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How Lenders Value A House

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Do they value against the amount they lend or the complete price?

eg. Offer agreed price £200K

1) Buyer A borrows 90% LTV i.e £180K + 10% deposit.

2) Buyer B borrows 80% LTV i.e £160K + 20% deposit.

If the property valuation comes to £170K buyer A will not get enough mortgage and the vendor may be forced to reduce the price whereas buyer will buy it a higher price as the remaining 10K will be covered by the deposit?

I ask this because the EA asked me to increase my offer on a property and I said I would increase but what if the valuation is less? EA said if the valuation comes less than agreed price then the price is sully dropped. Don't know if this is true???

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Do they value against the amount they lend or the complete price?

eg. Offer agreed price £200K

1) Buyer A borrows 90% LTV i.e £180K + 10% deposit.

2) Buyer B borrows 80% LTV i.e £160K + 20% deposit.

If the property valuation comes to £170K buyer A will not get enough mortgage and the vendor may be forced to reduce the price whereas buyer will buy it a higher price as the remaining 10K will be covered by the deposit?

I ask this because the EA asked me to increase my offer on a property and I said I would increase but what if the valuation is less? EA said if the valuation comes less than agreed price then the price is sully dropped. Don't know if this is true???

My understanding is that the lender's valuation aims to establish whether the property is adequate security for the loan being advanced.

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In my experience that EA tries to force the buyer to increase their deposit if the valuation comes in lower than the agreed price.

This happened to me more than once when I was trying to buy a flat in Surrey (I was more disabled then and needed flat access or a lift).

This is one of the reason I will no longer let the EA know what true deposit I have or see their "IFA".

It's all a game of bluff and negotiation. The seller doesn't care if the valuation is less if your deposit can rise to overcome this. They can choose to sit and keep the house until the right buyer comes along. That is unless they genuinely want to sell it quickly.

EA's were arguing to me then, that increasing my deposit wasn't a risk as the flat was increasing in value every month.

It's all part of the game for them. The valuation and the survey are another step in the game.

Edited by Flopsy

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