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Mortgage valuation too low.


ZacP
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Just had our mortgage valuation come back.

 

It’s not good news.

 

We have agreed a purchase price of £350k. Mortgage valuation (for Ecology) say value is £250k.

 

The valuer also suggests build costs of £400k where as because we are self managing and doing as much DIY as feasible we have costings to show £280k. 
 

Looks like the project is dead in the water. Any suggestions?!?

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No suggestions sorry but an interesting post in as much we a,re in the process of putting our sons flat on the market. The Estate Agent - 20 years experience - was saying that he has noticed a trend in the past 3-4 months whereby he has had more downgraded market valuations than in the past 20 years put together. 

It seems the RCIS are getting stricter with their valuations or are reacting to pressure from elsewhere?

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15 minutes ago, willbish said:

Possibly time to renegotiate the purchase price.

Do you have a copy of the valuation you can use as 'evidence'?

We will be trying to renegotiate, yes using the report. The planning expires in May, so need to get a shifty on! The vendor bought the plot 18months ago for £315k...

 

@Redoctober that’s v interesting. Or mb as a reaction to a bit of a housing market bubble? 

Edited by ZacP
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Potential self build plots (certainly around south/west yorkshire) are selling for much more than the valuations which will cause problems for most self builders looking to mortgage the site.

Ive recently lost out on two places simply because they made far more at auction than their realistic surveyor  valuations.

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21 minutes ago, ZacP said:

We will be trying to renegotiate, yes using the report. The planning expires in May, so need to get a shifty on! The vendor bought the plot 18months ago for £315k...

 

@Redoctober that’s v interesting. Or mb as a reaction to a bit of a housing market bubble? 

Quite interesting that the vendor has bought the plot and decided not to build 

They will have to take a hit on it 

Things where booming eighteen months ago 

 

 

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House prices have continued to rise through 2020.

 

https://moneyweek.com/investments/property/house-prices/602540/will-britains-2020-house-price-boom-continue-in-2021

 

Quote

...as 2020 draws to a close, it has proved to be the best year for the UK housing market – in terms of activity at least – in a long time. House prices hit new record highs and saw their strongest growth for years, as measured by any house-price index you cared to use, from the mortgage-tracking indices of Halifax (up 7.6% in the year to November) and Nationwide (up 6.5%), to the detailed transaction data of the Office for National Statistics (up 5.4% to October), or even the rather more nebulous “asking-price” data from Rightmove (up 6.6% to December).

 

We sold a flat in October this year and it went for more than the asking price.

 

I think lenders are worried about the year ahead and might be covering their backsides.

 

Edited by Temp
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2 minutes ago, Temp said:

 

I think lenders are worried about the year ahead and might be covering their backsides.

 


I think this might be the case for us. They’ve also asked us to have 25% contingency. Think it’s an ar$e covering exercise. 
 

back to the drawing board!

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The built value is essentially the same - it's the build cost differential that has essentially led the valuer to reduce their figure for the site. Perhaps you need to go back to Ecology again and discuss in further detail how your build costs add-up?

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@ProDave knock down, rebuild.


https://www.rightmove.co.uk/new-homes-for-sale/property-74407401.html

 

we we’re thinking about trying to negotiate £300k ish. Might take it? Plot will reduce in value as it gets closer to planning expiry anyway?

 

@Mr Punter the estate agent values GDV as £850 and the valuer values as £750, we were thinking £800. 
 

@Tom the site is difficult so the valuer has put more contingency into it and less risk for the mortgage company.

Edited by ZacP
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Interesting thread.

I wonder if the surveyor was from eSurv? We've had nasty experience both during and after the build.

We are looking to re-mortgage now to get onto a repayment mortgage from an advance self-build product. Local estate agents value our house c. £900k (very rough estimate). Locally smaller roperties in worse conditions / really dated sell c. £750k-£850k. He valued our newbuild at £800k - and openly admitted during the visit that he has no clue how to value it as newbuilds are rare in his experience!!! We are really pissed off and are appealing - this stupid thing costs us a good deal on a mortgage and extra £600 in product fees!

 

Looks like they play into lenders hands and the lenders are really looking to cover their backs :(( It seems to be a trend, sadly :(

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That looks a nice plot but an eye watering cost compared to what you pay for a plot up here.

 

If the planning does expire I would expect it to be a formality to be reinstated,  I doubt that has much affect on the value.  If in doubt, make your offer to purchase subject to planning then revise the application to make any changes you want and you would be buying it with full duration planning to suit how you would like it.

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@Bored Shopper it was Allied Surveyors for Ecology. If it doesn’t work out it’ll be a waste of £1700 in fees!

 

@ProDave yes, it feels expensive to us too, but the location is perfect for us in a lovely village v close to the school were likely to be spending the next 15 years going to! Good to know about planning. We wanted to make a few changes to the window positions etc anyway so maybe not a bad idea. 

Edited by ZacP
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11 minutes ago, ZacP said:

@Bored Shopper it was Allied Surveyors for Ecology. If it doesn’t work out it’ll be a waste of £1700 in fees

Whose fees were they?  If it doesn't work eith ecology its only 300 lost plus  the surveyors costs. 

 

I had Allied surveyors my plot (through ecology also).  I talked the surveyor through what the value should be on open market.  

 

I bought for 50k. He valued at 175k. 

Edited by SuperJohnG
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59 minutes ago, ZacP said:

@Mr Punter the estate agent values GDV as £850 and the valuer values as £750, we were thinking £800. 

 

Offer the £250 and go to £275 if you really want to.  The valuer is probably more accurate than the agent, who thinks in asking price rather than sold values.  Also the slope and access issues are not inconsiderable.

 

If this is your first project it will be a big challenge and all trades who are any good are flat out and expensive.

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If you were buying the house with the thought of just living there I'm sure £350k would be reasonable and mortgage valuers would be fine.

 

The value goes down once you tell the mortgage company you intend to knock the building down and it could be some time before the new house is rebuilt and worth more.

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1 hour ago, Jilly said:

The same may have happened to them

We’ve quite a lot of sold plots are coming back on the market locally 

With build costs high and house prices expected to fall 

Lenders are nervous 

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19 minutes ago, bassanclan said:

 

If you were buying the house with the thought of just living there I'm sure £350k would be reasonable and mortgage valuers would be fine.

 

The value goes down once you tell the mortgage company you intend to knock the building down and it could be some time before the new house is rebuilt and worth more.


we thought this originally and have had 3 separate standard mortgage valuations. All came back as insufficient security nil value.

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2 minutes ago, ZacP said:


we thought this originally and have had 3 separate standard mortgage valuations. All came back as insufficient security nil value.  Our daughter has just purchased a  former red row home Four years old 360 k They are still building the exact same house on the same site 395 k

Imagine Ger surprise when her mortgage valuation came back at 320k No explanation other than we haven’t visited the house 

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@SuperJohnG just looked in more detail. the ecology fees were £800 application fee and £650 valuation fee.
 

I wasn’t there when they valued the plot, couldn’t have been - COVID. Do you think it’s worth a phone call? I have the surveyors number!

 

@nod completely bizarre! Not even the most basic bit of research at all. So unfair. Did she challenge it? 

Edited by ZacP
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15 minutes ago, ZacP said:

SuperJohnG just looked in more detail. the ecology fees were £800 application fee and £650 valuation fee.
 

I wasn’t there when they valued the plot, couldn’t have been - COVID. Do you think it’s worth a phone call? I have the surveyors number!

That seems steep. I done mine last year - albeit she told me to get it in quickly before they changed the prices. That seems a steep rise though. My survey was 400 I think - a bit of a joke TBH, but it is what it is. I am in Scotland. 

 

I would make a call, talk through with the surveyor - he works for you at the end of the day. Provide some background and show him why its worth more and get the price pumped up. Albeit, this only matters if you need all the cash from Ecology? it just helps draw more overall and at the start. 

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