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Cinzano Bianco

Mortgage Valuation Survey

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Hi all,

I am looking at a semi-detached house which is on the market for £50K more than the other half of it sold for in the last few months. As far as I can tell, there is very little difference (it has been a rental and needs updating, so the inside is unlikely to make up for the difference), same footprint, but the garden is bigger.

If we make an offer (as FTBs) we obviously will use this information to justify a lower offer, but my question is, what does the mortgage company do to with regards to a valuation report? If in theory we offered the asking price, would the mortgage valuation use the land registry sold price, and take that as current market value, and thus not lend above that (minus our deposit)?

TIA.

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Hi all,

I am looking at a semi-detached house...

TIA.

Cisco

See my thread on the 'Boiler'. The RICS HomeBuyer report is a total red herring, and next to useless. Unless there is something seriously fundamentally wrong (cracks in the walls, a very old property) it is so generic as to be no good

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Hi all,

I am looking at a semi-detached house which is on the market for £50K more than the other half of it sold for in the last few months. As far as I can tell, there is very little difference (it has been a rental and needs updating, so the inside is unlikely to make up for the difference), same footprint, but the garden is bigger.

If we make an offer (as FTBs) we obviously will use this information to justify a lower offer, but my question is, what does the mortgage company do to with regards to a valuation report? If in theory we offered the asking price, would the mortgage valuation use the land registry sold price, and take that as current market value, and thus not lend above that (minus our deposit)?

TIA.

The mortgage company don't do anything. They (get you to) pay for a surveyor to do it.

And yes, the surveyor will do a comparison with other sold prices in the street to reach his valuation

tim

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Cisco

See my thread on the 'Boiler'. The RICS HomeBuyer report is a total red herring, and next to useless. Unless there is something seriously fundamentally wrong (cracks in the walls, a very old property) it is so generic as to be no good

But it is perfectly useful at obtaing a valuation for mortgage purposes.

tim

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The mortgage company don't do anything. They (get you to) pay for a surveyor to do it.

And yes, the surveyor will do a comparison with other sold prices in the street to reach his valuation

tim

Thanks Tim.

Yes I don't think I worded it very well. I understand that the banks will use a surveyor to value the property, but I am struggling to find information on how they compile a report that the banks then use to approve or otherwise. I know that mortgage availability is tight at the moment, and I wonder also if surveyors are erring on the side of caution.

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Cisco

See my thread on the 'Boiler'. The RICS HomeBuyer report is a total red herring, and next to useless. Unless there is something seriously fundamentally wrong (cracks in the walls, a very old property) it is so generic as to be no good

Thanks garybug.

I guess what I am trying to deduce is if a valuation that the bank requires a surveyor to carry out is likely to use the land registry data to come up with a maximum they would lend, given my particular circumstances. I assume they would, but I wonder how much significance is placed on it.

Essentially I want a solid argument to lay a one time non-negotiable figure on the table... I may alternatively start low and work up to this, but my strategy is as yet undecided.

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Thanks Tim.

Yes I don't think I worded it very well. I understand that the banks will use a surveyor to value the property, but I am struggling to find information on how they compile a report that the banks then use to approve or otherwise. I know that mortgage availability is tight at the moment, and I wonder also if surveyors are erring on the side of caution.

Surveyors will not consider mortgage availability to reach a decision, that is for the underwriters. They do however use a number of sources to reach a valuation. They of course have access to the same sold price data you have, some will have decades of experience pricing houses in an area and finally they often contact agents for comparable evidence.

If the house next door sold unreasonably low, it is fair to say that they may disregard the evidence. If though, it links in with other information they have, then I imagine it will be quite pivotal. If your offer is substantially over market value, it will be downvalued, if your offer is reasonable and the house is sound there will be no issue.

Surveyors are being more cautious with their valuations, but only so far that they are being so with a mind to the current downward trend in prices.

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The best advice is to just negotiate a price you are happy with. The worst that will happen is that the vendor will say no and will still be regretting it in eighteen months as he pockets 15k less than you offered

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The best advice is to just negotiate a price you are happy with. The worst that will happen is that the vendor will say no and will still be regretting it in eighteen months as he pockets 15k less than you offered

Yeah, that's the other concern :)... but I am so sick of waiting now, it's like my life is consumed with thinking about house prices - I just want to get on an forget about it to be honest!

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Yeah, that's the other concern :)... but I am so sick of waiting now, it's like my life is consumed with thinking about house prices - I just want to get on an forget about it to be honest!

Same with me and the reason I just purchased a house, but.... do not just buy anything for any price. Look at as many places as you can and offer low.

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Same with me and the reason I just purchased a house, but.... do not just buy anything for any price. Look at as many places as you can and offer low.

The situation I outlined above makes me wonder what the lowest is though. The strategies I have been mulling over are:

  1. Offer asking price minus £50K minus another ~10%, and be prepared to be talked up

  2. Offer the asking price minus £50K and say that's the same as next door, and the only offer you are going to get

Based on the information I have at the moment, we wouldn't be prepared to pay more than next door paid... and likely wouldn't get a mortgage for that - hence the reason for the OP.

This assumes we think it is worth what next door paid, and are happy with that figure, but it feels somewhat like a very low offer based on asking price, and I don't want to get labelled as a time waster if you see what I mean.

The other thing I have been thinking about is to ask the agent what next door sold for (playing slightly dumb) and seeing what their answer is... alternatively simply asking why, in a falling market, this house is worth £50K more than next door.

Since you recently bought, what advice can you give me regarding making a low offer? As an FTB, I have no experience, though I have had some good advice from friends, such as offering and stating it is subject to survey (to see if they start getting worried at the idea).

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The situation I outlined above makes me wonder what the lowest is though. The strategies I have been mulling over are:

  1. Offer asking price minus £50K minus another ~10%, and be prepared to be talked up

  2. Offer the asking price minus £50K and say that's the same as next door, and the only offer you are going to get

Based on the information I have at the moment, we wouldn't be prepared to pay more than next door paid... and likely wouldn't get a mortgage for that - hence the reason for the OP.

This assumes we think it is worth what next door paid, and are happy with that figure, but it feels somewhat like a very low offer based on asking price, and I don't want to get labelled as a time waster if you see what I mean.

The other thing I have been thinking about is to ask the agent what next door sold for (playing slightly dumb) and seeing what their answer is... alternatively simply asking why, in a falling market, this house is worth £50K more than next door.

Since you recently bought, what advice can you give me regarding making a low offer? As an FTB, I have no experience, though I have had some good advice from friends, such as offering and stating it is subject to survey (to see if they start getting worried at the idea).

My first piece of advice is to look at other similar properties in neighbouring streets both on rightmove and on houseprices.co.uk. If there are several properties at the price you want to pay you can feel justified offering it.

Next talk to the agent. I assume you have viewed it already and I am assuming they are the same agent that sold the next door house. Chances are that the agent is pulling their hair out at the sheer stupidity of a vendor. In my agency we know that most of our properties are overpriced and work on a regular basis to get prices down. In this market agents aren't selling much and may actually think you offer is very good. The only way to find out is to have a frank conversation with the agent face to face. Don't do it on the phone - the agent is likely to be more cagey and will be a lot less likely to think you a timewaster if you go to the office. Discuss the comparables you've found and why you think the offer is justified. Don't lecture the agent though, you want him on your side as much as possible.

My personal opinion is that you should always offer lower than your ideal offer and be prepared to go up gracefully. Negotiating i always look for win win and vendors dont want to think theyve sold it too cheaply. Give the agent some ammo to work the vendor with.

Don't mess with subject to survey offers, it is meaningless and is only relevant in Scotland. There's nothing to stop you pulling out or renegging on a bad survey anyway.

Finally be prepared to walk away and buy another house in the area. This is a buyers market and there should be plenty of choice. FTBs are like rocking horse sh1t at the moment. You have all the aces.

Good luck. Let us know how you get on.

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Thanks PbroAgent, some very interesting words of advice there.

Sadly the type of property we are interested in are very hard to find in our area. There aren't really any other houses around, certainly the only comparable is the house next door... it is quite rural.

I think this puts us in a tough position from the point of view of holding our nerve to be honest! We have been looking for around 18 months now, so when something looks promising it is easy to get over excited... but we are pragmatic enough financially to walk away.

Of the friends and colleagues I have spoken to, the consensus is that the vendor must just be chancing their arm to see what happens... it's interesting that you should say the agent is likely pulling their hair out. It appears to me the agent sold the other property, so I would suggest they know the score, but are looking to see if they can hook a mug I guess.

Thanks for the advice on delivering an offer, and I I think I agree I will have to negotiate face to face on this. Are you an estate agent by the way?

The plan is to simply front load by saying I don't want to come across as a time water, or insult anyone, but these are the facts as I see them... then give a few short points about the sale price of next door (and therefore mortgage availability), the falling market, and being an FTB that is able to move quickly and unencumbered by chain. I'll certainly try not to lecture or labour any points.

Does that sound reasonable?

Thanks again.

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Your plan sounds entirely reasonable. I am an agent in Peterborough, which is a cheap city on the very edge of the London commuter belt.

Agents very rarely set the price of a house, and frustratingly we are often seen by vendors as a necessary evil who's advice is often best ignored. There are some big new developments in Pbro, in one we have three houses of an identical design where the asking price varies between the 3 by over 30k (10%). There is no difference and even the cheapest is probably 20k too much for this market.

The reason for over priced houses can be numerous. Sometimes the vendor needs more because they overpaid and need to clear a mortgage, sometimes there is an overinflated ego - the number of people who think they live on a better street/bigger plot/better orientated garden is laughable. We have too many agents in Pbro and often an agent will purposely overvalue a house to try to win business. Finally vendors can be just clueless - i am still coming across people (albeit not many) who think it is a right for them to sell their house for more than they paid for it. Even if they bought it new 18 months ago.

Edited by PbroAgent

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Since you recently bought, what advice can you give me regarding making a low offer? As an FTB, I have no experience, though I have had some good advice from friends, such as offering and stating it is subject to survey (to see if they start getting worried at the idea).

At the end of the day you need to be realistic in terms of what will be accepted and what won't. I would have loved to offer £100K less but the reality is it wouldn't be accepted and regardless of what people might think here it wouldn't set a seed in the vendors head.

PbroAgent has given good advice, for me the number one key is don't get sucked in by a house, it's very easy but you need to be really cold when it comes to buying, once you get emotional it will be no end of trouble. It seems as if this house is a non-starter, if you think it is massively over priced then the vendor may well have it set in his mind he wants XYZ and offering won't get you anywhere. In this market you want to be looking at places at the right valuation and the start offering lower than that, not offering at a level over the average.

You need to plan an offer strategy, give it 2-3 days between offers IMO regardless, you don't want to seem too keen. We found somewhere we liked, with a motivated seller we offered 30K less and then went up £2.5K at a time with a plan to leaving it longer after each offer. We set a hard upper limit and would have gone for £20k under asking maximum but in the end managed to get it for £25K less, however it was already undervalued in our opinion and needed work.

In this market you want to be looking for somebody who wants to sell, not some kite flyer. Don't waste any energy on people who won't negotiate or want more than the going rate.

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PbroAgent (I understand your name now :)), gilf, thanks for the great advice chaps.

We are off the see the place tomorrow, unless the weather causes us problems (being something of a fatalist, I sometimes wonder about the timing of things like this).

In response to gilfs post, I agree with pretty much everything you said especially about being realistic. However the more research I do on this property, the more it seems slightly different from what would be normal.

As I have mentioned, the house next door is identical in footprint, but appears slightly better kept, with a better detached garage. It is being sold off by a vendor who recently bought it (this year it seems) as part of a much bigger estate, and was until recently rented out. It is like they curent owner is asset stripping... It appears that the tenants have been given notice, and forced to move (as they had been there for a few years). Next door was also part of the estate, and was sold for £50K less than this one is advertised for... and I am not sure if they are just chancing, and would accept a lower offer.

Thanks for the strategy tips - useful to know for sure. I think I have a hard limit, set by the sale of the house next door, and unless convinced otherwise there is no reason I can see for the wildly different asking price. Would you consider an initial offer on the day far too eager?

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Would you consider an initial offer on the day far too eager?

In this market, yes.

Edit: On reflection, perhaps not. You've no doubt already shown a lot of interest in it by finding out all the extra info. Go for it but keep the offer low.

Edited by PbroAgent

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In this market, yes.

Edit: On reflection, perhaps not. You've no doubt already shown a lot of interest in it by finding out all the extra info. Go for it but keep the offer low.

Well, we saw it. Needs a lot of work, but it's very nice... seems to be a lot of interest at the house sadly, and is going to sealed bids (of doom!) on Wednesday. We are realistic about what we would pay for it, so I think it is very unlikely we would win... if we decide to go for it. Any advice?

Cheers.

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Well, we saw it. Needs a lot of work, but it's very nice... seems to be a lot of interest at the house sadly, and is going to sealed bids (of doom!) on Wednesday. We are realistic about what we would pay for it, so I think it is very unlikely we would win... if we decide to go for it. Any advice?

Cheers.

They're really making you jump through hoops for this. I really want to know what property I'm talking about. What's the post code and price?

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They're really making you jump through hoops for this. I really want to know what property I'm talking about. What's the post code and price?

We have decided it isn't for us, and won't be jumping through those hoops (the instructions letter put us off a bit as well)! Just in case you are curious though, the link is below. Basically the ivy is causing damp in the house, and I think the lead flashing around the main chimney stack is shot, if not something more serious roof wise. The chimney on the side of the house currently houses the oil fired boiler downstairs, and the water tank upstairs - there is some structural cracking on the outside. Finally, all the windows are shot, and need replacing. All in all, being rushed into a purchase like this is a recipe for disaster IMO (as inexperience FTBs) so this is best left to someone who knows what they are doing. Would be a belting house when sorted though.

North Cottage

It is part of the old Tandridge Estate, and dates make many hundreds of years as far as I can tell. Someone bought the estate in July for £19.5M, and it seems is asset stripping, leaving whatever it is they originally wanted behind I guess.

I will track it, and see what it eventually goes for out of interest... but there is a lot to spend on it I think. No idea what it would be worth in perfect condition, but I expect if you were that way inclined there is some money to be made... but we just want a decent home.

Thanks for you advice.

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Wow. Cracking property in a great location. I can see why you'd be interested, but I can also see the potential pitfalls.

I think in eight years, I've only ever run sealed bids four times, and then only really it used for a dog of a house or for one with great potential like that which is almost un-valuable. This is where you've really got nothing to lose. Is there any harm offering £100k under asking? Gives you £50k to make it right, and if you "win" the house and you're still not happy, you can always pull out.

BTW for a house looking like that and of that age, I'd be recommending a full structural survey all day long - could be all sorts wrong with it.

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  • 312 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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