Has your property been down-valued and want to know what can you do about it? Don’t worry, it’s not the end of the world, there are certainly some things you can do in this situation.
Why do down valuations happen?
Down valuations typically happen when house prices are out of sync with current property market trends. This means that if house prices are falling at a faster rate than they are in other areas, or transaction levels aren’t what they once were; there can be a gap between what estate agents and sellers believe a property is worth and the surveyor’s opinion of its market value.
What can I do if my property has been down-valued?
If you receive a down valuation on the property you want to buy; the first thing to do is try and renegotiate the sale price with the seller. A down valuation can be a strong bargaining tool. The chances are that if your lender doesn’t think the property is worth what you had agreed to pay others will agree too; this can means that your seller could struggle to get more money from another buyer anyway. Depending on their situation, they may also be keen to push the sale through; even if it does mean that they will get less money.
However, if the seller doesn’t budge or you’re remortgaging a property you already own; you may be able to challenge the valuation if you have robust evidence that the property is worth the amount you said it was. Unfortunately, accepting a challenge on the valuation is at the discretion of the lender. If you don’t have any evidence against the lender’s valuation; you could potentially accept the new loan offer and try to make up the shortfall. We know that this isn’t a realistic option for everyone, so your last resort might be to try an alternative lender that uses a different independent surveyor; they may provide a valuation closer to the sale price.
How can I avoid a down valuation?
Here at The Residential Mortgage Hub; we understand that down valuations can put a tremendous amount of strain on what can be an already stressful process. However there are some things that you can do to prevent your property being down-valued.
- It’s important to research the value of the property you’re hoping to buy or sell. Try and look at how much properties in the area have actually sold for over the past three to six months; so that you get an idea for what a realistic price should be.
- If you’re selling, we recommend inviting at least three local estate agents to value your home. They can take a look at the property, offer insight into local market activity and use recent experiences they’ve had with similar properties to give you a suggested price. Whilst it’s likely you’ll end up with three different figures from each agent; it’s important to remember to not just go with the highest sale price. A good rule of thumb is to go with the middle valuation or calculate an average between them.
- If you’re hoping to sell your home, you can check what property value your existing lender has on file. This can help guide your decision on how much to put your property on the market for.
- If you’re a buyer you should use your research to make a realistic offer on a property. This means that if the property is on sale for £500,000 but you’ve seen similar properties sell for £425,000 in the area, don’t be afraid to offer under the asking price – it could save you a lot of trouble later on.
- Lastly, finding the right mortgage provider is obviously an important key to mortgage success. Depending on your circumstances and the property; you may need to find a specialist provider. As a whole-of-market mortgage broker we have access to a wide variety of mortgage deals and lenders; so we can recommend suitable lenders for your financial circumstances and the type of property you’re after.
Looking for some advice if you’re property has been down-valued?
If your property has been down-valued, don’t stress – get in touch with our team to see how we can help you.
