House Valuation Issue

Dis86 · 3 Oct 2019 at 21:25

So...house was put up for sale for a month ago. We had it valued by 3 independent local estate agents and two online agents. All 5 agreed to within 5k. Just so happens we priced it as an estimate at exactly where they did.
A lot of interest in the house, infact 2 offers within 24 hours at the bottom end of asking. We said nay and both upped it with one meeting us in the middle. Apart from this we had about a dozen other viewings in the week before we agreed to take it off sale with several coming for a second viewing.
Then the problems started - mortgage valuer came out and priced it 15% below the offer. Buyer agreed to find another mortgage provider. They did the same.
We approached 2 more estate agents. Valuations came in exactly where the others did.
Buyer tried a third lender. Same deal.
The market in our area is very buoyant with a lot of demand and similar houses to ours are selling for 5k either side of our asking price (thanks Zoopla!). The buyer has been looking in this area for 6 months and knows the property values here well.
What is with the huge disparity between the mortgage providers surveyor(s?) and estate agents, recent purchases, us and our buyers? How do we get around this and sell the house for what the market shows it to be worth?!

alx · 3 Oct 2019 at 21:36

I've seen issues before where a market is so buoyant that all the bids on properties are over asking and hence the valuations are below the sale price, as they tend to lag behind as they're based on completed sale data.

Seems odd - have the mortgage company / valuers been asked to explain the difference vs the estate agents? Or do they not care?

Dis86 · 3 Oct 2019 at 21:39

alx said:
I've seen issues before where a market is so buoyant that all the bids on properties are over asking and hence the valuations are below the sale price, as they tend to lag behind as they're based on completed sale data.

Seems odd - have the mortgage company / valuers been asked to explain the difference vs the estate agents? Or do they not care?

Yeah. They've given a cookie cutter response each time. All including the same phrase that they don't have to explain how they've come to their values.

Burned_Alive · 3 Oct 2019 at 21:42

This issue here is that you need to find a buyer with a better deposit

Dis86 · 3 Oct 2019 at 21:48

Burned_Alive said:
This issue here is that you need to find a buyer with a better deposit

That's what I was wondering. They've already admitted that this is the top end of what they can afford but they've also said that they could put another 10% on top of their deposit. Is it just that the banks are being very cautious with them being first time buyers?

Slade2 · 3 Oct 2019 at 21:57

Estate agents price to get the most money they can as they get a percentage of the sell price (most do some don`t of course, some get a flat fee) Mortgage valuations are a little different and they price to protect the lenders investment to a certain extent. I think currently it might also have a bit to do with the uncertainty over brexit and they have been told to undervalue for lending purposes until they know how the market is going to settle after.

alx · 4 Oct 2019 at 06:06

Slade2 said:
Estate agents price to get the most money they can as they get a percentage of the sell price (most do some don`t of course, some get a flat fee) Mortgage valuations are a little different and they price to protect the lenders investment to a certain extent. I think currently it might also have a bit to do with the uncertainty over brexit and they have been told to undervalue for lending purposes until they know how the market is going to settle after.

This makes sense, especially the lenders trying to protect themselves vs the possible outcome of Brexit.

200sols · 4 Oct 2019 at 07:06

Eastate agent prices are irrelevant, mortgage lenders are those who set the true value of your property. Either buyer ups their deposit which is risky for them because they will be buying a property at a premium over what it is deemed to be valued, or you lower your asking price and take the hit which sucks for you. It’s unlikely the mortgage valuers will suddenly increase their valuations by 15%.

Dis86 · 4 Oct 2019 at 07:29

200sols said:
Eastate agent prices are irrelevant, mortgage lenders are those who set the true value of your property. Either buyer ups their deposit which is risky for them because they will be buying a property at a premium over what it is deemed to be valued, or you lower your asking price and take the hit which sucks for you. It’s unlikely the mortgage valuers will suddenly increase their valuations by 15%.

Surely the market sets the value? Anything is only worth what people are willing to pay and people are willing to pay the asking price for it.

Skillmister · 4 Oct 2019 at 07:41

200sols said:
Eastate agent prices are irrelevant, mortgage lenders are those who set the true value of your property. Either buyer ups their deposit which is risky for them because they will be buying a property at a premium over what it is deemed to be valued, or you lower your asking price and take the hit which sucks for you. It’s unlikely the mortgage valuers will suddenly increase their valuations by 15%.

Lenders normally value a property at the agreed price unless there is a massive disparity. OPs case is definitely an unusual one

chroniclard · 4 Oct 2019 at 07:49

Mortgage valuer knows of the approach of Brexit, estate agents are leavers.

IvanDobskey · 4 Oct 2019 at 07:55

I'm a bit surprised at this. I thought there had to be a large disparity between sale price and value for the lender to pull the plug. Guess it depends on what percentage of the house price is being lent.

Dis86 · 4 Oct 2019 at 08:01

IvanDobskey said:
I'm a bit surprised at this. I thought there had to be a large disparity between sale price and value for the lender to pull the plug. Guess it depends on what percentage of the house price is being lent.

Worth noting none of them have pulled the plug but are expecting either us to drop the price or the buyer to make up the difference.

BUDFORCE · 4 Oct 2019 at 08:07

Estate agents often over egg the value more on remortgages.

It is, more unusual for a valuer to value a property less than the purchase price (except new builds) as said above, the value of something is usually what someone is prepared to pay.

But.... Estate agents are cowboys, a valuer will have a degree and a MRICS or FRICS qualification and will base the value of comparable sales, market conditions and all sorts, basically they are the experts.

Also the valuers will be acting as a third party to the lender, the lender has little to no control at all over what valuation figure the valuer provides.

Saytan · 4 Oct 2019 at 08:09

might it be worth engaging a chartered surveyor to do an independent valuation?

Burned_Alive · 4 Oct 2019 at 08:17

The valuation by the estate agents or anything to do with the estate agents is completely irrelevant. The bank have their valuation and nothing you do will change this.

End of the day, the bank is valuing the house at X and so will only cover Y as part of the buyers mortgage, therefore the buyer needs to come up with a bigger deposit.

This really is not your issue. Tell the buyer to up their deposit or you'll put the house back on the market. This will drag on if you let it.

200sols · 4 Oct 2019 at 08:46

Dis86 said:
Surely the market sets the value? Anything is only worth what people are willing to pay and people are willing to pay the asking price for it.

The mortgage lender sets the value (as they see it in the market) as its their money at risk. We dont know their criteria so can only speculate as to why they have valued it as they have.

Dis86 · 4 Oct 2019 at 10:01

200sols said:
The mortgage lender sets the value (as they see it in the market) as its their money at risk. We dont know their criteria so can only speculate as to why they have valued it as they have.

And that's what's so frustrating - they won't share it.

Psycho Sonny · 4 Oct 2019 at 10:37

Dis86 said:
Surely the market sets the value? Anything is only worth what people are willing to pay and people are willing to pay the asking price for it.

100% this - the market sets the value. I know here in Scotland we get home reports with valuations. People still choose to pay over the odds in high demand areas or premium properties.

Mercenary Keyboard Warrior · 4 Oct 2019 at 10:41

The value of a house is always what someone else is willing to pay. Ie the market value

Normally unless there is a significant difference I have found valuers tend to put in a close value. Do you happen to know if they have paid for a decent valuation, or just the minimum one. Because the minimum one is not much more than a papervalue it can mean significant factors, such as decor etc will not be taken into account.

I know of one significant valuation difference. Was actually my parents buying a new house. Mortgage compancy valued it signifciantly lower than sale price agreed. All the other houses we selling for comparable amounts, no one else seemed to have a problem. The mortgage company were the same, nope not talking, valuer knows his stuff. Switch lender and problem fixed.

But if consistent different lenders are coming up with different values thats very wierd.
is there anything else to take into account, freehold/leasehold (lease could make resale more difficult)?, flood risk, local planning dispute over say a windfarm, those sorts of thing. Lenders will be cautious.