The lenders valuation is thousands below what I’m paying – what are my options?

Q: My lender's valuation on the house I am buying is £40,000 below the agreed purchase price. I've asked the lender if the valuation can be revised upwards but have been told that valuations are final unless there is a very large difference (25%+) in price. What are my options?

 

The valuer will be independent of the lender so it’s not a decision that the lender will directly influence.  Therefore you do get situations like this where the property is downvalued and the surveyor doesn’t agree with the purchase price.

It is generally difficult to appeal these decisions with a lender.  To stand a chance there will need to be several very recent sales of very similar property close by.

As a result the lender will only offer the mortgage based on the lower valuation amount.  However as a purchaser it could be possible to renegotiate the purchase price to reflect the  surveyors findings.  After all the buyer doesn’t want to pay over the odds.

If the vendor won’t budge on price and on the assumption an appeal is unsuccessful, the options are either to bridge the difference from savings or to try an alternative lender.  A different lender may instruct a different surveyor who may reach a different conclusion on the valuation.  I say ‘may’ as lenders will have panels of valuers and so there’s even the chance that the same firm could be instructed. There’s also clearly no guarantee that there will be a difference in opinion so could end up being a costly exercise.

Finally, it’s worth noting that lenders will only instruct a basic valuation for their own purposes.  It’s well worth considering a more in depth survey when buying a home as this will flag up any issues with the property for the buyer not just the lender.  This will help give them confidence that they are buying a property that isn’t carrying any nasty surprises but may also give more info on what could affect the value if it falls short.

David Hollingworth, London & Country Mortgages

 

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