valuation less than purchase price

[ClubMan]

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.

No - the €250K figure comes from here:

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.

I missed the bit about the further €60K discount:

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!

but surely since the shortfall is still €40K + 5% of the valuation price the original poster is still overstretched and cannot obviously afford this property?

The vendor seems to have dropped the asking price by €310K since putting it on the market!

 

[DrMoriarty]

Unfortunately weve become emotionally attached to this house.

I suspect that your vendor is keenly aware of this. You may feel very differently about your 'dream house' if you find yourself strapped by debt and, quite possibly, in a negative equity situation one or two years from now.

 

[sam h]

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.

Seems a rather lazy attitude when you are talking about such large amounts of money? You are talking about €100k, which is more than we paid for our first house less than 15 years ago!

 

[iguana]

I suspect that your vendor is keenly aware of this. You may feel very differently about your 'dream house' if you find yourself strapped by debt and, quite possibly, in a negative equity situation one or two years from now.

But the op will be in negative equity from the instant they buy the house as they are paying €40k over the valuation price.

 

[DrMoriarty]

Up to a point, it's understandable that a lender will value a property more conservatively than, say, an estate agent. Ultimately, a house — particularly a "one-off" such as the OP seems to be describing — is worth what someone is prepared to pay for it, and the only accurate valuations are retrospective.

Anyway, the OP talks about staying there "for the next 40 years please god". The point is that if it doesn't please Him, then yes, they could be facing very significant real losses.

I have to agree that this seems to be a "heart over head" scenario.

 

[Andyeire]

Up to a point, it's understandable that a lender will value a property more conservatively than, say, an estate agent.

The valuation has more than likely been done by the local Estate agent most lenders require them to but down comparable properties on the valuation.The OP should be able to get a copy of the valuation,he has probably paid for it failing they should at least tell him who did it.It is usually the longer established estate agents in an area that are on the panel.

 

[ClubMan]

I was assuming that the valuation mentioned in the original post was done by a surveyor.

 

[Trustmeh]

Call the vendors bluff... This is a buyers market !!! Good Luck ....

I agree with the sentiment, but not in the OPs scenario. Im a landlord and a tenant approached me a few months ago about purchase of house. We never came to an agreement but lets face it - there is NO DOUBT I was in the driving seat.

I have a property currently occupied that is washing its face and has been for 3 years without one break in rent - sounds similar to your landlord (18 months). If I dont sell I will get another renter in with at least 2 more years and no break.

Do I care if the tenant wants to buy the house - not really. But if they stump up enough cash - maybe the very TOP end of any valuation of my house then I might consider selling it now. But either way I wasnt to bothered. Remember your landlord didnt list the house - you asked him.

 

[Brendan Burgess]

Hi Yanklink

I agree with you. The landlord was approached to sell. He presumably does not want to sell unless he gets a very good price i.e. something better than the market.

Backfromoz - you want to buy a house which is not for sale. You have to pay over the current price.

I agree with your decision to pay a bit more than this house is is worth. It is much better to buy a house which you really love than to buy a house which you don't like because it is a bargain.

And, anyway, how accurate is the valuation from the bank's surveyor? It is an estimate and probably a conservative estimate. Valuation is an art and not a science.

When you look back at it in a few year's time, you will be delighted that you paid a bit more for the house you really liked. A lot of people regret that they did not stretch themselves a bit more when buying a house.

Brendan

 

[tyoung]

A lot of people regret that they did not stretch themselves a bit more when buying a house.

Brendan

This is because the rapid appreciation of house prices in the recent past meant meant a greater financial gain if you had stretched yourself to buy a more expensive property. If house prices are flat or actually fall in the next five years I think current buyers will have a lot fewer regrets about not stretching themselves.

 

[moneygrower]

it's not necessarily because of rising prices. I wish we had stretched to a two bedroom place when bought so we had the option of putting off moving to a bigger place for a few years.

 

[backfromoz]

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!

Steve I never WANTEd to pay 100k above market value.
When we made our offer in August we based the offer on an independent valuation we had done.
Our vendr had had her own valuation done at the height of the craziness last year so her expectation were based on that.She quickly realised that market had changed considerably and accepted our offer
3 months later tha bank valued the house at less than our original valuation which did suprise us. However I am DELIGHTED it gave us the opportunity to renegotiate - save ourselves 60K and stamp duty savings too! we had to use more of our savings- delays improvements we hope to make for a while but we have a house we love. and lower mortgage payments too!

 

[backfromoz]

Hi Yanklink

I agree with you. The landlord was approached to sell. He presumably does not want to sell unless he gets a very good price i.e. something better than the market.

Backfromoz - you want to buy a house which is not for sale. You have to pay over the current price.

I agree with your decision to pay a bit more than this house is is worth. It is much better to buy a house which you really love than to buy a house which you don't like because it is a bargain.


Brendan

We got to test drive the property for 18 months while looking at other properties nearly every weekend. Nothing else has compared. We rented for 18 months while house prices have been dropping all around us so feeling lucky we didnt buy at the height of it.Another house accross the road sold for 350k more than were paying and we still have a better house.We're 2 minute from the DART.2 doors from the playschool. 5 minutes from parents.Walk to the sea.wonderful neighbours.Have our own blackberries/plums/resident fox.No estate agents involved. Dont have pack up and move again! The valuation doesnt take these into account! We'll not be moving this is it.

 

[backfromoz]

No - the €250K figure comes from here:

I missed the bit about the further €60K discount:

but surely since the shortfall is still €40K + 5% of the valuation price the original poster is still overstretched and cannot obviously afford this property?

The vendor seems to have dropped the asking price by €310K since putting it on the market!

Been away for a few days and just seeing these posts now!Clubman the 250K WAS in relation to the house accross the rd which has dropped its price recently

There was no actual asking price!We approached the vendor to sell.We based our offer on a valuation we had done. Her expectations had been far above that based on the fact another house on the road sold for 300k above our offer last year and her own valuation last year was 150k above ours.She eventually accepted our valuation.

As I said earlier we've used extra savings but have a mortgage thats now 60K lower than original loan offer/stamp duty savings.The question about being overstretched.The bank were quite happy giving us a mortgage 25% above the one were now asking for so-can meet the mortgage repayments-yes.There is the question of negative equity. Given that were going to live there forever.....its not an issue, we wont be trading up again.This is it!