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Dodgy valuations when remortgaging


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So today I was preparing company accounts for a property investor. 

He bought a house in Nov 18 for 200k with 75%/150k mortgage. In July 2019 he had it revalued at 340k and remortgaged at 75%. He basically got 100k cash after fees. What did he do with this 100k? Deposit on another property.... 

Bearing in mind he spent 10k sprucing the place up, where have you ever heard of a house increasing in 140k in just under 2 years? 

It's made me realise the mortgage brokers, surveyors, solicitors, and everyone else involved in the chain is dirty as hell. As long as he makes his monthly repayments the lender won't care and property only ever goes up so it won't be problem???? 

This game is rigged. It's like a massive Ponzi scheme

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10 hours ago, MuayThai18 said:

It's made me realise the mortgage brokers, surveyors, solicitors, and everyone else involved in the chain is dirty as hell. As long as he makes his monthly repayments the lender won't care and property only ever goes up so it won't be problem???? 

This game is rigged. It's like a massive Ponzi scheme

A valuation is just one person's opinion.

The broker and solicitor have little to do with it the broker submits the application - if it is downvalued it is out of his hands. The sol processes the paperwork.  

If it is so rigged get involved.  

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12 minutes ago, richmondtw said:

A valuation is just one person's opinion.

The broker and solicitor have little to do with it the broker submits the application - if it is downvalued it is out of his hands. The sol processes the paperwork.  

If it is so rigged get involved.  

If it is so rigged then it's a dangerous game.

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11 hours ago, MuayThai18 said:

He bought a house in Nov 18 for 200k with 75%/150k mortgage. In July 2019 he had it revalued at 340k and remortgaged at 75%. He basically got 100k cash after fees.

Where is this house that went up >50% from 2018 to 2019? 

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I wouldn't worry about it too much. 

Either something dramatic happened in the area ( eg a new hospital opening) or the valuer got it wrong/ committed fraud. 

Fraud works only when the market rises. When market falls, valuer gets sued by lender/ goes to jail. 

I'd ask the punter how come and note down his answer personally. There may be no one left in the country to jail apart from the accountant...

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This has crossed my mind too, more than once. 

I'm in a similar line of work as OP by the sounds of things and am tangentially aware of certain brokers/Ifas who seem to be able to drum up unlimited amounts of credit from seemingly average properties and get mortgages for people who seem ridiculously over extended. 

Why don't I just get involved? I've seen the flip side of this too, where a family member was over extended and lost the lot back in the last GFC. I expect a similar event is ahead of us. 

Oh yeah, plus I don't want to be a landlord. Quite happy with my one house, safe boring job and my savings and pension. 

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8 minutes ago, 24gray24 said:

I wouldn't worry about it too much. 

Either something dramatic happened in the area ( eg a new hospital opening) or the valuer got it wrong/ committed fraud. 

Fraud works only when the market rises. When market falls, valuer gets sued by lender/ goes to jail. 

I'd ask the punter how come and note down his answer personally. There may be no one left in the country to jail apart from the accountant...

It's good practice for accountants to ask those sort of questions and corroborate the answer to ensure there isn't a mistake, OP is not going to jail over this. Ultimate responsibility for what goes in those accounts lies with the client. 

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56 minutes ago, Hullabaloo82 said:

It's good practice for accountants to ask those sort of questions and corroborate the answer to ensure there isn't a mistake, OP is not going to jail over this. Ultimate responsibility for what goes in those accounts lies with the client. 

True, but what does get the accountant sent to jail is the conviction that the accountant a) knew what was going on and b) was getting a cut somehow. 

That applies double if the main men have left the jurisdiction. 

You have to hang an accountant from time to time in order to encourage the others, as the saying goes. 

But if said accountant is just a bit dim and takes clients reasonable explanation, he should be okay. He's not expected to be a detective. 

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  • 418 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% +
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