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What Happens When The Bank Value Lower Than Agreed

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

They ask for a second opinion. LOL

and a third...

and finally they might give in, or take it off the market.

the sane ones shrug and say ok, and negotiate their future purchase down.

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Totally don't know what to do right now. Said at weekend I was not going to post anymore :

Link

But reading through every now and then I think , oh, there's that article and that one too , so I just don't know what to do.

People have posted and got in touch saying that they find my posts helpful but I am SO tired of Hamish spoiling threads.

But for what they are worth, try these.

Chains Break Due to True Valuations

Homebuyers Left High and Dry as Lenders Cancel Mortgage Offers

I posted a thread today related to NAEA Stats and noticed that up to last year the NAEA published the % of transactions that fell through after a sale had been agreed , but this stat in June 2009 , not surprisingly perhaps, appears to be missing.

BLOO LOO who used to post but I have not seen around for 2 weeks said "we live in a land of broken chains."

The 50+ properties I have been watching have never got past Under Offer or STC and back again to available , NOT ONE has sold and I have been watching these for months.

First Rung said last week:

UK house prices (asking) have stopped their recent 'dead cat bounce' according to Miles Shipside and his team at Rightmove. Estate agents now have on average seventy properties each on their books, and are only selling ten per month according to RICS...

However, this RICS contention is not supported by recorded data. With only 35,000 property sales a month, according to Land Registry, and the head count of agents being circa the same this would suggest that agents are in fact only selling on average one property per month.

Can't understand why EA's are still listing at 2007 values and getting buyers when they must know that buyers are not going to be able to get the finance.

I can only imagine they HOPE that all down the chain will drop, but it would seem that rarely happens.

Edited by Sybil13

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in my very limited [all second hand] experience they're usually prepared to accept a lower offer.

I am being shouted down because I quote Rightmove / Hometrack/ Savills / Rics etc who said as early as February 2009 that property was selling at the new floor or 25 - 30% below peak.

Someone on another thread tonight said their chains of 3 broke down. They had their property on the market virtually at 2007 value.

A valuation is likely to come in at 25% - 30% below peak, 40% I believe for remortgages.

So if you are selling a property valued at £300000 in 2007 and you get a buyer for it in 2009 at £290000 and the lender values at 25% below peak, you will be asked to accept £65000 below asking.

Sellers currently must think "why should I " when everything else is being marketed at 2007 values.

So the chain breaks.

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So the chain breaks.

Ah Sybily, we already debunked Sybil fallacy 1572 (land of broken chains) this afternoon.

QUOTE (Rinoa @ Jun 29 2009, 11:04 AM)

Cancelleations have reduced markedly over the past 4/5 months, coming down from a high of 37% at one point down to 13% now. A further sign of confidence returning to the market.

So approvals net of cancellations up.......

And cancellations down from 37% to only 13%.......

So much for bloo loo and Sybil's much parroted "land of broken chains" theory!!!!!!

This is turning into a great month. All those bear myths being debunked, no wonder they are getting desperate.

True enough, the difference between Sybil and Sibley is only one letter and 10,000 words per post......

BTW, isn't the point of throwing a strop and leaving that you last more than a few hours before you come back looking for attention???? :lol:

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Cheers for the links Sybil ;) .

Don't stop posting.

You could just put him on ignore. I mean he bought at peak in Aberdeen which says enough about him for me at least.

That Ali Hussain is clearly deluded too.

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

A lot of sellers would assume that any subsequent valuation would be the same (unless they have evidence to the contrary) and would seriously consider a lower offer.

Totally don't know what to do right now. Said at weekend I was not going to post anymore :

Link

But reading through every now and then I think , oh, there's that article and that one too , so I just don't know what to do.

People have posted and got in touch saying that they find my posts helpful but I am SO tired of Hamish spoiling threads.

But for what they are worth, try these.

Chains Break Due to True Valuations

Homebuyers Left High and Dry as Lenders Cancel Mortgage Offers

I posted a thread today related to NAEA Stats and noticed that up to last year the NAEA published the % of transactions that fell through after a sale had been agreed , but this stat in June 2009 , not surprisingly perhaps, appears to be missing.

BLOO LOO who used to post but I have not seen around for 2 weeks said "we live in a land of broken chains."

The 50+ properties I have been watching have never got past Under Offer or STC and back again to available , NOT ONE has sold and I have been watching these for months.

First Rung said last week:

Can't understand why EA's are still listing at 2007 values and getting buyers when they must know that buyers are not going to be able to get the finance.

I can only imagine they HOPE that all down the chain will drop, but it would seem that rarely happens.

People aren't buying at 2007 prices - what makes you think that?

'Frequently lenders are raising people's hopes with mortgage offers which, as far as I can see, they never have any intention of honouring'

This is a very dubious article that you have posted IMO with the above sweeping statement and no evidence to support it and I would suggest that it might even be an advertisement!!!

That is an outrageous statement and I'm sure it might have happened once or twice but I have been in the mortgage industry for 25 years and don't believe a word of it. None of my mortgage offers (thousands over the years!) has ever been pulled!! :rolleyes:

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That is an outrageous statement and I'm sure it might have happened once or twice but I have been in the mortgage industry for 25 years and don't believe a word of it. None of my mortgage offers (thousands over the years!) has ever been pulled!! :rolleyes:

Sybil has never let reality or facts get in the way of a good spamming session..... ;)

1+1 = Eleventy!!!!!!!

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

If the banks value at 230k and you are the buyer you would be silly to offer more....

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A lot of sellers would assume that any subsequent valuation would be the same (unless they have evidence to the contrary) and would seriously consider a lower offer.

People aren't buying at 2007 prices - what makes you think that?

'Frequently lenders are raising people's hopes with mortgage offers which, as far as I can see, they never have any intention of honouring'

This is a very dubious article that you have posted IMO with the above sweeping statement and no evidence to support it and I would suggest that it might even be an advertisement!!!

That is an outrageous statement and I'm sure it might have happened once or twice but I have been in the mortgage industry for 25 years and don't believe a word of it. None of my mortgage offers (thousands over the years!) has ever been pulled!! :rolleyes:

Hi thanks for your input, so which of the articles I posted did you feel was "outrageous" , and an advertisement.

Was it the :

Homebuyers left high and dry as lenders cancel mortgage offers

8 June, 2009

Lenders are increasingly withdrawing written mortgage offers just before exchange, reports PPR, leaving chains in disarray and homebuyers and sellers in serious financial difficulties.

Buyers normally assume that a written mortgage offer means their finance is secured. But in fact, lenders are frequently making written offers and withdrawing them; which they are legally permitted to do within the small print. Prior to the credit crunch this was very rare and usually only occurred when the borrower's circumstances changed adversely after the mortgage application was submitted, increasing the risk to the lender.

Over the last few months, however, there has been a notable rise in the number of cases where lenders have withdrawn mortgage offers with no explanation, or attributed it to something as trivial as one missed credit card payment, resulting in the sale collapsing. Since March, Property Portfolio Rescue (PPR) has intervened to save over a dozen chains from collapsing, as desperate sellers urgently need to find a new buyer for their property after a mortgage offer has been withdrawn, causing their existing buyer to pull out of the sale.

Nick Hopkinson, Director of Property Portfolio Rescue, said: ?Frequently lenders are raising people's hopes with mortgage offers which, as far as I can see, they never have any intention of honouring. In fact, I?ve heard of several instances recently of mortgage offers being withdrawn at the eleventh hour after repeated credit checks by lenders have adversely affected a buyer?s credit rating, causing them to fail the loan criteria!

"Banks are simply not open for business apart from to the very best customers with the lowest loan to values, but they are disguising this unwillingness to lend by launching products to the market which have so many clauses and caveats that most ordinary people would have little hope of qualifying.?

PPR is regularly coming across buyers who have succeed in securing a mortgage offer, only to be informed that it has been withdrawn as they liaise with the lender approaching exchange with no explanation given. This is after the buyer has spent significant time, emotional effort and money proceeding with the sale in good faith. This behaviour is causing major stress for sellers who are losing agreed sales as chains collapse, often several months into the process.

Don?t believe the adverts and rate charts publicised by mortgage lenders as these are mainly a smoke screen to make it look like they are open for business,? says Nick Hopkinson. ?Most banks are still in real financial trouble behind the scenes and are battling to build their reserves and reduce their bad debts as the recession worsens. The UK is effectively seeing mortgage rationing by banks as they cherry pick only the buyers with perfect credit ratings and huge deposits."

There was another link tonight with a guy in a chain of 3 that had broken down. Certainly I read on HPC every week that members using Property Bee see property go Under Offer or STC and then back again. As I said at the weekend to McT and co I simply put forward for discussion what I read, I haven't got a vested interest . The 50 properties I have been watching some have been going Under Offer or STC and back again, NOTHING has sold and I have been watching these for months.

Or was it the link that said:

June 9, 2009

Surveyors are stifling property market recovery

By undervaluing properties, surveyors could be prolonging the house price downturn

Surveyors have been accused of undervaluing properties and stifling the property market recovery, according to a new analysis.

Research by the commercial law firm, McGrigors, suggests surveyors are valuing properties up to 20 per cent less than an agreed sales price. It means many buyers need to find a bigger deposit or see their purchase fall through.

The practice is also providing ammunition for gazunders - buyers who reduce their offers on properties, often at the last minute as contracts are due to be exchanged.

However, McGrigors says a more rapid recovery is being undermined. Suzanne Gill, Partner at McGrigors, said: “Surveyors are making some very defensive valuations which are significantly below prices which have been agreed between seller and buyer. This is making it much more difficult for sales to complete and holding back house price growth.

If a price of £120,000 has been agreed for a flat, a buyer seeking an 80 per cent mortgage (i.e, requiring a 20 per cent deposit) should be able to borrow £96,000. However, if a surveyor values the property at £100,000, the buyer will only be able to borrow £80,000. The buyer will then need a deposit of £40,000 instead of £24,000.

Gill adds: With builders margins already wafer thin, defensive valuations are piling more misery onto the sector at a time when many were hoping they had seen the bottom of the market.

McGrigors says surveyors are permitted a margin of error in their valuations of up to 20 per cent. Valuations which are deemed to be more than 20 per cent inaccurate could form the basis for legal action by the lender.

Edited by Sybil13

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....

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

...

IMVHO you would wonder why you had had a very stupid day, then go to the pub to celebrate that bank valuer has saved you from yourself. Why anyone at that point would still be looking to buy I don't know.

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

There are three main groups of people who do not accept the down valuations easily that I have seen so far.

- The downsizers for whom a drop in value is more difficult to accept than it is for the upsizers. In my limited experience, these people tend to have large amounts of equity and are willing to wait a year or two for conditions to improve by either delaying their downsize or renting rather than selling. They might have to wait a lot longer than they thought.

- Those who have a sliver of positive equity at the agreed price and negative equity at the down valuation. These people are stuck. Their position might well worsen over the next few years.

- There are also quite a few opportunistic upsizers. They think that their next house should be 25% off peak prices but their existing house should only be 10% off peak prices. This group of chancers are a waste of everyone's time although their position with respect to expectations might actually inadvertantly prevent them from making a bigger mistake by upsizing.

In my limited experience, at least a third of homes on the market are really not on the market as sellers have no interest in actually selling at fair market value (as supported by an independent valuation from a RICS surveyor).

My experience is probably biased by the fact that I am looking at biggish family homes in niceish areas which are currently being hogged by those in the right part of the demographic distribution and bought 10+ years ago.

Edited by LuckyOne

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

It depends :P

Seriously, how could there be a general answer to such a question? It really depends on whether the bank valuation is enough for them to proceed with whatever next step they had planned.

- 230k might leave them with a mortgage shortfall (NE) and unable to proceed no matter what their personal preferences

- they might be moving to a place whose vendor won't budge

- they might be hoping to emigrate and need a minimum amount of dosh to fund it

- they might simply decide that the house's amenity value is worth more to them than 230k.

- ...

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Hi thanks for your input, so which of the articles I posted did you feel was "outrageous" , and an advertisement.

Was it the :

Homebuyers left high and dry as lenders cancel mortgage offers

8 June, 2009

There was another link tonight with a guy in a chain of 3 that had broken down. Certainly I read on HPC every week that members using Property Bee see property go Under Offer or STC and then back again. As I said at the weekend to McT and co I simply put forward for discussion what I read, I haven't got a vested interest . The 50 properties I have been watching some have been going Under Offer or STC and back again, NOTHING has sold and I have been watching these for months.

Or was it the link that said:

June 9, 2009

Surveyors are stifling property market recovery

By undervaluing properties, surveyors could be prolonging the house price downturn

Sybil I don't mean to be rude but did you actually read my post?

I actually 'quoted' the statement I was questioning verbatim from your own link.

'Nick Hopkinson, Director of Property Portfolio Rescue, said: Frequently lenders are raising people's hopes with mortgage offers which, as far as I can see, they never have any intention of honouring. '

I made no comment whatsoever on your link about surveyors!

Edited by LettingsLady

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Ah Sybily, we already debunked Sybil fallacy 1572 (land of broken chains) this afternoon.

True enough, the difference between Sybil and Sibley is only one letter and 10,000 words per post......

BTW, isn't the point of throwing a strop and leaving that you last more than a few hours before you come back looking for attention???? :lol:

Why dont you just do one!!

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Sybil I don't mean to be rude but did you actually read my post?

I actually 'quoted' the statement I was questioning verbatim from your own link.

'Nick Hopkinson, Director of Property Portfolio Rescue, said: Frequently lenders are raising people's hopes with mortgage offers which, as far as I can see, they never have any intention of honouring. '

I made no comment whatsoever on your link about surveyors!

Don't worry about it. All Sybily's posts end up like this.

It makes no difference how often you point out the obvious fallacies, it's back being spammed in another thread within minutes....

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Totally don't know what to do right now. Said at weekend I was not going to post anymore :

Link

But reading through every now and then I think , oh, there's that article and that one too , so I just don't know what to do.

People have posted and got in touch saying that they find my posts helpful but I am SO tired of Hamish spoiling threads.

But for what they are worth, try these.

Chains Break Due to True Valuations

Homebuyers Left High and Dry as Lenders Cancel Mortgage Offers

I posted a thread today related to NAEA Stats and noticed that up to last year the NAEA published the % of transactions that fell through after a sale had been agreed , but this stat in June 2009 , not surprisingly perhaps, appears to be missing.

BLOO LOO who used to post but I have not seen around for 2 weeks said "we live in a land of broken chains."

The 50+ properties I have been watching have never got past Under Offer or STC and back again to available , NOT ONE has sold and I have been watching these for months.

First Rung said last week:

Can't understand why EA's are still listing at 2007 values and getting buyers when they must know that buyers are not going to be able to get the finance.

I can only imagine they HOPE that all down the chain will drop, but it would seem that rarely happens.

Your first link relates to comment made commercial lawyers who then go on to talk about builders margins. This suggests that the report relates to new builds which are and have always been over valued. I'm not surprised these are being downvalued as they probably have never been worth the figures the builders put on them.

An example is 3 new builds in the area I used to rent. A peak houses on the road were worth £250K max. theses houses have been on the market for the last 6 months at £289K.

The second link does not seem to mentions valutions but talks about mortgages being pulled for various reasons like missed like missed credit card payments etc.

Remember even in the boom 25-30% of property sales fall through so even if we are now at 40% its not a massive amount more than peak.

You may have further links to support your arguments but based on the 2 links above there is nothing to suugest the land of broken chains you refer to or that lenders are down valuing 30-40% from peak

Edited by Emy74

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

Back in 2004 when we sold our property was down valued. Not by the figues you are talking about but by about 5K. In my opinion its up to seller to way up whats going on in the market and the likelyhood they would get more money if the property went back on the market.

In the current times I suspect anyone who is really looking to sell will accept the offer if they can. I suspect though that there equity issues etc come into it when decisions are being made.

Edited by Emy74

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

Reduce your offer to 230k. If they put it back on the market send some friends around to make a lower offer than 230000. Then if that is accepted pull out at the last minute and make a lower offer :lol:

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

I can tell you what happens

if the property is down valued either the seller has to come down to bank valuation or the buyer has to find the cash to make up the difference.

If you want to challenge the valuation (which would be crazy on the buyers part) you need to find 3 comparables that have sold in your area recently i,e last 3 months.

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Just wondering if anyone has any experience of this.

Say if you make an offer and 250k then the banks valuer puts it at 230k, what is generally the next step?

Do the sellers accept the banks valuation? Or only if they're desperate?

Depends on the seller.... many take the view that where this occurs then valuers are overstepping the mark as they are employed to assess market value (not future market value) and as the bidder is the market they have no grounds to reject the price the larket has declared is fair, especially as in these lean sales times they have precious little info to go on.

Many valuers out of fear for their insurance premiums are just valuing down... on that basis it isn't worth the paper its written on.. sadly for buyers they don't have any come back, and mortgage companies won't lend the full amount.

Sellers of course will agree or disagree to varying degrees.

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Depends on the seller.... many take the view that where this occurs then valuers are overstepping the mark as they are employed to assess market value (not future market value) and as the bidder is the market they have no grounds to reject the price the larket has declared is fair, especially as in these lean sales times they have precious little info to go on.

Many valuers out of fear for their insurance premiums are just valuing down... on that basis it isn't worth the paper its written on.. sadly for buyers they don't have any come back, and mortgage companies won't lend the full amount.

Sellers of course will agree or disagree to varying degrees.

This is where I was coming from - believe it or not it was a hypothetical question - if both purchaser and vendor have agreed a price surely that is the market value. The valuers job, surely, is to protect the lenders interests in the event of default and the need to recoup losses? Therefore he must make a guesstimate of the likely value at some point in the short term future.

It doesn't really matter what the seller believes does it? I would have thought that given an "official" valuation the majority would then acquiesce. Obviously not.

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