Survey Valuation Less Than My Offer-help!

[live in hope]

Of course no one on here seems to recognise the valuer might very well be wrong anyway.... the market in simple terms IS the buyer.. the buyer has offerred his price... who is the valuer to say thats not reflective of the market... after all in this market he probably has no eveidence otherwise... like many valuers he may well just be being overly cautious .

Is it clear whether the valuer is an independant valuer or is just the mortgage company valuer. Just because one mortgage company values it for less than the offer he made does not necesserily make it the properties worth.There may be other offers above the valuation, or another valuer may see it differently. It depends on how the OP values it too, and how bad he wants it.

[live in hope]

Actually raises a fascinating point, to which Bloo Loo alludes.

The market price is the clearing price at which demand meets supply to create a sale.

Remeber that economic demand is the desire and ability to buy an item at a given price.

This guy was happy to offer £435k, IE he had a desire to pay 435 for the property. But since he was the only one bidding 435, and he did not have the ability to raise the capital to pay this price, there was in fact no demand for the property even at 435.

Therefore 435 has not been shown to be the market price.

Interesting paradox: The surveyor's opinion of what is the market price is one of the determinants of the market price.

And there may be other offers between the valuation price and his offer price. Ita a way to run yet depending on his and wifes desire for it, and at the outcome the real market price will be determined.

[live in hope]

I guess if the OP really wants it and can afford then he'll pay.

It all comes down to different pressures and pulls, with money not always been the deciding factor in some cases.

More likely it will come down to whether the wifw really wants it bad enough.

[pie-eater]

More likely it will come down to whether the wifw really wants it bad enough.

Yup.

Good old vaginal blackmail

[deeplyblue]

More likely it will come down to whether the wifw really wants it bad enough.

Yup.

Good old vaginal blackmail

Or possibly he's using her as the get-out clause. "Yes, I know it would have been more sensible to walk away from it, but the wife wanted it ..." shrugs shoulders, having been saved the responsibility for a difficult decision.

Or even, "Well, darling it's whatever you want." Looks lovingly at wife, having been saved the necessity of making any decision at all.

Or, of course, they could discuss it like reasonable people, both of whom have a stake in the place. If one of them likes it more, but both want to get the move over and done with, then they might decide to get the place for the best price they can. Or they might decide that, even though one of them really likes the place, it's not a good buy.

Not all couples are trapped in 1950s sit-coms.

db

[deeplyblue]

If the majority of Estate Agents understood this transactions would not have fallen to the historically low levels that they have done over the last year or so - and remain incredibly low. Don't underestimate the stupidity of Estate Agents - they have, as a group, consistently failed to adapt their approach to Estate Agency to work positively with falling prices, and very much to theirs and vendors detriment. Even retired Estate Agents can't believe how stupid current day Estate Agents are being.

One EA (one of the good guys!) on HPC was explaining. There are many very new agencies and agents out there - many of them have never seen a buyers' market before now. Quite a few of them really believed that there never would be another downturn; not only would there be a continued upward trend in house prices, but there would never even be a blip, or a temporary loss of confidence.

The group think a few weeks ago was, "This isn't happening, if I put my fingers in my ears and say la-la-la very loudly it will go away." Now they are saying, "There, see it wasn't really happening, and the fingers in the ears + la-la-la trick really works." Check some of Sibley's recent posts. The only real association between "housing" and "crash" is made by ministerial careers.

The likelihood is that their faith in the fingers-ears-la-la combo is going to be sorely tested. I don't think the days when sellers just had to be flattered into letting you sell their house and buyers could be bullied and patronised into paying whatever figure you thought up are going to be back for a long time.

db

[RDW]

This happened to me in Jan 98.

I offered £64k for our property, it was on at £68k, survey came back from the bank saying it was only worth £60k. In the end we agreed £60k, because I needed a 95% loan, plus £2k for Fridge freezer, washing machine, dishwasher, beds curtains etc.

You have been handed a gift, take it.

[D Vardy's Shadow]

Actually raises a fascinating point, to which Bloo Loo alludes.

The market price is the clearing price at which demand meets supply to create a sale.

Remeber that economic demand is the desire and ability to buy an item at a given price.

This guy was happy to offer £435k, IE he had a desire to pay 435 for the property. But since he was the only one bidding 435, and he did not have the ability to raise the capital to pay this price, there was in fact no demand for the property even at 435.

Therefore 435 has not been shown to be the market price.

Interesting paradox: The surveyor's opinion of what is the market price is one of the determinants of the market price.

The buyer should be the best placed person to purchase. The valuation is to establish what the next best placed person would offer.

[D Vardy's Shadow]

I think that OP saw in his contract with the surveyor what I also saw. There was a clause which said (I paraphrase), "You cannot show this report to anyone else except your solicitor." I suspect that what they are mostly trying to do is prevent you pulling out of the purchase and then selling the document on to the replacement buyer - which is something we were asked to do. (But didn't, in case anyone wants to know - we had after all signed a piece of paper that said we wouldn't.)

But technically, if there is a such a clause in the contract, then you can't show it to the vendor either.

I believe the major reason for the clause is to make the valuation report a 'privileged communication' between surveyor and client, which provides some limited protection for the surveyor against being sued for libel by the seller if he makes a mistake which reduces the reported value. With this protection in place, the surveyor can fulfill his duty to the client and express himself more freely, without looking over his shoulder for a libel writ.

[Oh Give Me A Home]

This happened to me in Jan 98.

I offered £64k for our property, it was on at £68k, survey came back from the bank saying it was only worth £60k. In the end we agreed £60k, because I needed a 95% loan, plus £2k for Fridge freezer, washing machine, dishwasher, beds curtains etc.

You have been handed a gift, take it.

And to me, way back in 1992. We viewed a new-build flat, on the market at £65k. Offered (I think) £58k, which was accepted. The valuation came back at £54k. We told the vendor (builder) - his response? "Don't worry about that, we can find a surveyor for you who will value it at the right price"! Oh how we laughed.

In the end, we upped our offer to £55k providing they had the place fully carpeted, which was accepted.

[Bloo Loo]

The buyer should be the best placed person to purchase. The valuation is to establish what the next best placed person would offer.

but the buyer needs a loan.

I might want that new car, but if I cant get the loan to finance it, either the dealer drops his price to my level, or he walks, or I find some more cash of my own, or I walk.

no different with housing.

to say otherwise is the same idiotic argument I heard on radio 2 in 2007...."but, the banks HAVE to lend otherwise we cant afford the houses!"

[Number79]

Not necesserily. A sale at any price is far more important to them than a vastly reduced price.

Then why not simply pass on the revised offer and try to explain to the vendour that if that is what the survey says then that is all there is too it as it fixes lending terms?

If the ea were simply wanting the sale then they would be working for both parties to reach an agreement in the middle.

[Selling up]

but the buyer needs a loan.

Unless I read him wrong, I don't think DVS is disagreeing with you or me.

His point makes sense alongside the one about the only buyers who count being the ones who can afford to proceed.

IE The valuation is to establish what the next best placed person who can actually proceed with the sale would offer.

[noff]

A quick update on the situation, the Vendor has turned down the 385K but has said that he would be willing to negotiate further. What would other people do in my position. The survey says 385K, my original offer was 435K (50K difference) however I am very reluctant to offer any more than 385K. Naturally I expect the answers to be 'just pull out' however if I still want the propoert how should I play it. If I am really pushed I would pay up to 400K but not a penny more.

[thefruits]

Spot on

The market value for this property was £435k because that was the figure offered by the person who sets the actual price the purchaser. The fact some surveyor sets the price lower for his valuation estimation purposes is totally irrelevant. The purchaser is somehow trying to guzunder the price by using a surveyors estimation as a guide, which is just silly. House prices are set by how much people are willing to pay for them, surveyors only try to give a guide to trends, and tend to be slightly conservative out of self interest.

Why does the OP describe himself as a bear?

Agree. The vendor should simply take the nock on the chin and say to the offeree (the OP in this case) to sling their hook. If i was selling and I came up against this sort of nonsense, I'm hardly going to say 'ok I'll take off £50k' just because your valuation says its worth less.

[tomwatkins]

Agree. The vendor should simply take the nock on the chin and say to the offeree (the OP in this case) to sling their hook. If i was selling and I came up against this sort of nonsense, I'm hardly going to say 'ok I'll take off £50k' just because your valuation says its worth less.

To clear up all this nonsense about how a surveyor values. We are required to value as is stands (rebus sic stantibus) taking in to account defects inherent. Surveyors are NOT there to forecast trends as some posters on here say. That is the job of the lender when making his risk assessment and hence the current requirements for mortgage insurance, increased deposit etc. Whilst my own PI insurance would cover negligence (if I missed subsidence for instance or dry rot), valuation is still in the eye of the valuer. I was taught to "value as you de-value". It's the sound way. Remember also that the surveyors client is usually the lender-he is not there to protect the interests of the buyer (for mortgage purposes anyway).

Tom MRICS

[Brave New World]

Agree. The vendor should simply take the nock on the chin and say to the offeree (the OP in this case) to sling their hook. If i was selling and I came up against this sort of nonsense, I'm hardly going to say 'ok I'll take off £50k' just because your valuation says its worth less.

Oh yes don’t let a silly little thing like the commercial valuation get in the way of cuckoo land prices!

Banks clearly are reluctant to lend against something they feel simply ain’t worth what some naïve seller wants for it. Hence the amount of SSTCs falling through. It is the first good thing banks have done in years.

[tomwatkins]

Agree. The vendor should simply take the nock on the chin and say to the offeree (the OP in this case) to sling their hook. If i was selling and I came up against this sort of nonsense, I'm hardly going to say 'ok I'll take off £50k' just because your valuation says its worth less.

If the surveyor valued it at 385K then that is his opinion of OMV. The vendor can say what the hell he likes but I can tell you that the lender will be out of the market for this property at 435K both with this potential buyer and any other that comes forward. So your analysis that he tells the buyer to "sling his hook" is fine and dandy but if the lender was, say, the largest lending institution, then that's a big slice of the lending circle excluded wouldn't you agree? The valuation of that property doesn't just cease with one failed attempt at a deal. It's on file for reference.

[Flat Bear]

but the buyer needs a loan.

I might want that new car, but if I cant get the loan to finance it, either the dealer drops his price to my level, or he walks, or I find some more cash of my own, or I walk.

no different with housing.

to say otherwise is the same idiotic argument I heard on radio 2 in 2007...."but, the banks HAVE to lend otherwise we cant afford the houses!"

You normally have a reasoned argument and tend to be quite accurate as I would suggest you read threads through and "read between the lines" of posts

You seem to have missed post 44

[erranta]

Can't agree strongly enough with this and the comment from Dubai.

Don't take any crap from the EA - if they're obnoxious, bypass them directly. Remember, this is a business transaction, so don't get emotional about it.

Agreed - this is what confuses me.

When I have bought and sold houses before if the buyer/seller wants to swop tel numbers and deal direct - why the f'ing hell not?

Just don't say anything that they could have you for in the future - although the solicitor questions will probably get you on that - such as previous subsidence / antisocial neighbours enquiries etc.

You/seller don't have a legal obligation to go thru the bloody EA's! Therefore they can't give you boll*x about not passing on "offers" or not and demanding to see your survey.

The house probably belongs to an EA, friend or relative in this case!

At least, ask to swop Email addresses with owner once you get as far as paying a £1000+ on a private survey!

It is also common for a survey to be below the amount agreed upon ie your offer - that's totally up to you what you want to 'offer' for it.

Thing is, are you desparate to complete against loads of competion and in a rising price market. Obviously No!

Whether the bank gives you a mortgage relevent to the amount you have offered is another thing!

Edited June 4, 2009 by erranta

[deeplyblue]

A quick update on the situation, the Vendor has turned down the 385K but has said that he would be willing to negotiate further. What would other people do in my position. The survey says 385K, my original offer was 435K (50K difference) however I am very reluctant to offer any more than 385K. Naturally I expect the answers to be 'just pull out' however if I still want the propoert how should I play it. If I am really pushed I would pay up to 400K but not a penny more.

I'm assuming that you could make an offer of £400K, even if the mortgage provider will only support an offer of £385K.

If that is the case, then you have to decide if do really want to proceed. I would certainly think hard about it, as the surveyor's valuation is probably a good guide to how how much you will have to spend on the house. DON'T over-extend yourself - leave enough for all the things that you think will have to be done, and then add on a really hefty percentage for all the extra things you'll discover whilst you do the known problems. This is experience speaking!

Given that you do want the place, and he won't take £385K, I would suggest that you make him an offer of £395K and make it you "best and final offer" - i.e. that you will not improve that offer, even if he turns it down. I would suggest that you mean it, too - I suspect you are going to need every extra £5K you can get hold of, and it sounds as though £400K would over-stretch your budget. The only compromise that I might consider (were I in your position) is giving him an extra couple of thousand for carpet and curtains, and fixed appliances (fridges etc) - but only if he sounds as though he is prepared to be cooperative (and if you actually want them!). Better yet, if he suggests it himself.

I'm picking £395K because if he turned down £385K, he won't listen to £390K; OTOH you would really rather not go as far as £400, and should leave a little to one side for extras. Hence £395K. But I would make it "best and final", otherwise he will try to force you up to £415 at least. But given that he thought he'd got £435K he may think he'll get that from someone else with a different surveyor, or at least £420K+, so you do have to be prepared - both you and your wife have to be prepared - to walk away from this one. It may be that you can't get it for a price you can afford.

db

[Bloo Loo]

You normally have a reasoned argument and tend to be quite accurate as I would suggest you read threads through and "read between the lines" of posts

You seem to have missed post 44

thank you. I did. I note the man needs a mortgage if he goes to the full price, so he will need a mortgage valuation as well.

[Damik]

A quick update on the situation, the Vendor has turned down the 385K but has said that he would be willing to negotiate further. What would other people do in my position. The survey says 385K, my original offer was 435K (50K difference) however I am very reluctant to offer any more than 385K. Naturally I expect the answers to be 'just pull out' however if I still want the propoert how should I play it. If I am really pushed I would pay up to 400K but not a penny more.

jesus christ!!! value of this house is 385k now; 320k next year; 280k in 2 years ....

do not be blind!

tell him that ha can negotiate with your bank or get you a different mortgage ... what is unlikely ...

tell him that people need mortgages to buy houses and the mortgages come from banks

tell him that the bank is the master in the game and he will have to accept it or keep the house for next 15 years .... or find a Russian cash buyer ...

[Damik]

Agree. The vendor should simply take the nock on the chin and say to the offeree (the OP in this case) to sling their hook. If i was selling and I came up against this sort of nonsense, I'm hardly going to say 'ok I'll take off £50k' just because your valuation says its worth less.

there are only 3 options for you:

- get a cash buyer and sell for your price

- get a buyer with mortgage and sell for bank's price

- keep your sh.t place for 15 years ...

anything else is just your wet dream and the first option is very unlikely ... ))))))))

[Damik]

thank you. I did. I note the man needs a mortgage if he goes to the full price, so he will need a mortgage valuation as well.

if you find a cash buyer he can offer anything over bank valuations

but usually (90%) you will get a buyer with 90% LTV mortgage

and in this case the bank valuation is the most important factor

and because of these valuations, 3.5x mortgages, deposits and higher IR the HPI is dead in the water for next 15 years ... 100% guaranteed!!!