Failing a Property Valuation after handing over large deposit

Jerry777

I am currently in the process of purchasing a new 2 bed apartment:

To make it as short as possible, I am a First Time Buyer and I am a single applicant.
I've put down €15k deposit on the property through my solicitor. Everything was going well until the very last thing, the valuation failed. Valuer valued the property €50k less than asking price.

Therefore my bank will only give me what their valuer recommended.

I've been told from lots of people that I may end up loosing my full €15k or else the builder can take me to Court to demand the full asking price that I signed a contract for originally even though my bank will only give me the valuation amount.

Any advice??

Bigcheeze

Troll fail. Your story is BS. The solicitor wouldn't let you pay the deposit without the loan offer from the bank which you hadn't have without a valuation.

Jerry777

Unfortunately it's not BS, far from it I can tell you. The whole saga has been going on for several months now.

Loan offer was received from the bank in writing, hence why my solicitor agreed to hand over my deposit.

The Valuation was only required from the bank once the property was fully built as it was only at 1st phase of completion when I put down my deposit down originally.

My solicitor was surprised that the bank didn't request a valuation before they gave me the actual loan offer which apparently is what was done in the past!!!!!!!!!!!!

Senna

There was plenty of these stories back in 2007-2009 when people bought off the plans when the market was high, then once the property was completed the banks wouldn't lend the pre agreed price.

OP you can look at it two ways, you have lost €15k or you have save €35k+ by the banks not allowing you to complete (seen the house is over valued by €50k).
If i was in your shoes, it'd thank my lucky stars that i'm not being forced to buy a house €50k over its value and tell the builder to sing for it. If you're single without any assets (guessing) the builder wont waste his time trying to chase you through the courts to complete, as even if you wanted, you have no way to complete.

I would question why any solicitor would allow you to sign a contract at a fixed price in a falling market without funding and with a distant completion date.

ANXIOUS

You don't have to worry about the builder chasing you, 0% chance of that happening. Was the deposit subject to anything? I.e loan approval?

antoinolachtnai

ANXIOUS wrote: »

You don't have to worry about the builder chasing you, 0% chance of that happening. Was the deposit subject to anything? I.e loan approval?

The facts are not totally clear from the information you have given. It does appear that you are in a very serious situation here. It is quite conceivable that the vendor would sue you as you clearly have some earning power and resources. Something has gone wrong here and one of the parties needs to take responsibility.

You need to go and seek fresh legal advice from a new solicitor to make sure you understand your situation and to Ensure you get your savings back.

not even wrong

Nobody can answer your questions without seeing the contract you signed when you handed over the €15k.

You are already paying for the advice of a qualified solicitor, why aren't you asking him/her these questions instead of taking the advice of internet randomers? If your current solicitor is not answering your questions to your satisfaction, then get a new solicitor!

Milk & Honey

Jerry777 wrote: »

My solicitor was surprised that the bank didn't request a valuation before they gave me the actual loan offer which apparently is what was done in the past!!!!!!!!!!!!

Your solicitor was negligent. He should only have allowed you to sign the contract subject to loan. Tell the solicitor to notify his insurance company, and get another solicitor for yourself, one who knows his job and is prepared to sue the first one.

ted1

Reneogiate the sale. Tell them that you can't get the money and the reason why. They'll have no choice but to lower the price as the next person will have the same problem. Also the developer will just want rid of it.

Jerry777

Thanks for your replies, I appreciate any advice as it's been almost 1 year since I handed over the deposit and am just desperate at this stage to see the end of it!!

Regarding my own solicitor, they have phoned and sent letters to the builders solicitor, they will not respond though. I myself have even visited the builder & he will not tell me anything.

They had an 8wk completion date to finish the build & they finished it within the time frame, contract was not subject to loan approval as I already had loan approval

Fair point about looking at it as saving €35k and only loosing €15k, however €15k took an awful long time for me to save up as I'm sure you'd appreciate!!

Man007

Senna wrote: »

OP you can look at it two ways, you have lost €15k or you have save €35k+ by the banks not allowing you to complete (seen the house is over valued by €50k).
If i was in your shoes, it'd thank my lucky stars .

Are you for real the chap might lose €15k that he has more than likely saved years for and you're saying look at it as saving €35k get a grip I've never heard such rubbish

The_Conductor

OP- you really need to get proper legal advice on this- anything that I or any other posters here might suggest could be entirely wrong, as a) we're not solicitors and b) even if we were- we don't have the contract you signed (and frankly please don't post it).

Please get proper legal advice- taking soundings here is not appropriate.

Duckjob

ted1 wrote: »

They'll have no choice but to lower the price as the next person will have the same problem.

Not necessarily.

I would think that problem would only arise where the buyer has a minimal deposit and is looking to borrow close to the sale agreed price. In that case, if the valuation falls short, then that would leave the lender exposed.

If the buyer has a larger cash deposit then even if the valuation were low it could still be higher than the amount being borrowed.

ted1

Duckjob wrote: »

Not necessarily.

I would think that problem would only arise where the buyer has a minimal deposit and is looking to borrow close to the sale agreed price. In that case, if the valuation falls short, then that would leave the lender exposed.

If the buyer has a larger cash deposit then even if the valuation were low it could still be higher than the amount being borrowed.

The bank will not give you the money even if you have a larger deposit. at the end of the day, they are givign x% of the value thsy say it is.

so if you borrow 100 for a house they say is valued at 200 then they are given 50%
however if you pay 300, (100 of there money + 200 of your money) there equity is only worth 33%. they won't go for this, they need there equity to be with whats its actually worth.

Linoge

Can you appeal the valuation? Maybe the bank is undervaluing the property to cover themselves and give them a nice buffer. An independent valuation is only a couple of hundred. Could be well worth it.

Senna

Man007 wrote: »

Are you for real the chap might lose €15k that he has more than likely saved years for and you're saying look at it as saving €35k get a grip I've never heard such rubbish

So what are you saying? He's better to over pay by €35k (over the life of a mortgage could cost €70k) rather than loosing €15k now? Just because its property doesn't make it any different to any business deal, the agreed price is €50k over valuation, the buyer should do everything in their power to walk away from the deal (or renegotiate in their favour).

I have yet to see a case where a First Time Buyer was forced to complete, there has been cases, but nearly all have been investors and even in those cases, if the judge sees they cannot get funding, then the case is thrown out.

Linoge wrote: »

Can you appeal the valuation? Maybe the bank is undervaluing the property to cover themselves and give them a nice buffer. An independent valuation is only a couple of hundred. Could be well worth it.

WHY?? so you can find someone to over value the property and allow you to spend more money? Jesus i have little hope for Irish mentality when it comes to property.

The OP has been told the house is worth €50,000 LESS than the price in the contract, to most people they would realise what a bad deal they got and look to get out of it however they can, but because it property, people on here are giving him advice on how to complete

Mouldy Mary

ted1 wrote: »

Duckjob wrote: »

Not necessarily.

I would think that problem would only arise where the buyer has a minimal deposit and is looking to borrow close to the sale agreed price. In that case, if the valuation falls short, then that would leave the lender exposed.

If the buyer has a larger cash deposit then even if the valuation were low it could still be higher than the amount being borrowed.

The bank will not give you the money even if you have a larger deposit. at the end of the day, they are givign x% of the value thsy say it is.

so if you borrow 100 for a house they say is valued at 200 then they are given 50%
however if you pay 300, (100 of there money + 200 of your money) there equity is only worth 33%. they won't go for this, they need there equity to be with whats its actually worth.

That makes no sense. The lower the percentage of the purchase price the bank lends, the more security the bank has. The property can fall more in value before the banks mortgage is affected by negative equity.

leeroybrown

OP, you need independent legal advice. You could either lose your deposit or worse have legal action taken against you for failing to complete the sale and in either of these events your solicitor may be liable due to the advice he gave you. They're no longer in a position to advise you as they have made an error. You should talk to the Law Society for advice about how to proceed.

Kosseegan

ted1 wrote: »

The bank will not give you the money even if you have a larger deposit. at the end of the day, they are givign x% of the value thsy say it is.

so if you borrow 100 for a house they say is valued at 200 then they are given 50%
however if you pay 300, (100 of there money + 200 of your money) there equity is only worth 33%. they won't go for this, they need there equity to be with whats its actually worth.

Where are you getting this nonsense from? The bank registers a charge for a sum of money on the property. That is the loan to value ratio. 50% or 33% as the case may be in your example. If the property is sold the bank gets its money first. The lower the loan to value ratio the better from the banks point of view. At 33% there would have to be a catastrophic fall in values before the bnak would not be able to realise its full charge in the event of a forced sale.

Linoge

Senna wrote: »

WHY?? so you can find someone to over value the property and allow you to spend more money? Jesus i have little hope for Irish mentality when it comes to property.

The OP has been told the house is worth €50,000 LESS than the price in the contract, to most people they would realise what a bad deal they got and look to get out of it however they can, but because it property, people on here are giving him advice on how to complete

Who mentioned having someone over value the property? There is a real possibility that the bank has undervalued the property as a way of reducing risk for them even further.

Just because you cant afford to honour the contract does not mean they cant come back and sue the arse off you. What most people realise is that just because something has turned out to be a bad deal for you, doesnt mean you can just turn your back on the deal and say "phew!".

You know cases where the judge has thrown it out of court - great! Thats what the OP should do obviously.

Free legal advise is the most expensive advise you can get. Why not give the OP many suggestions, he brings them to a proper solicitor and he works out the best way to mvoe forward from there.

Senna

Linoge wrote: »

Who mentioned having someone over value the property?

You did??? If you go an seek someone with the purpose of getting them to come in with a higher valuation than the official bank assessor, then you are looking for someone to "over value" it. The point is nonsense anyway, the banks will only accept valuations from their list of approved auctioneers.

Jerry777

Thanks again for all your views & comments, some of which are very interesting not to mention extremely worrying!!!

The gas thing is it's only a 2 bed apartment I'm trying to buy, the length of time the whole saga has been going on you'd think that behind the scenes there was tough negotiations going on for a property worth a few million quid.

Perhaps it'll be sorted out in the next year please god.............

jackal

I would look at the builders position and see if you can delay until they are bankrupt and just walk away.

Also as countless others have said, get some legal advice from another solicitor, boards.ie will just give you a load of "I'm not a solicitor... but..." type answers.

killers1

Jerry777 wrote: »

Thanks again for all your views & comments, some of which are very interesting not to mention extremely worrying!!!

The gas thing is it's only a 2 bed apartment I'm trying to buy, the length of time the whole saga has been going on you'd think that behind the scenes there was tough negotiations going on for a property worth a few million quid.

Perhaps it'll be sorted out in the next year please god.............

You need a solicitor to contact the developers solicitor and send a copy of the Bank Valuation to prove that the property is not acceptable security for a loan of that amount. This will then be used to come to a reduced selling price in line with the bank valuation.

Jerry777

Is there anybody else in the same boat or knows of anybody in the same situation in relation to failing a property valuation?? I've now been told that this could drag on for several more years!!

antoinolachtnai

I am sorry to have to tell you this but no, I do not know anyone in your position and it appears to be an extraordinary, fairly unique position.

I do have experience with a bad solicitor in relation to a conveyance. After going sale agreed on a property it became manifestly obvious that that the local solicitor engaged had no grasp of the relatively simple issues which arose. It did not sit easily with us but we had to take the file back and find a new solicitor. That is how we dealt with the issue and progressed successfully.

I do not know how comparable the problem you have is and I am sure your solicitor carries out your instructions and advises you to the high standard expected. That said, I am honestly concerned that either the solicitor has failed to convey, or you have failed fully comprehend the seriousness of your situation. This is not just a question of delay or inconvenience. You appear to be facing a massive, life changing liability. You need legal advice, not general support. Litigation (going to Court) is a real possibility for you and for that reason I would avoid discussing the matter further in public, unless your solicitor or counsel has advised you that it it is a good idea. If you are not getting the advice you need from the solicitor you engaged, you now need to go elsewhere.

StillWaters

Jerry777 wrote: »

Is there anybody else in the same boat or knows of anybody in the same situation in relation to failing a property valuation?? I've now been told that this could drag on for several more years!!

Although I don't know anyone in this situation, I do remember reading a thread about it over on askaboutmoney. Maybe do a search there, or ask your question there.