Valuation less than sale agreed price....

LouthMouth

We went sale agreed on a house a few months ago but have just got mortgage approval now as both us and the vendor were in no rush. However, there's obviously been a drop in house prices since. Plus we were bidding against another couple and bid over the initial asking price.

A valuer is due to go and value the new house in the next couple of weeks. What can we do if he values it less than the price we've agreed with the vendor? We haven't signed anything yet but have provided a 5k (refundable) deposit.

tHE vAGGABOND

tell them you wont sign contracts unless he drops price by x..

Dont feel guilty, its standard practice these days to be honest. The boot was on the other foot a few years back with vendors asking for more as the house price had gone up in the same period..

TwoShedsJackson

Yep it's called gazundering and is probably pretty commonplace nowadays. Tell him that you're not able to go through with the sale unless he knocks 20k (or whatever) off. Seems like a cunty thing to do, but as vaggabond points out, it's merely the opposite of what the situation was for the last decade.

Of course if he tells you to piss off then you're back to square one etc. but if as you say you're in no major rush, it's likely worth a go as long as you realise he's within his rights to tell you to take a hike so if it's a house you're very keen on you may not want to mess him about too much.

EKRIUQ

tHE vAGGABOND wrote: »

tell them you wont sign contracts unless he drops price by x..

Dont feel guilty, its standard practice these days to be honest. The boot was on the other foot a few years back with vendors asking for more as the house price had gone up in the same period..

.

What a stupid bit of advice:mad:, and its not standard practice, you went sale agreed on a property at a price and any vendor to tell you to go away if you try that messing around.

jdivision

I think the valuer, if it's appointed by a bank, usually comes back with a valuation below the market one. Certainly that happened with my mate's place in D6 which then nearly doubled in price in the three years afterwards. I thought the bank did it to cover its arse

Tony255

BingoBongo wrote: »

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What a stupid bit of advice:mad:, and its not standard practice, you went sale agreed on a property at a price and any vendor to tell you to go away if you try that messing around.

This is far from stupid advice, why should the buyer not ask for a reduction if the market has dropped what has he got to loose if he is not in a rush. If the vendor doesnt like it he can refuse there are plenty other properties out there. We were in the opposite position 18 months ago where the seller asked for more money after we went sale agreed and this was fairly common back then, we refused and went elsewhere and are much happier.

So what if the buyer asks and gets 10-15k off the selling price, do you realise how long it takes to pay 15k off a mortgage, there is nothing stupid about this. I would much prefer to ask and to loose the house rather than to not ask at all. We are now in what is called a buyers market if this is not Standard Practice at the moment then it will become standard very soon.

OP go for it, price similar properties around and base your price on those. Buyers have been messed around by greedy sellers and incompetent EA's for the last 5 years its time for a change.

Colonel Sanders

BingoBongo wrote: »

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What a stupid bit of advice:mad:, and its not standard practice, you went sale agreed on a property at a price and any vendor to tell you to go away if you try that messing around.

Stupid advice to ask for a discount in an agreed price if its an inflated price? What planet do you live on? Maybe a bit cheeky (possibly even unethical) but very sound advice.

seamus

On a more technical note, depending on the size of your mortgage, the bank may refuse to provide you with a mortgage for the property if the valuation is significantly less than the asking.

mastermind2005

If you agreed with someone on a price for something you should stick to it....

Its your own fault.... you known prices are comming down

So what if it looses value before you move in or after its the same difference!

Mr. Incognito

bit of a tough one, sure prices are going down in the short term but if you intend living there for a significant length of time then the price is going to go up in the long term. I'd wait and see what the valuer says but it's probably a legally binding oral contract anyway.

Tony255

mastermind2005 wrote: »

If you agreed with someone on a price for something you should stick to it....

Its your own fault.... you known prices are comming down

So what if it looses value before you move in or after its the same difference!

We're not talking about saving €5 here we are talking about saving possible between 15-20k do your calculations and see how long it takes to pay that amount off a mortgage.

It was never certain that prices were going to drop, we have been hearing about this for years and it has only happened recently.

Why should you pay more for something than it is actually worth, it may be a pain in the ass for the vendors but at the end of the day they are not the ones who are going to have to pay the mortgage.

BC

Of course you should argue the price if valuation is lower. The vendor doesn't have to accept it.

Plus depending on the OPs situation it may not be possible to proceed as the bank may not give enough of a mortgage.

tbh

chance it. As others have said, you are not holding a gun to the sellers head, if they don't like it, they can tell you feck off. That's the gamble, and if it's one you are willing to take, why not.

TwoShedsJackson

SetantaL wrote: »

bit of a tough one, sure prices are going down in the short term but if you intend living there for a significant length of time then the price is going to go up in the long term. I'd wait and see what the valuer says but it's probably a legally binding oral contract anyway.

It's not legally binding in any way at all. He has his refundable deposit in, nothing's binding until they sign contracts agreeing the sale and he hands over 10% of the agreed purchase price. The 'agreed' bit here can be subject to change at any time, as it frequently was up til recently when the vendor realised his house might have gone up ten grand in the three months since the sale process started.

What a stupid bit of advice, and its not standard practice, you went sale agreed on a property at a price and any vendor to tell you to go away if you try that messing around.

Got a house for sale have you?

Gurgle

LouthMouth wrote: »

What can we do if he values it less than the price we've agreed with the vendor? We haven't signed anything yet but have provided a 5k (refundable) deposit.

Nothing is signed but you paid a deposit and the house went sale agreed?

AFAIK the seller can sue you for the loss he made in the value of the property due to taking it off the market when you agreed to purchase it.

If you pull out, you could end up paying the difference between the current value and the price you agreed to.

pow wow

LouthMouth wrote: »

We went sale agreed on a house a few months ago but have just got mortgage approval now as both us and the vendor were in no rush. However, there's obviously been a drop in house prices since. Plus we were bidding against another couple and bid over the initial asking price.

A valuer is due to go and value the new house in the next couple of weeks. What can we do if he values it less than the price we've agreed with the vendor? We haven't signed anything yet but have provided a 5k (refundable) deposit.

Bidding over the asking price was risky in the beginning and now it seems the current slow in the market is making the fact you were paying over the odds in a more buoyant market harder to swallow. If the mortgage is not dependent on the valuation and you want the house I'd be inclined to leave it, if the mortgage is dependent on it then obviously some negotiating will have to be done.

If there is an agent involved it's probably easier to go back to them and say the valuation has come out at less than the original asking price (as opposed to less than what you bid, which it possibly would have regardless of the market slowing) and could they knock a wee bit off because you're keen, able to move quickly etc.

Don't be cheeky, and don't be shocked if they say no.

miju

:rolleyes::rolleyes::rolleyes::rolleyes:

please ignore gurgles obviously misinformed post above. if no contracts are signed then the deposit is fully refundable and there would be no penalty

the deposit merely is a sign of intent and is fully refundable in most cases until contract is signed (even if contracts are signed it is refundable as 99% of the time the contract is "subject to mortgage approval" and if you cannot get that mortgage the contract is null and void and thus your contract is refundable) you also definitely cannot be sued by the vendor for any loss in value. thats the upside / downside to a vastly unregulated property market

anyway in response to your original quesiton. if you agreed to purchase house at say 300k and were looking for a full 100% mortgage (for arguments sake). if the valuer then values the property at 290k then thats what the bank will give you and it will be up to you to find the other 10k to complete the sale.

personally , if the valuer undervalues your property , instruct your solicitor / contact the vendors EA explain the situation and say that you are still interested in property but now cannot go through with sale unless the vendor drops price to valuers price (provide valuers report to show your not messing about either and are genuine)

chances are in the current climate the vendor will more than likely be willing to drop the price to the valuers price rather than suffer further falls in the properties valuation (it worth bearing in mind that even the most usually "optimistic" economists are predicting at least a further 5% decline in prices this year)

pow wow

miju wrote: »

:rolleyes::rolleyes::rolleyes::rolleyes:

please ignore gurgles obviously misinformed post above. if no contracts are signed then the deposit is fully refundable and there would be no penalty

the deposit merely is a sign of intent and is fully refundable in most cases until contract is signed. you also definitely cannot be sued by the vendor for any loss in value.

thats the upside / downside to a vastly unregulated property market

I didn't mention anything about deposits

SimpleSam06

ellscurr wrote: »

I didn't mention anything about deposits

He was talking to Gurgle, the last bull who through it all, walked alone.

miju wrote: »

please ignore gurgles obviously misinformed post above.

you also definitely cannot be sued by the vendor for any loss in value.

But Gurgle said earlier that house prices have bottomed out and should soon be increasing, so there should be no problem.

bleary

Gurgle wrote: »

AFAIK the seller can sue you for the loss he made in the value of the property due to taking it off the market when you agreed to purchase it.

If you pull out, you could end up paying the difference between the current value and the price you agreed to.

No theres no truth in that
It is only when you exchange signed contracts there is an enforceable contract in place
Sale agreeds collapse all the time for loads of reasons

tHE vAGGABOND

If you pull out, you could end up paying the difference between the current value and the price you agreed to.

Thats the problem with the Internet, and 'experts' on forums like this in a nutshell right there

Sale agreed collapse all the time for loads of reasons

I've had two fall through on me over last year. The only problem was that it took a couple of weeks for estate agent to get me my deposit back [both times!]

[That said, given how the property market has gone, I suppose I was lucky!]

LouthMouth - Do what you think is right. But if it was me, and I thought the place was not worth what I had agreed to pay for it, for whatever reason, I would ask for a reduced price or just pull out totally. There has never been more fish in the sea [in terms of property!]!

At the end of the day no one is going to give you a medal for paying 20 grand more than a house is worth..

Patrickof

tHE vAGGABOND wrote: »

...
I've had two fall through on me over last year. The only problem was that it took a couple of weeks for estate agent to get me my deposit back [both times!]
...

[Aside] Usually a delay in returning a deposit is because the purchasers solicitors may have the contract/title documents in their possession. Deposits are not normally refunded until these valuable documents are returned.

LouthMouth

Thanks for the advice folks. it'll be interesting to see what the valuer comes back with as it still seems to be pretty good value for the area. I was more worried about getting approved for less of a mortgage and having to sort of the difference ourselves if the valuation is alot less.