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  • Property Prices

    Down-valuations - anecdotal evidence of trend



    Anecdotal evidence suggests the number and severity of down valuations in the current market are increasing.

    In an article in Mortgage Strategy, three valuers were asked for their impressions, and one reported that two surveyors visited the same property and came back with valuations that differed by £100K!

    Mortgage Strategy article

    The BBC recently reported that there had been a rise in down-valuations with 1 in 5 properties being down-valued:

    There has been a "significant" rise in homes being valued at less than what buyers have agreed to pay, the UK's largest mortgage advisers have said.

    These "down valuations", by lenders, can mean buyers having to pay thousands of pounds extra, up front, to avoid the sale collapsing.

    Those remortgaging their houses after doing renovation work are also among those most affected by down valuations.

    BBC article

    A search on twitter revealed the following:

    PT member InvestorSK8 experienced the following:

    Anybody else experiencing downvaluations recently on remortgage or sale?

    Local surveyor spent total of 5 mins for mortgage company ( according to tenant at Property) - same price as 10 years ago. !!!

    Stunned by Down-Valuation in 2018

    The RICS website states:

    When house prices are falling or rising at a faster rate than typical as they are in some areas of the country, or when transaction levels are perhaps not what they might be surveyors have to be very certain they can evidence the value on paper (as they can be sued for over valuing properties by lenders).

    See - Insights:  Lender's survey and down-valuations

    My thoughts:

    Valuing a property is not an exact science!  See -

    A "masterclass" in how to value a property correctly

    In some cases, people might be over-paying for a property, or think it is worth more than it is.  A down-valuation can actually protect a buyer from potential negative equity.  In other cases, a valuer might be being super-cautious.

    See this RICS article - The "myth" of down-valuations - do they really exist?

    Please share here if you are experiencing a down-valuation!

    SEE ALSO  -       Down valued - still proceed with purchase?

    UP NEXT -           What matters with a valuation ?

    DON'T MISS -      7 reasons a property might not achieve a higher valuation after refurbishment.

    NOW WATCH:


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    NE valuation is holding up ok - especially houses

    I purchased houses in 2014 for £75K and there worth about £110K now

    Flats are still slow moving  and I would imagine down-valuing.

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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.

    Interestingly my sister in law just bought a house to live in 355k. Mortgage valuation came in that it was worth that. They got homebuyers with valuation and they valued it at 400k. Do you think that is because they are not the lenders surveyor and therefore can't be sued for valuing too high, as it is a personal valuation it really has no bearing on anything

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    A private valuation is different to a lender's valuation.

    A lender's valuation will value it at the purchase price or the market value, whichever is the lower.

    A private valuation will value it at the market value.

    The lender's protocol is to stop people getting valuations that facilitate a so-called "no money down" deal.

    They buy the property for £150K, but get it valued at £200K to borrow 75% of £200K.

    Your sister can take comfort that she has almost certainly bought at a discount. Smile

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    I think the so called 'no money down' wealth guru circuit make life harder for the normal LL. 

    having said that, you can still buy in the NW at a good price do it up (force apprec) and get about 5k added what you bought no problem. Anything above this I think is grasping at straws really, unless something amazing has taken place.

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    Thanks for the mention.

    So my experience may be skewed due to location.

    one has valued up , thanks to using techniques described in PT and establishing rapport. This will become almost no money down - effectively withdrawing my original desposit after 10 years. ExtractIng 10k @ 2.75% fix for 5 years.

    Cheapest personal loan is 2.7% with Sainsbury’s currently.

    Im building a war chest for later and money to do refurbishment later- new kitchen, boiler in next few years.

    I contested the valuation on second with disappointing result . But realised they was two sales recently in May which affected the average.

    Bought at 51k , value for remortgage at 52k - so still achieves better fix from 5% SVR BM solutions to 2.75% fix for 5 years.

    Anybody sitting on the fence about remortgaging /releasing funds or equity   imho should  be acting  quickly. I doubt better oppurnuity will arise over next few months. 

    Contact PT broker or own broker to look at options. 

    If I have wait out a downturn , I want some of original money out. Or access to equity NOW not once it’s erodes.

    10k may not seem a lot - but it’s a desposit in my area. Wink

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 

    https://www.ftadviser.com/mortgages/2017/...aluations/

    The tend has been slowly gathering pace?

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    Coming soon Investorsk8.com

    Wisdom - an integration of knowledge, experience, and deep understanding that incorporates tolerance for the uncertainties of life as well as its ups and downs. 


    Reflecting what has been happening in the market - in some areas as inevitably some areas will be reported with prices still increasing.  If you do a search on Rightmove you will see a number of price reductions in most areas.

    https://www.propertytribes.com/where-nex...44-22.html


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    The value of a property is defined as the price that someone will pay in an open, arm's-length, transaction between two unrelated parties. Inevitably, therefore, valuation can only ever be a subjective assessment which will often lead to differences of opinion.

    When valuing a property on behalf of a lender, the valuer works to a set of strictly enforced guidelines that have been defined by that particular lender. Different lenders have different guidelines.
    The valuer will use comparable evidence of the most recently available sales of similar properties within a similar area to that of the property under inspection.

    Ultimately, though, the valuer effectively makes an educated guess as to what an average buyer would be willing to pay for that property. And, as he may be called upon to justify that valuation, the valuer will, in most normal circumstances, be as impartial and objective as he can be. 

    One of the issues that was identified after the 2008 crash, and that led to many valuers receiving claims from lenders via their insurers, was that it was very difficult to quantify the "feel" of the market in a particular location at a particular point in time. In times of market volatility, therefore, it is understandable that valuers tend to be more cautious in their assessment.

    One of the things that is noticeable in the market, as a whole, at the moment, is a lack of consistency and a rather confused picture about the way the market is moving. There are certainly some notable regional differences, but even at a local level there is a degree of variability from house to house.

    In such a market, therefore, it should probably be expected that valuers will form different opinions which can even be influenced by the news they saw earlier  on the morning of the day they carried out the valuation. That may sound ridiculous but is probably the reality.

    The other factor we are seeing is that, increasingly, valuations are being carried out without anyone visiting the property. The data available to facilitate desktop valuations has become more comprehensive and reliable, and many lenders are now relying more heavily on computer models. This will, undoubtedly, add another variable factor into the mix of valuation.

    I suppose I would suggest that, the most important factor to consider is that valuation is not, cannot, and never will be, an exact science, and so will always fall to a matter of opinion at some point.

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    In the last week I've had a house I fully refurbed down valued from 80k to 75k, despite an identical tired house 3 doors down selling for 78k a few months earlier.

    Ive also had a 4 bed house with a large family that has been there for 6 years that is in good order but is due a new bathroom been UP Valued from my 140k to 150k. I thought 150k would be pushing the top end, so 140k fair.

    Thanks valuer, that now gives me a 3k capital gains hit after our allowances, on top of the  4.5k hit to sell this property that we own privately to our ltd company.

    You couldn't make it up.

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