Survey down valuations! Why and what happens?
With a booming market, we haven’t seen this issue for a while, but clearly over recent weeks we have seen several surveyors questioning the sale price which has been agreed. So why is this happening?
Thanet, and especially Margate are seeing almost a micro market at the moment. With the huge investments into the local economy, we have seen unprecedented rises in the values of homes with Margate being tipped as one of the highest increases in recent years. However, the rest of the country is experiencing a slowdown in house price growth to more sensible levels. With this, surveyors will often get instructions from their head offices to be more cautious in their valuing of homes.
We must remember that a bank or building society “valuation” is exactly that. It is an opinion on how much the property could be sold for in the event the buyer defaulted on their mortgage. This will be guided by evidence of other “sold and completed” properties in the area. Surveyors will also consider the demand for areas and restrictions of areas such as the designated selective licencing area of Cliftonville.
So, we know why this is starting to happen, but what are your options?
Well firstly, it’s about opinions. There are always two values on a property. One is the marketing value (what you would expect to sell for) and the mortgage value (the amount the bank would achieve if the property were to be repossessed)
So primarily, just because the surveyor’s opinion of the value is lower, doesn’t mean the buyer is getting a bad deal. Often buyers will be pragmatic about it and proceed anyway. However, some buyers are more cautious and demanding reductions from the previously agreed price.
Our Advice? Compromise. In the event this happened both parties need to take a sensible view. A second survey may well uphold the actual value, but the buyer will still always remain cautious of the first opinion. Remember both parties will have invested time and money into this purchase and so a compromise is always the best option. If either party pulls out, it will become costly and you always risk coming across the same problem.
And in 10 years’ time once prices have shot up further, will your concession look as drastic?
Category: Survey down valuations! Why and what happens?
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