Bank Valuation - Asking Price too high

RaulDublin

We just got a survey done for a house in castleknock area and the bank valuation surveyor feels that the asking price is too high and it should be around 15 K lower than the current sale agreed price .
I have already gone back to the vendor asking for a list of repair work which needs to be carried out and they are yet to come back .
However similar properties with similar size sold recently in the same area in 2017 seem to have been sold for more than the current price .
The estimate of the work involved in around 8-10 , which will still leave the house overvalued be around 5- 10 K .

Would the banks still lend in this case ?

Paddytheman

What kind of repair work if you don't mind me asking, going through the process too and wondering what you can/should expect to have fixed when buying second hand?

RaulDublin

Paddytheman wrote: »

What kind of repair work if you don't mind me asking, going through the process too and wondering what you can/should expect to have fixed when buying second hand?

Re plumb pipeworks, new showers and bath and extra insulation .there's work to be done in the garage but I've asked the vendor to get ot done.

antoinolachtnai

RaulDublin wrote: »

Re plumb pipeworks, new showers and bath and extra insulation .there's work to be done in the garage but I've asked the vendor to get ot done.

I think you need to put the evidence of other comparable sales at a higher price to the valuer.

I couldn't see the vendor doing any repair work whatsoever in the current market but that is by-the-by.

The bank will lend sure, but will lend only on the basis of their valuation and will only lend a proportionate amount of that valuation.

Paddytheman

Sorry you've asked the vendor to get a list of the repair work that needs to be done?

I don't get it, is it not your surveyor who provides a list of issues which you can then discuss with the vendor?

RaulDublin

Paddytheman wrote: »

Sorry you've asked the vendor to get a list of the repair work that needs to be done?

I don't get it, is it not your surveyor who provides a list of issues which you can then discuss with the vendor?

Typing with a thumb made me lazy.. i shld have ..
I have already gone back to the vendor asking ####if they are ready to facilitate ##### a list of repairs which needs to be carried out and they are yet to come back
😊😊😊

trobbin

RaulDublin wrote: »

We just got a survey done for a house in castleknock area and the bank valuation surveyor feels that the asking price is too high and it should be around 15 K lower than the current sale agreed price .
I have already gone back to the vendor asking for a list of repair work which needs to be carried out and they are yet to come back .
However similar properties with similar size sold recently in the same area in 2017 seem to have been sold for more than the current price .
The estimate of the work involved in around 8-10 , which will still leave the house overvalued be around 5- 10 K .

Would the banks still lend in this case ?

Banks are pushing mortgages very aggressively ATM, adverts everywhere (see top of page. Anyway, if the bank think the price is to high by 15k, I would really worry about buying the house. IMO, the surveyor is doing you a favour.

I know how banks are approaching mortgages ATM, they'll happily give a mortgage on a massively overvalued house, let's be honest, if they weren't, there wouldn't be any mortgages being given out. But they'll only do so if your deposit is large enough. Without coming across cheeky, you're probably only handing up a 10/20% deposit.

RaulDublin

trobbin wrote: »

Banks are pushing mortgages very aggressively ATM, adverts everywhere (see top of page. Anyway, if the bank think the price is to high by 15k, I would really worry about buying the house. IMO, the surveyor is doing you a favour.

I know how banks are approaching mortgages ATM, they'll happily give a mortgage on a massively overvalued house, let's be honest, if they weren't, there wouldn't be any mortgages being given out. But they'll only do so if your deposit is large enough. Without coming across cheeky, you're probably only handing up a 10/20% deposit.

Yes i get that part on the bank valuation .It so happens that the structural survey is carried out by the same firm that carried out the bank valuation. I asked them to do it rather than the bank.As they are an on the bank's approved list.
Yes the valuation is objective enough and they indeed are helping me and I'll ultimately end up asking the vendor to agree to that valuation.l if it comes to that.
Probably others in line will have the same issue..
Its just that i see 2/3 houses on the same road /same size sold for much higher in last few months ..some just looked to be money pits
Anyways I've asked this today and the valuation team will come back.
I am hoping that the vendor reduces the price based on the issues highlighted so that i we can reassess the deal ...
Thanks,raul

I'm handing out ~30% of a 450 k house .

The_Conductor

The fact of the matter is though 15k in the context of a 450k property- is just 3.33% of the property value. Properties are increasing (or falling) by this percentage and more- on a daily basis.

Good luck getting the vendor to carry out your shopping list of repairs/upgrades - if they are willing to do so, happy days- however, in the context of a property shortage in the area, the fact that the 'over-valuation' is less than 3.5% and there are recent sales of 'money pits' in the area which were within the same ballpark- if I really liked the property and/or the area- I'd have a chat with the bank and see about accessing another 15k, rather than endanger the property.

antoinolachtnai

If you are putting down a 30 percent deposit, I don't think you are going to have any big problem with the bank. You are risking your own money, not theirs for the excess over the valuation. But you need to talk to the bank.

listermint

Most valuers actually use daft as a guide for house prices and show similar example homes as a reference for their estimate. Have you considered contacting the valuer with your examples as you seem to be adamant the pricing is comparable

Samuel T. Cogley

Christ I have never heard of this happening, I sincerely hope that we starting to see valuations based on some sensible yardstick, even if it is only similar properties in the area. I was literally told by a valuer during the boom "market value is whatever you're willing to pay". It might only be a small part of the problem but it's a problem nevertheless.

Lumen

I always assumed that the main purpose of the valuation was to deter fraud, e.g. I sell a garden shed to my brother for 1m secured with an 80% mortgage, he defaults on the mortgage and goes bankrupt, we split the 800k.

nosilver

listermint wrote: »

Most valuers actually use daft as a guide for house prices and show similar example homes as a reference for their estimate. Have you considered contacting the valuer with your examples as you seem to be adamant the pricing is comparable

can you show an example fo that <mod snip >

I got a valuation done recently and the valuer HAD to show three comparables that had sold in the area and they had to be referenced through Property Price Register.
The valuer also had to comment on the general area, the condidtion of the house, the services available, any work the required doing and the estimated letting value.

He said the form was similar for all banks and quite different to a few years ago when it was just a number in a box.

Gumbo

nosilver wrote: »

can you show an example fo that or is it just some barstool comment.

I got a valuation done recently and the valuer HAD to show three comparables that had sold in the area and they had to be referenced through Property Price Register.
The valuer also had to comment on the general area, the condidtion of the house, the services available, any work the required doing and the estimated letting value.

He said the form was similar for all banks and quite different to a few years ago when it was just a number in a box.

+1 on this.
Went through remortgage and top up recently for renovations and UB required this from the surveyor also.

Mooooo

Samuel T. Cogley wrote: »

Christ I have never heard of this happening, I sincerely hope that we starting to see valuations based on some sensible yardstick, even if it is only similar properties in the area. I was literally told by a valuer during the boom "market value is whatever you're willing to pay". It might only be a small part of the problem but it's a problem nevertheless.

That is what market value is tho, it's whatever anyone is willing to pay.

trobbin

Mooooo wrote: »

That is what market value is tho, it's whatever anyone is willing to pay.

That's only true to a rational person with real money. Basically, you've a hoard of people out there that will take as much as they can get from a lender and just outbid anyone in their path. So valuations by the actual lender are really important. Having said that, they can always make the math work if they wanna give the loan.

listermint

nosilver wrote: »

can you show an example fo that <mod snip >

I got a valuation done recently and the valuer HAD to show three comparables that had sold in the area and they had to be referenced through Property Price Register.
The valuer also had to comment on the general area, the condidtion of the house, the services available, any work the required doing and the estimated letting value.

He said the form was similar for all banks and quite different to a few years ago when it was just a number in a box.

I had a valuation done in the last 4 weeks.

I never said it was solely based on daft you misconstrued that and ran with it.

The valuation was done by the bank their valuer put examples of houses for sale from daft as part of the survey.

I like they way it's assumed other posters make thinks up...

Good luck .

RaulDublin

Mooooo wrote: »

That is what market value is tho, it's whatever anyone is willing to pay.

When i spoke to them i felt that they were quite realistic in their estimate of the
Property value . It was on the mkt for 450 k originally before we went sale agreed .there had been a few bids over 450 already ...
I also think that the bank surveyor did not take the 3 houses i mentioned in my previous post into account...

Water John

You picked the valuer from a list supplied by the lender, I presume.
You could pick another for a second opinion.

Eric Cartman

Lumen wrote: »

I always assumed that the main purpose of the valuation was to deter fraud, e.g. I sell a garden shed to my brother for 1m secured with an 80% mortgage, he defaults on the mortgage and goes bankrupt, we split the 800k.

If that garden shed was in dublin 4 and south facing they'd probably say it was a steal because the neighbours either side sold for 1.25 million :pac:

Gumbo

Water John wrote: »

You picked the valuer from a list supplied by the lender, I presume.
You could pick another for a second opinion.

I had no choice with UB.

They sent their valuer and he just rang me on the day to confirm access.

Water John

AIB use a list.

RaulDublin

Water John wrote: »

AIB use a list.

Yes from Aibs list of approved. They also did my structural survey ..
I would stick with them and see over the next few days.

RaulDublin

RaulDublin wrote: »

When i spoke to them i felt that they were quite realistic in their estimate of the
Property value . It was on the mkt for 450 k originally before we went sale agreed .there had been a few bids over 450 already ...
I also think that the bank surveyor did not take the 3 houses i mentioned in my previous post into account...

There were higher bids than 450k, but they agreed to sell to you at 450 (a lower price)? Or the others pulled out? That might indicate some problem on a 450K or greater valuation?

Gumbo

Water John wrote: »

AIB use a list.

Did you have to pay for it?

Water John

Yes, €100 + VAT.

RaulDublin

reick wrote: »

There were higher bids than 450k, but they agreed to sell to you at 450 (a lower price)? Or the others pulled out? That might indicate some problem on a 450K or greater valuation?

Current sale agreed on 475k.asking price was 450k.valuation report says 460k.

RaulDublin

Water John wrote: »

Yes, €100 + VAT.

I didn't have to pay for it as they said they'd include it for free for me. I paid 450 for the structural +vat to them.
The valuation cost which they didn't charge me for was 150k..

Water John

The Engineer's Report is done by a qualified person for you. A copy needs to be given to solrs on both sides.
The Valuation Report is done specifically for the lender and normally you pay.
Two diff functions and usually two diff professionals.
The first done by someone of engineering/planning background, the second done by an auctioneer.

Quandary

Eric Cartman wrote: »

If that garden shed was in dublin 4 and south facing they'd probably say it was a steal because the neighbours either side sold for 1.25 million :pac:

If it was a shed in D4 then it would be called a rustic mews needing some tlc to bring it back to life

RaulDublin

Water John wrote: »

The Engineer's Report is done by a qualified person for you. A copy needs to be given to solrs on both sides.
The Valuation Report is done specifically for the lender and normally you pay.
Two diff functions and usually two diff professionals.
The first done by someone of engineering/planning background, the second done by an auctioneer.

Yes. But i saw no problem in that being done by the same firm who were highly recommended for both the tasks .
Just to add that they obviously haven't shared the valuation with me but just mentioned their views on the estimates and the reasoning behind it..

The_Conductor

trobbin wrote: »

That's only true to a rational person with real money. Basically, you've a hoard of people out there that will take as much as they can get from a lender and just outbid anyone in their path. So valuations by the actual lender are really important. Having said that, they can always make the math work if they wanna give the loan.

People are not rational though- and the sooner people realise this- the better.
Ignore any ideas of what people 'should' do or feel about a situation- approach it as a blank canvas- and see where you can go from there.

OP- at this point- I'd be hurridely putting together packs and applying to lenders other than UB- if you actually want the property. Ulster Bank having been doing very indept reviews of their business here- the results of the most recent one were only released earlier this week. They, along with most lenders, are risk averse- however, the lenders are not treating risk in identical manners.

AIB or BOI would bite your hand off- given you have 30% equity in the property- this is your major selling point as a prospective customer. You need to sell yourself. UB obviously, for whatever reason, are just not that interested in your business- fine, thats their prerogative- however, you are a customer, and can go anywhere else- its time to talk to someone who values you as a customer- and fast, bloody fast, if you don't want to loose this particular property.

If, on the other hand, you are only humming and hawwing over this property- and are happy to hang around and see what comes up elsewhere- thats also fine- however, I would still be shopping around for a lender who actually values you as a customer- as UB seem to be taking you for granted.

Samuel T. Cogley

The_Conductor wrote: »

People are not rational though- and the sooner people realise this- the better.
Ignore any ideas of what people 'should' do or feel about a situation- approach it as a blank canvas- and see where you can go from there.

Which is all the more reason for the other actors in the system to have rationality and regulation imposed on them.

The_Conductor

Samuel T. Cogley wrote: »

Which is all the more reason for the other actors in the system to have rationality and regulation imposed on them.

You can't regulate for stupidity though- and there is a hell of a lot of stupidity out there.

If you assume that the entire system is in disorder and suspend any belief in rationality or normality- then you have a clearer and more fair perspective on what the Irish housing market is like.

I'm not even sure whether more regulation will achieve anything- the government has rammed though some quite incredible measures already in the assumption they were going to resolve some of the ills of the sector- however, time, history and experience has shown- the law of unintended consequences is alive and well- and indeed, entropy, in the case of the measures unveiled thus far.

I firmly believe that scrapping regulation- including things like building heights for our city centres- is critical- but I also believe that some measures- such as reducing the minimum size of apartments- should be reversed- as the whole 'starter home' / 'getting your foot on the property ladder' lark- is cow manure- and has consigned an entire generation to living in wholly inappropriate property- because it suited the aims of the government of the day- and the current government are more interested in looking at the homeless issue- than the fact that there are 120,000 people living in property that they own- that councils would not supply to homeless people- because its 'unsuitable' (figure from the CSO census analysis performed by the Spatial Analysis unit of the geography department in NUI Maynooth).

The squeaky wheel gets oiled.

Water John

Well if they have not yet committed their views in writing, you should submit to them any info, which you mentioned, that backs up your case.

As others said, maybe time to pursue alternative lenders.

I would suggest to any potential buyers to pursue two lenders at least, I know that's a pain, but process two until you are sure the one you prefer will come good.

SB_Part2

Happened me.

Got another valuation but also ended up having to go to another bank.

RaulDublin

Water John wrote: »

Well if they have not yet committed their views in writing, you should submit to them any info, which you mentioned, that backs up your case.

As others said, maybe time to pursue alternative lenders.

I would suggest to any potential buyers to pursue two lenders at least, I know that's a pain, but process two until you are sure the one you prefer will come good.

I just heard back from the valuation survey that they should be OK on the sale agreed value based on the information I provided on recently sold houses in the area ...

Water John

Great news for you.
I'd see no issue with you processing a second lender as a back up strategy.
Best of Luck.