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Times Article Saturday - Banks Valuing Houses At 25% Less Than Sale Agreed Price

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The gist of the article was that, far from escaping the housing price bust as anticipated, prime property is being hit in exactly the same way. They gave several examples of buyers where banks had valued the house they were buying at 20-25% below the sale agreed price. One of the property pundits quoted in the article said that this was very similar to the period just before the crash of 2008.

The article was pretty dumb however, with footnotes such as 'Buyers - what to do if your house is being valued at 25% less than you have agreed to pay for it: 1) get another survey done to prove the house is worth what you've agreed to pay for it, or 2) go to a private bank who will lend you money much more freely.' The article even had to pose the question 'is there an advantage to buyers if the house is valued at 25% off?'.

No mention of the fact that 20-25% lower valuations might actually mean that the house is worth exactly that and NOT TO PROCEED WITH THE PURCHASE AT ANY COST.

I thought Times readers were supposed to be an intelligent bunch; if they are they would hopefully see through this kind of nonsense.

Edited by Analysis

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Your post conjures up images of John Cleese and Michael Palin.

One of them is sat at a desk, the other is demanding that he be given a rope to hang himself.

This country.......

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...it's a trend which shows the Banks are at last refusing to lend against thin air....in a falling market they will follow the snake down to spread their risk and place more onus on the owner with lower LTTRVs (loans to their revised values)..... :rolleyes:

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That is very interesting news.

I know that quite a few HPCers are able to buy with cash having STRed or inherited... or just being rich... and it has crossed my mind in recent weeks whether that might be a mug's game... If you get a mortgage you have to get a bank surveyor and peraps the surveyor/bank will do the work for you by simply stating to the EA/seller that the house is vastly over-valued.

Then again, I think that some areas still have surveyors who are, IMPO, as deluded as the EAs/sellers are.

Although, anecdotally and also on bloomberg today, I hear that banks are now restricting mortgagesto 2.5 times salary for public sector workers.

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That is very interesting news.

I know that quite a few HPCers are able to buy with cash having STRed or inherited... or just being rich... and it has crossed my mind in recent weeks whether that might be a mug's game... If you get a mortgage you have to get a bank surveyor and peraps the surveyor/bank will do the work for you by simply stating to the EA/seller that the house is vastly over-valued.

Then again, I think that some areas still have surveyors who are, IMPO, as deluded as the EAs/sellers are.

Although, anecdotally and also on bloomberg today, I hear that banks are now restricting mortgagesto 2.5 times salary for public sector workers.

The fear of being sued will drive valuations by surveyors down. None of them want to be on the right hand side of the valuation bell curve when prices are tumbling...

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That is very interesting news.

I know that quite a few HPCers are able to buy with cash having STRed or inherited... or just being rich... and it has crossed my mind in recent weeks whether that might be a mug's game... If you get a mortgage you have to get a bank surveyor and peraps the surveyor/bank will do the work for you by simply stating to the EA/seller that the house is vastly over-valued.

Then again, I think that some areas still have surveyors who are, IMPO, as deluded as the EAs/sellers are.

Although, anecdotally and also on bloomberg today, I hear that banks are now restricting mortgagesto 2.5 times salary for public sector workers.

That's an interesting point.

Always get a small, say 5%, fee free mortgage even if you can afford to pay cash and completely confident that you have hammered the vendor on price.

That way you get a valuation to verify that you are paying no more than the current 'forced seller' price.

The mortgage could be on a 4/5 year repayment basis so that the interest is minimal and you get the deeds relatively soon.

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That's an interesting point.

Always get a small, say 5%, fee free mortgage even if you can afford to pay cash and completely confident that you have hammered the vendor on price.

That way you get a valuation to verify that you are paying no more than the current 'forced seller' price.

The mortgage could be on a 4/5 year repayment basis so that the interest is minimal and you get the deeds relatively soon.

Can you get mortgages over that period, and for that sort of value ?

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That's an interesting point.

Always get a small, say 5%, fee free mortgage even if you can afford to pay cash and completely confident that you have hammered the vendor on price.

That way you get a valuation to verify that you are paying no more than the current 'forced seller' price.

The mortgage could be on a 4/5 year repayment basis so that the interest is minimal and you get the deeds relatively soon.

at 5% they're not going to be arsed about the value

Most surveyors judge price the same way we do - there's no magic there - so at 5% you'll not get a valuation out of line with what you think

If you borrow 90% then they may down-value it for safety

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Yes, you would need to get as big a mortgage as possible, or give the impression you want such, in order to get a hopefully true valuation.

Alas, several surveyors I know of locally are also EAs.

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Can you get mortgages over that period, and for that sort of value ?

5%? No. Never could. Waste of time for the mortgagor. Pick any lender you like and look at their T&Cs.

But the principle he was making is valid.

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in my limited experience most surveyors are chumps... by far the main source of information they use to inform their valuations are simple sold [and even asking] prices... but if a surveyor is valuing 25% below a price you'd agreed then you can pretty much guarantee that said price is way above anything that's been paid for a similar house before. that must be as good a sign as any to steer well clear.

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5%? No. Never could. Waste of time for the mortgagor. Pick any lender you like and look at their T&Cs.

But the principle he was making is valid.

It's not the level of LTV, it's the amount to make it worthwhile for the lender. I mean, 5% of £500k property is £25k. Most of them have a minimum lend amount of £15k - £20k.

You could always get a higher LTV if you're concerned about the valuation, say 75% on their SVR, and then pay it all off a month later.

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  • 239 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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