House Valuation Issue

[Dis86]

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?!

 

[Dis86]

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.

 

[Dis86]

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?

 

[Dis86]

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.

 

[Dis86]

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.

 

[Dis86]

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.

 

[Dis86]

Even if you knew there is nothing you could do to change it. At the end of the day a fw variables are thrown in a computer such as size, # bedrooms, location, garden, age and a value is spat out. The bank has very little incentive to disagree with the valuation.

I'm just curious if they've made a mistake with some of those variables though. For example one of the conditions of the sale was that we buy the freehold for the building - which has been processed but probably won't show up on official records yet. I'm also curious what properties they're comparing us against for valuations as like you we have some cheaper houses located nearby but which are built to a completely different standard and located on the 'other side of the tracks' literally.

 

[Dis86]

Ah see this is why I posted about free/lease as an potential issue earlier
Is it now freehold, that is a valid one to throw back to the mortgage lender if its not updated fully yet they may well get leasehold coming back as the ownership.

Precisely. Which is why I'm really irritated at their response of 'we don't have to justify it to you'. Well sorry, but when you're being paid to do a job the client has a right to review your process!

 

[Dis86]

Yeah there's been no choice from these guys. You have to use their appointed surveyor. I do wonder though if it's been the same guy each time as it's been different people from our end in the house each time.

 

[Dis86]

Update to this - looks like the surveyors had all made the same error! Didn't include the fact that the property is freehold - not leasehold. Incompetence from their side.

 

[Dis86]

So, has this corrected the agreed valuation of the sale?

Yeah. It's now overvalued as it happens!

 

[Dis86]

To be fair, it doesn't really sound like incompetence, its more like bad timing. Most of these surveys are done remotely so are reliant on the records available to them. If the land registry record said leasehold at the time of the valuation then it'll have been valued as such.

If they'd been willing to discuss the matter though it could have been resolved instantly. Instead they refused to engage with the client which to me is a combination of arrogance and incompetence.

@fastwunz

They didn't use all of the information available to them.

 

[Dis86]

When I sold my house, the surveyour asked me if the house was leasehold or freehold...

Sounds like a better surveyor than these ones were!

 

[Dis86]

Leasehold really only ever existed as a way of preventing people misusing the land from it's intended purpose like a covenant would. It's only really recently where people have started exploiting it at every opportunity and this has essentially ruined it for everyone.

Pretty much this with ours. It was a way to keep property values up by ensuring people didn't have the land around their houses become a dumping ground or caravan park. It also required that gardens and houses are visibly maintained. The ground rent annually was a pittance.