valuation less than purchase price

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backfromoz

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We agreed a price with vendor 6 weeks ago.

We had the valuation for mortgage which has valued the house at 100,000 less than the price we agreed.

Where does this leave us?

The bank will obviously only lend us what the house is worth.

We are getting a 95% mortgage the LTV ratio wont be increased.

We wouldnt have the savings to bridge the gap but even if we did it wont change what the banks would lend us will it.

Other than re negotiating with the vendor i don't see any other options?

Do we get a second valuation.

Is this problem becoming more common place now that the market is slumping?
 
Who did the first valuation? Somebody on your behalf or somebody on the bank's behalf? Are you sure that it's not a valuation for reinstatement value rather than market value? Are you sure that the asking price for the property is not inflated?
 
It was on the banks behalf. It was for market value.

This is a private sale- we approached the vendor to sell as we are renting the property and love the house.

The price seemed appropriate 6 weeks ago but a house acrossthe road has not sold after being on the market for 2 months and theyve dropped their asking price by 250,000 since coming on the market-need to sell.

So our agreed price was probably a little high.

I know we'll have to renegotiate but dont want vendor to think were are trying to mess her around.

I suspect she will still want more than the banks valuation-it there anyway we can finance the shortfall ?

The bank obviuosly will only lend 95% of what valuation is.
 
Try another lender maybe? Maybe the asking price simply is too high in the current climate?
 
How would changing lendors help? Surely ALL lendors will only give you a mortgage based on the valuation. Should I get another valuation? Can we borrow the 95% of valuation price and then pay her more from our savings if we wish. I do plan to renegotiate but 100,000 is a big gap to bridge.
 
Unfortunately not as nice.A bit smaller, needs a lot more work done and garden doesn't compare.
 
backfromoz said:
How would changing lendors help? Surely ALL lendors will only give you a mortgage based on the valuation.
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The valuation mentioned above was done by or on behalf of your current (prospective) lender. I presume that other lenders will require/do their own valuation so maybe some of them will value the place higher?
Can we borrow the 95% of valuation price and then pay her more from our savings if we wish.
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Yes - of course. But you already said that you don't have the savings to do this! Maybe you cannot afford this house at the asking price?

Just saw your other thread which may be pertinent in this context - i.e. perhaps the vendor is optimistically inflating the asking price but your current prospective lender is realistically valuing it based on this (and other?) knowledge about the place?

Damp house
 
I'd prefer not to change lender and have to go through the whole process again and were getting a good deal from current lender.
I suppose my question is will the bank lend us 95% of valuation figure if they know we are paying a higher price than valuation?
We have some extra savings but as I said not enough to bridge a 100,000 gap which is why I will renegotiate price.I jst dont think I'll get her down 100,000.Will the bank allow me to make up the shortfall
 
backfromoz said:
I'd prefer not to change lender and have to go through the whole process again and were getting a good deal from current lender.
I suppose my question is will the bank lend us 95% of valuation figure if they know we are paying a higher price than valuation?
We have some extra savings but as I said not enough to bridge a 100,000 gap which is why I will renegotiate price.I jst dont think I'll get her down 100,000.Will the bank allow me to make up the shortfall
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The bank won't care what you do with your savings because they are just lending you 95% of their valuation. Its up to you if you want to pay 100,000 extra on top of that price out of your savings. (I don't see the logic myself). The bank won't lose out.
 
backfromoz said:
It was on the banks behalf.It was for market value.
This is a private sale- we approached the vendor to sell as we are renting the property and love the house. The price seemed appropriate 6 weeks ago but a house acrossthe road has not sold after being on the market for 2 months and theyve dropped their asking price by 250,000 since coming on the market-need to sell.So our agreed price was probably a little high. I know we'll have to renegotiate but dont want vendor to think were are trying to mess her around.I suspect she will still want more than the banks valuation-it there anyway we can finance the shortfall ? the bank obviuosly will only lend 95% of what valuation is.
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A drop of €250k? what was the original asking and what sort of house is it?

Just go back to the vendor and tell her what happened. There is no way you should be trying to pay more than the house is actually worth!

These are uncertain times. I'd wait until the Spring to buy myself.
 
As Clubman said, in reference to your other post about same house, I think it is very legitimate for you to go back to the vendor with the results of the survey, the independent valuation and say that things need to be re-negotiated. The vendor will know that she will not be able to sell to anyone else at the previous agreed price, so I thinnk you actually have a stronger hand than you think in this negotiation
 
backfromoz said:
Unfortunately not as nice.A bit smaller, needs a lot more work done and garden doesn't compare.
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Call the vendors bluff....First explain the problem with the new valuation being 100,000 Euros less and then go on to say that her house is unfortunately no longer in your price range and that you are now more interested in the property over the road which had its price dropped by 250,000. You could also say that they are willing to drop the price of the house even further. You have to play one vendor off against the other to get the best deal you can. This is a buyers market !!! Good Luck ....
 
thanks for all you advice.Just needed to think out loud.Unfortunately weve become emotionally attached to this house .I know the market will continue to drop.however we will be here for the next 40 years please god. have agreed a lower price with vendor saving ourselve 60k on agreed price.given that originally she felt the house was worth 200k more than the agreed price I think weve done ok. again thanks!
 
So - what are you going to do about (a) the finances and (b) the structural problems? I suspect that you are letting your heart rule your head here to be honest.
 
Clubman having lived in the house for last 18 months we now what the problems. Work needs to be done but very little immediately according to survey. We used the survey to bargain initally and those costs were factored in. Its got a 130ft garden which is rare enough to get and LOADS of potential so yes our hearts have affected our heads. stretched ourselves but not over stretched. could we have done better probably! but wont look back
 
backfromoz said:
stretched ourselves but not over stretched.
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But surely you ARE overstretched?! :confused:
backfromoz said:
we agreed a price with vendor 6 weeks ago.We had the valuation for mortgage which has valued the house at 100,000 less than the price we agreed.Where does this leave us? the bank will obviously only lend us what the house is worth.We are getting a 95% mortgage the LTV ratio wont be increased.We wouldnt have the savings to bridge the gap but even if we did it wont change what the banks would lend us will it.
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backfromoz said:
Can we borrow the 95% of valuation price and then pay her more from our savings if we wish. I do plan to renegotiate but 100,000 is a big gap to bridge.
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By the way - surely the gap is €100K plus 5% of the valuation price? If the price already dropped by €250K from the original asking then I presume that this house must be costing well in excess of €1M so 5% of the valuation could be something like another €50K!?
 
ClubMan said:
But surely you ARE overstretched?! :confused:


By the way - surely the gap is €100K plus 5% of the valuation price? If the price already dropped by €250K from the original asking then I presume that this house must be costing well in excess of €1M so 5% of the valuation could be something like another €50K!?
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The op stated that they had agreed with vendor to drop another 60k therefore only have to make up 40k plus 5% of valuation from savings. I assume the 250 K figure your using is from the house across the road.
 
I also have a severe emotional attachment to my future earnings which will require me to commute/work for 10 hrs each day for the forseeable future
 
I think that you should be very gratefull to your bank because they have prevented you paying €100,000 too much for this house. Anyone who wants to pay €100K over the market value for a property in a declining market is foolish! You really need to wake up!
 
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