What to do if Your Property Gets Down Valued in Essex
The excitement of having an offer accepted on an Essex property can quickly turn to anxiety when the mortgage lender’s surveyor returns a down valuation. This is when the surveyor declares the home’s market value is less than the price you, the buyer, have agreed to pay. This issue, currently trending and even featured in national news, is a significant challenge in the modern property market.
If you are buying or selling in Essex and face a down valuation, here is our expert guide on what steps to take.
Why is This Happening Now?
In the current climate, property down valuations are becoming increasingly common. Many industry experts are pointing to a new era of caution from lenders, reminiscent of market behaviour seen in previous economic downturns. This cautious approach is often driven by a desire from lenders to mitigate risk in a housing market that has experienced recent price fluctuations, particularly across parts of Southern England, including Essex.
While some down valuations are understandable, others can defy logic, as experienced estate agents often report, especially when they have strong comparables to support the agreed price.
Common factors contributing to a down valuation include:
- A Lack of Recent Comparables: Surveyors rely on recent sales data (ideally within the last three months) of similar properties in the immediate area. For unique or unusual Essex properties, or in areas with low sales volume, a lack of recent data can lead to a more cautious valuation. Sometimes, surveyors may pull in older or less relevant sales, resulting in a lower figure.
- Property Type and Features: Valuations based purely on price-per-square-foot can often overlook crucial variables like a south-facing garden, a detached status, better light, or superior views, leading to an artificially reduced value.
- Overly Optimistic Asking Prices: In some cases, a bidding war or an overly enthusiastic seller/estate agent may have pushed the agreed price beyond what a professional valuation can justify based on hard data.
Your Options Following a Down Valuation
As an independent mortgage broker in Essex, we at Goldmanread understand the stress a down valuation can cause. Here are the most effective actions you can take:
- Challenge the Valuation with Your Broker and Estate Agent
The first step is always to gather your evidence. Ask the estate agent for their strongest comparables to support the agreed sale price. These should be recent sales of very similar properties in close proximity.
As your mortgage broker, we can then explore the possibility of submitting an appeal to the current lender with this fresh evidence. While the original surveyor is not obliged to change their valuation, compelling, relevant, and recent data can sometimes lead to a reconsideration.
We would caution that getting surveyors to overturn a valuation is usually a lengthy, drawn out process which very rarely results in success ……but it may work on the rare occasion!
- Apply with a Different Mortgage Lender
This is often the most successful strategy. Different lenders use different surveying firms, and one firm’s interpretation of the market can vary significantly from another’s.
Goldmanread’s Advice: We have seen this often in Essex. For instance, a property in the Billericay area we arranged a mortgage on and the buyer had agreed at £450,000 was down valued to £425,000 by the initial lender. By immediately switching the application to a lender who uses a different valuation panel, we secured a second valuation at the full £450,000, saving the buyer the £25,000 shortfall and securing the deal. By leveraging our access to a large panel, we can quickly identify an alternative lender who may be more favourably disposed to the property’s characteristics or simply use a different, less conservative valuer.
- Negotiate the Purchase Price
The down valuation provides a valid reason to renegotiate the purchase price with the seller. If the seller wishes to keep the sale on track and avoid the risk of the same issue with a new buyer, they may agree to reduce the price to meet the surveyor’s valuation, or perhaps agree to meet you halfway.
This is a sensible approach and it could be that the estate agents had originally over valued the price in what is a frothy market. That’s why you should never rely solely on an estate agents valuation if you’re buying, selling or remortgaging.
- Cover the Shortfall
If the seller is unwilling to budge and you are committed to the property, you may choose to make up the shortfall yourself by increasing your cash deposit.
- Example: If you agreed to buy a property for £400,000 with a £40,000 (10%) deposit, but the valuation comes in at £380,000, the lender will only offer you 90% of the lower figure (£342,000). You would then need to find an extra £20,000 cash to make the purchase price of £400,000. While this means you are taking a smaller loan, you need to ensure you have the available funds to bridge the gap. We appreciate that in reality its not easy for buyers to “magic” up another £20,000, especially given all of the other additional costs involved in buying.
The Mortgage Broker’s Crucial Role
In the event of a down valuation the main thing is …Don’t Panic! Just remember that your mortgage broker is your most vital ally. We can:
- Advise on the Best Course of Action: Based on the specific details of the property and the lender’s valuation report.
- Access Alternative Lenders: We can quickly pivot and submit a new application to a different lender, saving you valuable time in a highly pressurised situation.
- Present Strong Evidence: We can work with your estate agent to present the most robust comparable evidence to the valuer, ensuring all variables are considered.
Don’t let a down valuation derail your property dreams in Essex. If your agreed purchase price has been challenged by a lender’s valuation, contact us today for expert, fast, and local advice to get your sale back on track.
