Survey valuation lower than offer, what to do?
So you saw a lot of properties, found one you wanted to buy, made an offer that was acceptable to the seller but now your surveyor is claiming its not worth the value you offered? Well, this 'down valuation' (as its known) is pretty common.
I'll explain why it happens and what you can do about it.
OK, So you went out there and did your viewings. You're not crazy, you saw what you could get for your money and where and that's why you made the offer you did. So how come the surveyor can't see what you saw?
There are a number of reasons:
- Firstly - the rising market. If prices are rising particularly fast at the moment a surveyor may not be keeping up. You'll know this if you have been looking for a while but not all surveyors are full time or from your area or have valued that type of property much recently. Yes, you might know your local market for your property type better than the surveyor.
- Secondly - the falling market. Other way round really. Yes, your property might be worth £200,000 now but the surveyor thinks it will be worth £180,000 within weeks or months. The surveyor is usually acting for the bank or lender (if you are getting a mortgage) and the bank or lender wants to know that they can get their money back if you run into financial trouble. So the surveyor is factoring in time with the valuation to protect the lender.
- Thirdly - the out of town surveyor. A lender can use surveyors from outside the area where you are buying. Sometimes simply because they are available and nobody local is or because they can be cheaper and the lender is trying to trim costs at their end - especially true of paying a surveyor in a rural area to carry out a valuation in an urban neighbourhood. These surveyors are just not used to the prices in your location and, quite frankly, can't believe their eyes.
I remember for a while the Woolwich was really bad, using out of town surveyors all the time. They'd announced they were trying to cut costs and cheap surveyors from somewhere way out where was part of it. You just knew when a Woolwich surveyor turned up to value a city property the first thing he would do was complain about all the traffic and how hard it was to park. Then he would take one look at the property details and say something like, "What! In my village you could get something like this for a third of the price!" and two days later, hey presto, a down valuation.
What to do about down valuations
First, be confident. You know what the property is worth because you've seen a lot of properties like it and you know what sells for what. If you pull out of this purchase and offer on something else either the same thing is going to happen again or you are going to get a switched on surveyor and everything will go through fine. Its all just a complete waste of time and money for nothing.
Second, appeal the decision. All surveys have an appeals procedure so use it but this time get smart as I'll show you now.
A surveyor comes to a valuation figure by finding out what else which is similar has sold in the area and by sold I mean contracts have exchanged or the sale has completed. These sales are known as 'comparables' although in the industry we often refer to them simply as 'comps'.
Surveyors literally pick up the phone to estate agents in the area and say "I'm looking at this two bed flat on the first floor of a new build on Stepwards Avenue. Its in fair condition but the second bedroom is definitely a single. Have you sold anything else similar recently?"
The surveyor really needs 3 solid comparables. Now for some reason when your surveyor did his research his comparables all turned out to have sold for less than the price you are offering so he down values to match.
What you need to do is get the surveyor the right comparables so yes, you need to pick up the phone and make the same calls to estate agents. Ask for the date that contracts exchanged on each property and ask them to email you through the property details.
Estate agents can vary in their helpfulness on this, there is nothing in it for them. In fact it would be better if your purchase did fall through and then you might buy something through them! I find the best approach is not the 'phone at all but to go there in person. Do it in the morning when the agents are generally quieter and can be more helpful because chatting to you relieves the boredom!
I'd be looking for a minimum of 3 comparables, 6 would be better, all sold within the last 3 months ideally, 6 months if the market is quiet. Then I would appeal the surveyors valuation with plenty of evidence that should make them confident to change their minds.
(A little side note on this. I don't do this after a down-valuation, I do this before the surveyor arrives and hand him my 6 comparables on a plate so that the down valuation never happens in the first place. I do this if I'm buying or selling or remortgaging. But you are where you are so lets fix that!)
Remember all the surveyor wants to do is feel confident when he says to the bank, "I think this property is worth £X". So make him confident.
To learn a whole lot more about surveys, how to prepare for them and what the various reports mean see Chapter 20 of How to Really Buy a Property. What A Property Survey Really Means.
Search Results for 'survey' in
How to Really Buy a Property
Search Results for 'survey' in
- What are the different types of property survey?
- My surveyor has put a retention on the property value
- My survey says the property is overvalued
- What should I do if my survey says the property has a damp problem?
- My survey says the property has problems with the electrics
- What to do if my survey says the property has problems with the roof
- My survey says the property has problems with the plumbing
- My survey says the property has subsidence or structural issues
- My survey says the property needs X thousand pounds worth of work done
- Survey valuation lower than offer, what to do?
- The Survey says the property has subsidence, what to do?
- Should i get a structural survey done?
- What happens if the survey valuation is higher than my offer?
Search Results for 'survey' in
- Agreement in Principle
- Homebuyers Survey
- Sold Subject to Contract
- Sold Subject to Survey
- Structural Engineer
- Structural Survey
- Tenanted Property
- Valuation Survey
- Rising Damp
- Penetrating damp
- Sagging Roof
- Dry Rot
- Wet rot
- Drive by Survey
- Down Valuation
- Survey Sent to Panel
- Survey Requested
- Survey Instructed
- Survey Booked
- Pre Arranged Mortgage
- Drainage Survey
- Cash Buyer Only
- Credit Check
- Time Costs Deals
- Managing Agents
- Gazumping Insurance