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  • Refurbish/Develop

    Struggling to get re-finance valuation I need

    Question guys, bear with my slightly lengthy explanation ....

    So have a property previously sold for £85k just over 10 years ago, property was repossessed and needs a decent refurb on it now and have an agreed price from the bank at  £35K.  Had a survey done on it and because the surveyor knows I had a price agreed at £35K will only give it a post refurb value of £45-46K, no evidence as to why?

    Obviously to refinance and cover costs I’d need a better valuation but don’t know why if it sold for £85k previous why, once the work is done that would not be achievable again, next door sold 9 years ago for £86k, same build and style and no. Bedrooms?

    Anyone have any suggestions as to how to get a better surveyor valuation? Or other ideas for this kind of situation? Any advice welcomed Smile

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    Hi Rob and welcome to the tribe.

    I can see the problem straight away - you are quoting comparables from 10 years ago.  These are not actually comparables.  Property prices can go down as well as up!!

    The valuer will be looking at recent comparables - from within the last 6 months.

    His re-fi value suggests to me that prices have dropped significantly in your area and he is being super cautious with his new valuation after refurbishment.  When you purchased the property at £35K, you set the new value in that street as to what properties are worth.  A BMV sale can often down-value an entire street/area, which is something not often mentioned or discussed.

    Have you spoken to the valuer asking him for his reason and asking his advice as to what you could do to get an improved valuation?

    Each valuer who comes out will take a slightly different view, but they will all want to know (and be able to find out) what you purchased it for, so you would be advised to keep very good records of all monies spent on the refurb, and perhaps also document it with "before" and "after" pictures to show the valuer who comes out to value the property for the re-finance.

    This will increase your chance of getting an up-valuation, but, in these market conditions, and with valuers being cautious because of concerns over Brexit, nothing is guaranteed.

    See - 7 reasons a property might not achieve a higher valuation after refurbishment. 

    The above thread is from a while back, but is still relevant.

    ​Good luck with this and let us know how you get on.

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    I really don't think one property sold BMV would reset the price for the whole street and have never seen an example of that.  I do know someone who bought a block of 4 properties in Manchester in one transaction well BMV and that did cause issues on refinance but never a single stand alone property.

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    If you can find concrete examples of what other comparables have sold for recently closeby that would help. As Vanessa says, we would always get lots of before and after pictures to show the extent of improvements, plus a schedule of works detailing exactly what you have done to improve the property.

    Worst case, how does the property stack up in terms of cash flow as a rental if you keep it for year or two and then try again for a better valuation? Would it be suitable for a high cash flowing strategy like HMO or serviced accommodation?

    What sort of property is it? If it's a flat, they have tended to suffer most in terms of drops in value in some areas and many folks are in negative equity...if it still cashflows well then that can be sustainable...and you might be able to sell it to an investor on account of its proven cash flow performance.

    If you're in a sticky spot and it doesn't work as a rental, you could look into selling at auction to see if there are any cash buyers who would take it on.

    Best,

    Guy

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    Guy Brown
    Blue Infinity Property Group
    M 07791-661491 | T 0118 3360366 | E guy@blueinfinityproperty.com<script data-cfhash='f9e31' type="text/javascript">/* http://www.blueinfinityproperty.com

    * New build residential developments and flat conversions in the Home Counties
    * High end HMOs in Reading and Bracknell

    Cheers Guy that’s good advice too Smile appreciate the help!

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    Comparable should really be actual sold prices (not for sale prices) within say half a mile of the subject property and be no more than 2 years old.  You'll need to find 3 similar properties at the sold price level you are looking for to be confident.

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