How to deal with a down-valuation from a surveyor

Last year, a survey of 1,000 sales in the UK revealed that nearly half of the properties involved were down valued. But what does this mean exactly and what can you do if it happens to you? Read on to get up-to-date with down-valuations.

A down-valuation is when a mortgage lender’s surveyor values a property lower than the current owner expects it to be valued at.

It’s more common when it comes to homeowners remortgaging their existing home and putting in a slightly hopeful valuation estimate. However, the survey of buyers last year shows that it has become increasingly more common with people moving to a new property.

So, picture the scene. You’ve found your perfect home, you’ve put in an offer and, hooray, it’s been accepted! Then, drama. The bank’s surveyor has valued the house lower than you offered to buy it for. So now, the bank won’t lend you as much as you thought and you’ve got a big chunk of money to make up.

Or, from the other perspective. You’ve found a buyer for your current property and you’re all set to buy a new place. Then, the valuation for the property you’re selling comes back lower than your buyer agreed to pay. What do you do now, if the sale falls through, it might jeopardise you being able to move into the new home you’ve found.

When a down-valuation happens, there are a few options. One, the buyer and seller negotiate a new, lower price. Second, the buyer can come up with the extra cash themselves or apply for a higher LTV mortgage product. Third, the buyer can attempt to use a different mortgage lender and see if they will value the property differently. And finally, you can try and challenge the valuation. This involves providing evidence to show why you think the valuation isn’t correct. However, this process does take time and often isn’t successful.

Regardless of which solution you’re drawn to if you hit this bump in the road, the very first thing to do is speak to your mortgage adviser. They will be able to help you understand why the valuation has come back lower than expected and what your options are going forward.

If you’d like to discuss the options available to you, contact your adviser today.