I like some advice about surveys & valuations

Just had a survey carried out on a flat I'm looking to buy.

The surveyor has said on it:
'The purchase price/estimated value is considered to be and is not supported by evidence of sales of comparable properties in the locality'

Do survey valuations normally come out at approximately what the property was marketed for?

Has anyone else been in this situation? What did you do?

Not been in the situation but yes, surveys tend to reflect the asking price. If they don't then your lender won't give you the mortgage as it's a risk to them.

The thing to do is negotiate down with the vendor. Does it mention an actual valuation figure? There really is no alternative but to try and reduce price or walk away, it's not just about finding problem areas which your lender would stipulate are sorted out, but bear in mind no lender would loan you more money than a house is worth as that would immediately place you in negative equity.

It is rare. Most valuation surveys agree with the agreed price, so if yours is a lot less then pay attention. It is of course possible they have gone to the wrong house or missed something, but if indeed it is the correct property, then you should walk away, pure and simple.

Ary.

Did your surveyor mention any actual figures- because if he did, you would have a strong hand to play with the vendor, I would think.Or was he just being unhelpful ?

this happened to a friend of mine recently....the estate agent selling the house sent details to the surveyor and the lender of a whole range of similar properties in the same road (and surrounding ones) to show that the house had been valued accordingly....but the surveyor would not change his mind and eventually they had to pull out of the purchase as the mortgage company would only lend on the surveyors valuation.

This happened to another poster recently. I asked them if they were borrowing a high percentage of the purchase price and it turned out they were.

As then, I am still of the opinion that if you are borrowing more than 95% valuations often seem to come in low.

At the end of the day it will depend on whether you can still proceed with a lower mortgage or persuade the vendor to reduce their price.

Thanks for the good advice. Time to renegotiate !!!!
I've spoken to the estate agent about the situation. Told them that I'm happy to pay market value. They've spoken to the seller who's now thinking about it!!!!!!!!!!

This happened recently to a friend, the valuation came back lower than the asking price. Turns out that the neighbour property was sold few months previously (private deal not through letting agency but must have involved some cash on the side) at a ridicously low price which put down the value of my friend property for valuation purposes.

My understanding was that valuers normally give a lower valuation. They are only making sure the lender could get his money back if the borrower defaulted. The surveyor used to ring a local agent and ask for a 'comp' ie comparable for similar properties. They then presumably reduce the value to take care of other factors, condition etc and market conditions ie in a slower market they'd take off for possible future lower prices. I am presently marketing our house. The agent said that because the current market is (was) quite good the valuer should give a high valuation but even so I expect it to be lower than the asking price. If a purchaser is only borrowing say 90% then it would't be a problem.

Why on earth would they regularly give a valuation lower than the asking price of the property unless that was the actual market value of it? What buyers are going to blithely hand over the asking price when its been valued otherwise? Only those with very large deposits by the sounds of it physically could do so as the lender isn't loaning them a big proportion of the 'value', but even then, if it were me, I would under no circumstances pay above the valuation.

quote:

Originally posted by queenstomper:
Why on earth would they regularly give a valuation lower than the asking price of the property unless that was the actual market value of it?

In a rising market it's safe to value at the asking price. In a static or falling market they need to cover their backs. If the buyer hasn't put down much deposit then the lender is not going to be happy if the house value drops below the mortgaged amount.

quote:

Originally posted by queenstomper:
What buyers are going to blithely hand over the asking price when its been valued otherwise?

Well they won't, so that's a downward pressure on the sale price.

I had this happen to me 15k under asking price. We tried to negociate but the buyers said they didn't want to. We are borrowing 100% and although I take on board what someone said as that means the bank intentionally value under I find that a difficult one to understand as at 100% the money they make back is good so long as we say with them over time.

WE pulled out of the first sale and offered on another house and survey came in bang on. Maybe that house is actually worth more who knows.

Alarm beels should ring if it is under. IMO our first house at celing for the road was a big misjudgement by those that originally valued for market.

If it depends on what percentage mortgage the potential buyer is having then does this mean that lenders inform the surveyor not only of the asking price of the house but also of the circumstances of the buyer?

The surveyor, surely, is not concerned with anything other than the specific areas he is being paid to look at and his professional opinion of the value of the house as opposed to the asking price.

Surveyors do not deliverately under or over value a property. The will, however, have the agreed sale price in their mind when they weigh up the relative value of the house taking into account any work that needs doing.

Ary.

This happened to us when we bought our house a couple of years ago when prices were rising in our area. We were wanting to borrow around 85% of the purchase price. The surveyor was a bit strange and commented on things like "low quality conifers" in the back garden. Anyway, agreed price was £124K, valuation came back at £116K. Turns out a sale had been agreed on next door for £118K (although it's a different style of house so not directly comparable). We re-negiotated to £119K. The sale on next door subsequently fell through and they sold a couple of months later for £129K!

quote:

The surveyor was a bit strange and commented on things like "low quality conifers" in the back garden.

>
I'm sorry but that made me laugh out loud! We had one like that - where the surveyor went on and on about whether the fireplace was 'period appropriate' for the house'. I felt like ringing up and saying 'Who did this survey? Brian Sewell?'. I only wanted to know if the bloomin' house was going to fall down once we bought it!

quote:

Originally posted by decca:
[I felt like ringing up and saying 'Who did this survey? Brian Sewell?'. I only wanted to know if the bloomin' house was going to fall down once we bought it!

I know I think Brian did ours! I could just imagine his voice and disdainful expression when he was looking around! He did us a favour in the end, although at the time is was a bit like reading a bad school report.

quote:

Originally posted by decca:

quote:

The surveyor was a bit strange and commented on things like "low quality conifers" in the back garden.

>
I'm sorry but that made me laugh out loud! We had one like that - where the surveyor went on and on about whether the fireplace was 'period appropriate' for the house'. I felt like ringing up and saying 'Who did this survey? Brian Sewell?'. I only wanted to know if the bloomin' house was going to fall down once we bought it!

LOL awesome

In my short experience, valuers working for the lender can simply be inconsistent. Obviously if you go to a high street lender, they will send their valuer out who strangely enough may have already made his mind up to agree the sale before getting there, especially if your making a deposit of 15% or more. They have a bit of local knowledge from properties up for sale in same area and are not responsible for spotting structural defects anyway.

On the other hand they could be incredibly detailed and at times ridiculous as mentioned by yourselves. If there are plenty comparibles at a similar price then you should be okay in a good market. the problem comes when all there is to compare was a similar house that sold last year and you end up suffering for it.

How can you combat this? Well if you have an independant broker who knows certain lenders methods very well, they can help you out and give you the heads up if theres some uncertainty

My first mortgage had an actual valuation which was over the sale price and list of work and probable costs and from then this is what i expected all of the time from a valuer sent by a lender, sadly not.

The last survey i had done independantly for piece of mind as the lenders survey said nothing other that they are happy to make an offer, and my survey(RICS homebuyers survey) simply agreed with the asking price but was incredibly useful at pointing out all of the bad points that i had originally negotiated it for anyway.

Mike

Hello

(My first posting - hope I'm doing this right!)

If it's any help, we are in the process of buying. We had our level 1 survey and valuation back from the lender yesterday. Their appointed surveyor has valued the property at exactly what we agreed to pay the vendor (i.e. the asking price). I feel that in the current market (which has gone ballistic!)it is a very fair price. Incidentally, we are only borrowing about 50% of the cost of the property.

It was interesting to read what others have posted here re: if the borrowing is very high, the valuation is reduced. Why don't they just call it something else then - 'level of equity risk' or similar, rather than 'valuation' which it quite clearly is NOT?!

My house was valued at offer price, although I had negotiated £15k off of the asking price. The comment was, and I quote "this property is, on the whole, a reasonable proposition for purchase at the agreed price"

The house next door is identical, and that has just sold for £40k more than I paid for mine, and I only moved in this Feb. The house 4 doors down, which is smaller than mine has just sold for £25k more than I paid. When I say smaller than mine, I mean it has 2 less reception rooms and does not have a freestanding garage. A house identical to mine about 20 doors away has just sold for £55k more than mine, after a bidding war! (what nutter bids more than the asking price in today's market?!).

So, valuations are certainly difficult to get right, and obviously the valuers for the three properties mentioned had different opinions to mine. 2 have completed, and one has exchanged. It makes me wonder what my valuer would have said in his comments if I had paid £40k more for the house.

Seems like I got a good price, although I have no intention of moving so it isn't relevant anyway.