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  • Property-a-holics

    Challenging a serious RICS down-valuation?



    Hello,

    I think it is common knowledge that lenders' surveyors are seriously undervaluing properties in the current market? I am in London with a gorgeous and huge 2-bed, 2 ensuite flat with lovely balcony to sit, say, 4 for dinner, valued by several local agents at £850,00-£900,000 for sale within the past year. The lenders' surveyor has just valued it at £640,000-£675,000. 

    Have had to decide not to sell because the best offer I had was £800,000 and I believe I may be better hanging on to it, given that the area should see some uplift post-Brexit and some more because it is very near 2 new Crossrail stations in, say, spring 2021. 

    So, I decided to seek rental valuations with a view to remortgaging, letting it out, and coming back to sell in two years, while renting myself outside of London. Saw about 12 agents, literally everyone around here. The average was £2,600-£2,900 PCM. I imagined I would let at about £2,600 PCM. Also believe rents have been rising slowly over past year or two re the sales market being flat. The lenders' surveyor has valued at £1,960!

    It is so way off. The broker has instigated an appeal.

    I may sound wealthy but can assure you I'm not. Still have pretty large mortgage and bridging finance due to be repaid late October.

    Have any of you had this experience re under-valuations and have any of you appealed successfully?

    Or have any other ideas of what I can do?

    Thanking you in anticipation

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    Hi,

    I'm a mortgage broker by trade. This problem crops up often when applying. I believe this is due to surveyors needing to cover themselves due to the property being a security for the mortgage.

    I get the impression a lot of surveyors believe the London market has peaked and prices may fall in the near future. As such they're covering themselves by valuing properties lower than they could potentially be sold for - to prevent the mortgage lender chasing for compensation if prices fall and people default.

    A client of mine had an offer accepted of £760K for a property, was down-valued to £690K, no opportunity to appeal due to no comparable sales in the area.

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    Hi Max,

    Yes, I'm getting that impression. There are few comparables in my area - and even if there were my flat is still incomparable. It was when I bought it so I guess I was lucky at that time to get a mortgage. It has increased in value over 600% in the 21 years I have lived here.

    I have taken it back to the brick, reconfigured and finished beautifully (I am v interested in and done some training in interior design). Wasn't intitially refurbing for sale, but now have to either sell or remortgage. Yes, the surveyor obviously needs to cover himself, but this is just ridiculous!

    But you are clearly saying there's probably nothing I can do about it. 

    When you say the problem arises when applying, what do you mean? I don't think the broker has done anything wrong and I have simply sent him the valuations I received...

    Thanks

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    Hello

    How much do you need to borrow in a remortgage?

    The value of the property is one thing, but the loan amount is usually based on the rental income - and when possible, we can also use your personal income to add to the affordability via a facility known as 'top slicing'.

    Top Slicing is a very useful tool and can possibly substantially increase the amount you need, versus just using the typical lenders ICR calculators.

    For a comprehensive research and detailed report of what can be achieved, contact any of the Team at https://www.PropertyTribesFinancialServices.com anytime at advice@ptfs.co.uk or 01206 654 444.

    Hope that helps.

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    Hi Babooshka@60

    I have experienced this issue first hand, appealing the decision will not work. I tried this myself gaining my own RICS valuation to no avail.

    However, i was successful via another method that might be helpful to you, it means using an alternative mortgage provider though.

    Firstly, ask your broker to find out who the current mortgage lender is using to provide the property valuation, as in most cases the mortgage provider uses external sources to carry out the valuations on there behalf. Then ask your broker to approach another mortgage provider (i.e not the one that has down valued your property) and ask who they use to carryout the property valuation, if its the same surveyors as the previous then ask to use an alternative company to provide this valuation (mortgage providers use multiple practices), they will ask why, my answer was they were unable to accommodate a valuation that suited my availability, and were extremely inflexible. Once this has been re-arranged make sure you are present whilst the surveyor is carrying out the valuation armed with all the market data you have sourced (comparables would be better than estate agent valuations). 

    This worked for me, perhaps could work for you also.


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    Thanks for your very informative reply. Unfortunately my broker initially thought only one lender would consider this remortgage re my very low income. Although he is trying to find others now. But the point re which surveyor they use is good. Do you have any idea which surveyors are the least likely to down-value to this extent? In the past I've always had great valuations from Connells but had never heard of e.surv! I was here when the valuer came. He was very friendly, told me lots about his private life, but was hard to read. Apparently he knows the area but, frankly, he just can't do and has probably used comparables from streets or other areas nearby that are simply nothing like my area, which is about 3 streets and a square, and is widely known to be the most prestigious micro area in the borough!

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    Not in your area i'm afraid, the main point is to try and get an alternative surveying practice to the one that has given you the down valuation. If you have received favourable valuations from the estate agents then kindly ask them what comparables they have used so that you can perhaps use these when a surveyor re-visits the property (dont use the estate agents valuation as this cant be relied upon), but comparables are very influential.

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    Yes, thank you. I have asked all the agents involved to send me the comparables they used when valuing my property. Fingers crossed

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    London market is difficult at the moment.

    You are looking for £850k-£900k for a two bed flat which is exactly the same price point as all these thousands of new builds going up are being marketed at. Surveyors are just seeing or thinking that price point will be flooded with stock.

    I have not had down valuations on flats in the £400 - 500k mark but have seen of big issues getting mortgages agreed on ones at higher valuations.

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    Thank you, mine is a period conversion in the 2nd best street in my immediate area and a minutes' walk to Zone 2 Tube. So it's a bit niche but plenty of buyers, especially affluent, slightly more mature ones, would I think prefer this to those new builds over at Canary Wharf and the cheaper ones near Olympics park etc

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    I see often from new Landlords that there plan is to buy a property BMV and then after they have owned it for 6 months remortgage it remove there deposit and cash an buy again

    I have warned a number of times that the Man with the clip board will have the final say

    This is going to get worse in the SE  as time moves on The valuer here will not be alone

    Now that the fall has started I want to know how the Govt is going to halt the falls 

    what leavers will they pull Low Interest Rates dont be daft  a cut in stamp duty more likely

    Its all going to come down to affordability and demand




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    Learn Change and Adapt ?????

    All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.