purchase a one bedroom flat earlier this year in south east London, which was on the market for £175,000.
To secure his mortgage offer, his lender needed to make its own valuation.
When it came through, it scuppered his plans, as he told BBC Radio 4's Money Box: "The survey came back at £140,000, which we found astonishing." '
Chris II. Will you be complaining in 1-2 years when you realise £160,000 was far too much for a one-bed flat in SE London? Doubt it. Hope the idiot manages to waste his money somewhere else, rather than being saved from his own stupidity.
4. mark wadsworth said...
"So why doesn't he buy at auction???"
Brilliant! :)
5. enuii said...
Estate agents do not have the buyers interests at heart and the valuations given by the surveyor are the only checks and balances working in the house buyers (and mortgage providers) favour. I find the BBC's tag line extremely misleading and also suspect that the comments from Barry Hall of RICS have been disected and taken out of context for the purpose of steering the article. This is revealed by the sentence starting with 'He agreed that surveyors are not supposed to base a valuation on the price repossessed properties reach at auction', which hints at a leading question of which only part of the answer has been selectively used.
It is also revealing that the BBC has used a picture of a nice detached house yet when you get to the bottom of the article the story is entirely based on information relating to flats which may have been of the single bedroom east london variety.
A very dodgy article from the BBC.
6. Happy Renting said...
"So why doesn't he buy at auction???"
Probably because you need the money up front. He presumably can't pay that, which is why he needs a mortgage.
The questions are, why he still wants to pay so much, when there are other desperate sellers around, and why the seller is in denial.
7. Bricor Mortis said...
plenty of properties in Bristol have come on to the market recently at 2007 asking prices. Denial or desperation?
8. Blockernz said...
Strange choice of headlines, corrections below
Buyers blocked by low valuations = buyers saved by low valuations
Homebuyers are being prevented from buying many properties because lender valuations are coming in too low, say estate agents. =
Homebuyers saved from buying properties where they are offering far too much more than sensible valuations made by lenders surveyor!
9. bystander said...
Valuations have always come in under the asking price, only difference now is that lenders are actually lending against valuations now. I bought a flat in 2001 for 105K, asking price 112K, and the mortgage valuation came on at 86K. This would only have been a problem had I not had a 10% deposit, which I had. This will become a major headache for 100-125% mortgagees when they come to re-mortgage. Things have changed.
10. bystander said...
...........also wasn't it countrywide who made huge losses from over valuing properties etc. During the boom?If so, isn't it a little obvious they would condone under, protectionist valuations? Just playing devil's advocate.
11. drewster said...
Talking of luxury apartments....
12. little professor said...
drewster - looks a lot better than some of the completed apartment developments in Leeds
13. drewster said...
The estate agent described it as "authentic and traditional warehouse-style lofts with extensive sea views" ;-)
14. Mr Rigsby said...
Must get an order in quick to buy some off-plan......