Survey has come back as less than what we've agreed to pay!

A question about : Survey has come back as less than what we've agreed to pay!

Hi everyone,

A bit of a panic, I apologise. Quick rundown of our situation:

Agreed purchase price of property: Ј249,950
Deposit: Ј55,000
Loan requested: Ј194,950

We're FTBs, everything was going so smoothly (completion date even pencilled in for 13th March!) and then today we got our homebuyers report through following our survey completed on Friday, and they reckon that the house is actually worth Ј225,000 (nothing really wrong with the property, just their assessment of the market value). This has knocked us for six as I'm sure you can imagine. I called the bank (Natwest) and they haven't actually got round to assessing the valuation yet, the expect to have this done by Wednesday.

My question really is this: is there any way on God's green earth that Natwest might still offer us the full loan we've requested of Ј194,950? Or does the result of the survey mean that's just off the table now, no chance at all? To my mind, I thought that IF they had to repossess the house and sell it, and say it sold for Ј225,000, they'd still get their initial investment of Ј194,950 back and then some more on top. Or does it not work like that?

Thank you for any kind words, I'm trying to stay calm and remember that it's not all over just yet.

Best answers:

• Another angle on this: Is it worth understanding why the surveyor arrived at this amount ?
  Don't assume he's wrong, maybe you are overpaying.
  Why don't you call him, they tend to be more direct/clear off the record.
• The bank will base the mortgage offer on the surveyors valuation.
  Ring the EA , tell him the valuation and say you've revised your offer.
• On those figures I suspect they will still lend but you will need to pick a new product, which will have a higher interest rate.
  Personally I would be using that to go back to the vendors to re-nogetiate the price down. Use it to your advantage, you dont want to be paying 20% more than the value is do you? Every pound saved is better in your pocket than theirs.
• Thanks for the advice all. I hear what you're all saying about renegotiating the price, my brain tells me that's the right thing to do but I also worry about scaring off/insulting the vendor which is stupid I know. Would you advise that we wait at least until Wednesday to hear the official decision from the bank or should I jump on it tomorrow with the Homebuyers Report as evidence enough for a lower price?
• Try to renegotiate, all that will happen is they come back and say no. You then have a choice of sticking with the purchase price or backing out.
  Think of it another way, if you struggle to get the price you want so may others. Lenders usually use a lot of the same surveyors so you may find that whoever has been out to see the property for you will see it for someone else regardless of which lender they use. That may not happen but it can.
• The vendor has insulted you by asking Ј249K when it is worth Ј225K.
  Expect a much lower price or walk away.
  Experience tells me that clients that need to find a second property option always get a better deal.
• Dont surveyors always say its worth less, in order to "cover" themselves for any possible comeback later?
• Thanks for the replies everyone and all the advice.
  A bit of an update - because of the size of our deposit apparently Natwest will still lend us what we need but we'll be paying a little more each month. We're keeping that as a last card to play if the vendor decides not to budge and we decide we still want the house.
  The issue is that in the area we want to buy the type of property we want is quite rare to come up - we want a one bed house with private garden, and I'd say about 90% of the ones that come on the market around here are back to back starter homes with an open to the pavement front garden. Add to this the fact that this new house is literally 3 doors down from where we currently live (in a street we really love) and it means that we are really keen on the property. I'm trying not to appear too keen to the EA though.
  Last night our offer of the valuation price of Ј225k was refused as apparently the vendor bought the house in 2007 for Ј190k and they feel that an increase of Ј35k isn't enough considering they've made improvements (new kitchen, new bathroom, extended porch that none of our other little houses have). We went back at about 5.30pm yesterday with an offer of Ј235k and now we're waiting for a response to that. I know this is Ј10k more than we should perhaps be paying, but we really want the house. I was hoping when they refused the Ј225k they might have come back with a counter offer so we could get into a real negotiation, but I guess that isn't how it works?
  It's such a headache, and it was all going so well!
  Wish me luck!
• Good luck Justadmin88!
  I've just had a valuation knock Ј5K off my original offer due to suspicion of damp. They're bringing in a damp/timber company but I plan to find a surveyor, get a Home Buyer's report done then take negotiations from there.
• If your 235 fails I would go back and say 237,500 is your final offer.
  Put the ball in their court and see what they say, if they say no you can always say how far off are we.
  Nobody elseis going to pay Ј12,500 over the asking price, unless you are very unlucky.
  Maybe geta horrible rusty van and caravan and park it on the street. Or get a few friends kids to hang around in your front garden with hoodies on? That might drive away any potential buyers, maybe throw a few empty bottles of stella around to add to the affect?