Mortgage survey revaluation

Q: Our mortgage lender has surveyed the flat we’re buying and has valued it lower than they originally agreed to lend.  What are my options?

A: This does happen from time to time so don’t be alarmed. When a property is valued by a mortgage valuation surveyor, the selling estate agent will usually provide sold prices of other, recently sold, comparable properties. This demonstrates to the valuation surveyor that the property is worth what you’re paying.

If your lender decides that the property is worth less, you have a few options; if you genuinely think that the lender has undervalued the property and hasn’t taken into account the selling price of similar properties which have recently sold, you can ask the lender to reassess their valuation. To do this, you will need to give them extra information about the other recently sold properties as comparables, however, this can be much harder to provide if you are buying something rare which doesn’t come up for sale very often.

We’ve had cases where the lender has revised their offer up slightly but not to the full asking price, and others where they have revised it completely to the originally agreed value. If your mortgage broker tells you that reassessing isn’t possible, we would recommend trying anyway because often, much to the broker’s surprise, the valuation has been revised upwards.

If your lender only increases their valuation marginally, or refuses to increase it at all, you need to start renegotiating the price with the estate agent. You can try to reduce your purchase price in line with the valuation given by your lender, but do be prepared for your vendor to dig their heels in. If you can’t agree a full price reduction in line with the new valuation, you could try to meet the vendor in the middle. This will involve you putting in extra cash into your purchase, though, to make up the shortfall on what your lender is willing to lend. If this isn’t possible, the vendor has a choice either to accept your reduced offer or reject it and put the property back on the market, leaving you to find somewhere else to buy.

If you have a question you’d like Jo to answer please email or tweet her @joeccles.