Homebuyer survey market value vs purcahse price

The_Organiser

Hi there,

I'm hoping for a bit of advice as this board is usually very knowledgeable.

Set the scene - I'm a first time buyer and found a house advertised for 330k and agreed a price of £315k.

I paid for a homebuyer (2nd level) survey which occurred Wednesday. The mortgage provider came back yesterday saying all good, the valuation survey agree it's worth that (£315k) so offer the full mortgage to us. Good stuff.

Then today the extra (homebuyer) element has arrived and the summary opinion is:

"Following my inspection I found no reason why you should not purchase the property but I
have recommended some improvement works. These are not considered to be exceptional
or unusual in a property of this age and type. The proposed purchase price of £315,000
reflects the need for the work. Under normal market conditions, providing the repairs are
done and regular maintenance is carried out there is no reason to expect the property to
be difficult to re-sell".

Again, fair enough.

It then goes into all the different elements and mentions some 'red' and 'orange' areas which need repair, or expert opinion etc.

It then finishes with their opinion of the Market Value (MV) of .......£265k(!!!) and reinstatement of £208k.

Now I have a few questions:

1.Does the market value not contradict the opening summary?
2.Is it normal for the MV to be so much lower than the purchase price and does it just reflect the fact that the market is so inflated these days?
3.If I go down the route of seeking a reduction in price, should I ascertain the sellers view on this before I start getting quotes etc.

I will obviously try to contact the surveyor to ask the questions above and will consider getting opinions/ quotes for the works.

I would not seek to knock them on the price for the sake of it, but think I should if there is valid justification.

Any advice/experience would be appreciated.

Cheers.

Covered_End_Lad

The house is worth what someone will pay for it.

letthegoodtimesroll

I'm no expert but my first thought is somebody has copied and pasted a previous report and not changed all the figures. If the £315k reflects the need for work then surely the value can't be less than that, can it ?

The_Organiser

letthegoodtimesroll said:

I'm no expert but my first thought is somebody has copied and pasted a previous report and not changed all the figures. If the £315k reflects the need for work then surely the value can't be less than that, can it ?

My thoughts too and I will ask them. But being my first time going through this process, I thought I'd put the question out there.

Gravesend_Addick

If you pay for a full report & take everything flagged up in that report as an issue, you would never buy a house ever again. It's their job to find possible faults, but they dig very, very deep to find them. As long as you've had the standard report & mortgage lender report done, I wouldn't worry

Valiantphil

Valuation reports - the next PPI scandal.

LenGlover

letthegoodtimesroll said:

I'm no expert but my first thought is somebody has copied and pasted a previous report and not changed all the figures. If the £315k reflects the need for work then surely the value can't be less than that, can it ?

My thoughts too.

Survey reports I've seen normally confirm the market value as the agreed sales price assuming all else is ok.

However I am not a surveyor and stand to be corrected.

The_Organiser

Chrissy\\\'s Army!! said:

If you pay for a full report & take everything flagged up in that report as an issue, you would never buy a house ever again. It's their job to find possible faults, but they dig very, very deep to find them. As long as you've had the standard report & mortgage lender report done, I wouldn't worry

This was not a full report. This was one above the mortgage lender one, so a homebuyer survey (circa £500), not a full structural one.

That being said, I know they have a rep for going to the nth degree to find faults and cover themselves etc, but a market value opinion of £50k less than I've agreed to pay, based on what he has found is a tad concerning. And it contradicting the opening summary is confusing.

Like the others have said above, maybe it will turn out to be a sloppy error.

MrLargo

The mortgage lender's valuation is key - they base everything around the possibility that you'll default on your mortgage and that they'll need to be able to get all of their money back when they sell the property that they've repossessed from you. If they're happy with £315k then so should you be.

The_Organiser

MrLargo said:

The mortgage lender's valuation is key - they base everything around the possibility that you'll default on your mortgage and that they'll need to be able to get all of their money back when they sell the property that they've repossessed from you. If they're happy with £315k then so should you be.

I agree from their perspective. But is theirs not based on not much more than a drive by valuation?

If the extra surveys says the works needed on my house mean it's currently worth £50k less than I was going to pay, then surely that should be a concern?!

MrLargo

The Organiser said:

MrLargo said:

The mortgage lender's valuation is key - they base everything around the possibility that you'll default on your mortgage and that they'll need to be able to get all of their money back when they sell the property that they've repossessed from you. If they're happy with £315k then so should you be.

I agree from their perspective. But is theirs not based on not much more than a drive by valuation?

If the extra surveys says the works needed on my house mean it's currently worth £50k less than I was going to pay, then surely that should be a concern?!

A mortgage valuation doesn't tell the buyer much but will still flag up anything that is likely to have a significant impact on the saleability of the property - damp, evidence of possible subsidence, etc. They still have a proper look at the place, they just don't provide you with a 30 page report on what they saw.

I suspect that your surveyor's £265k valuation is either a mistake, over-caution or a lack of knowledge of the current market conditions. Also, surveyors almost always significantly over-estimate building/improvement costs.

I'll be honest, I don't really like surveys - I've never learned anything useful from them, they just seem to add extra worries to an already stressful process.

The_Organiser

They sure do add stress.

I think my complete lack of knowledge on any of the issues the survey has highlighted, plus my inexperience in interpreting the survey is causing my concerns.

I think if they come back and say the £265k is a typo, then I'll be a lot 'happier' but that discrepancy is the alarm at the moment, which is making me think the works are more serious than they possibly are.

Cheers.

kings hill addick

I would check with the surveyor. The two numbers are inconsistent.

However, I would 'refuse' to send the current one back as it might be useful in the future. I would ask the surveyor to explain himself and then ask him to provide a new report with both the figures the same - either £315 or £265.

Siv_in_Norfolk

I've let two purchases fall through due to issues in survey

Was going to avoid it on this fourth attempt at buying we are currently involved in, but subsidence possibilities mean I need to do a survey IF (big if) I want to go ahead with it (see separate thread)

The_Organiser

Update - Surveyor has come back confirming the error and has apologised. A mapping error apparently and a new revised report will be sent.

That solves the discrepancy.

Now I just need to interpret the seriousness of the issues raised.

bobmunro

The Organiser said:

Update - Surveyor has come back confirming the error and has apologised. A mapping error apparently and a new revised report will be sent.

That solves the discrepancy.

Now I just need to interpret the seriousness of the issues raised.

You are paying £315,000 for something!!! I would pay the extra and get your own structural survey completed to determine the seriousness of the issues raised. That way you have comeback against a 'professional' surveyor who has full professional indemnity insurance should they miss something obvious.

heavenSE7

Soon as I read your post I knew what the outcome was going to be. Just had a homebuyers survey done for the house I bought and it mentioned our rear extension and flat roof - which is strange considering I have neither!! Just a copy and paste job! This was a company working as the named surveyor for HSBC...

They are knicking a living with those surveys as they will never actually go indepth unless you buy the "full" option- and even then they word it as such that it is non commital.

The_Organiser

bobmunro said:

The Organiser said:

Update - Surveyor has come back confirming the error and has apologised. A mapping error apparently and a new revised report will be sent.

That solves the discrepancy.

Now I just need to interpret the seriousness of the issues raised.

You are paying £315,000 for something!!! I would pay the extra and get your own structural survey completed to determine the seriousness of the issues raised. That way you have comeback against a 'professional' surveyor who has full professional indemnity insurance should they miss something obvious.

I was led to believe that level of report is only worthwhile for much older or uniques properties and even then can be uncommital. In fact I was told lots don't bother with a homebuyer even (which I agree seems mad). The fact 'my place' is a standard 1970's semi in a standard location it seemed the full one was not necessary.

Or have I assumed wrong? Have many people in here gone for a full one in similar scenarios?

I think the issues raised in mine are probably fairly bog standard but I'm just very lacking in knowledge/experience when it comes to home repairs/maint and the terms used. Plus the wording seems a tad vague.

I'll run it past my father and father in law tonight.

bobmunro

The Organiser said:

bobmunro said:

The Organiser said:

Update - Surveyor has come back confirming the error and has apologised. A mapping error apparently and a new revised report will be sent.

That solves the discrepancy.

Now I just need to interpret the seriousness of the issues raised.

You are paying £315,000 for something!!! I would pay the extra and get your own structural survey completed to determine the seriousness of the issues raised. That way you have comeback against a 'professional' surveyor who has full professional indemnity insurance should they miss something obvious.

I was led to believe that level of report is only worthwhile for much older or uniques properties. In fact I was told lots don't bother with a homebuyer even (which I agree seems mad). The fact 'my place' is a standard 1970's semi in a standard location it seemed the full one was not necessary.

Or have I assumed wrong? Have many people in here gone for a full one in similar scenarios?

I think the issues raised in mine are probably fairly big standard but I'm just very lacking in knowledge when it comes to home repairs/maint and the terms used. Plus the wording seems a tad vague.

I'll run it past my father and father in law tonight.

I've had full structural surveys done on every property I've purchased - but I tend to purchase very old properties - built in 1500, 1362 and my current one a whippersnapper at 1740!!

That said, I would still have one done on a 1970's house.

Sillybilly

We bought our current house 23 years ago. It is 100 years old and full of cracks but in a highly desirable street. We moved from a wood framed flat that we had bought from the plans during the height of the market in 1988. My survey came back with a number of issues that scared the bejeesus out of me. I rang the surveyor who essentially told me:

1. My 100 year old house would probably be standing long after my five year old flat.

2. Even if he was wrong, my plot of land was worth more than the house so go ahead and buy before somebody else does.

23 years later and there are a few more cracks but we're still here and it's worth five times what we paid for it.

The_Organiser

That's understandable and I'd have done the same in those scenarios.

LenGlover

The Organiser said:

bobmunro said:

The Organiser said:

Update - Surveyor has come back confirming the error and has apologised. A mapping error apparently and a new revised report will be sent.

That solves the discrepancy.

Now I just need to interpret the seriousness of the issues raised.

You are paying £315,000 for something!!! I would pay the extra and get your own structural survey completed to determine the seriousness of the issues raised. That way you have comeback against a 'professional' surveyor who has full professional indemnity insurance should they miss something obvious.

I was led to believe that level of report is only worthwhile for much older or uniques properties and even then can be uncommital. In fact I was told lots don't bother with a homebuyer even (which I agree seems mad). The fact 'my place' is a standard 1970's semi in a standard location it seemed the full one was not necessary.

Or have I assumed wrong? Have many people in here gone for a full one in similar scenarios?

I think the issues raised in mine are probably fairly bog standard but I'm just very lacking in knowledge/experience when it comes to home repairs/maint and the terms used. Plus the wording seems a tad vague.

I'll run it past my father and father in law tonight.

It's the largest purchase you'll ever make (until the next one) so the reassurance of a structural survey is a (relatively) small price to pay.

It gives you an extra layer of potential 'comeback' if anything untoward comes to light either while you're there or when you are trying to sell on yourself.

Not sure where you are buying but Mike Heselden of http://www.premiumsurveyors.co.uk/ is a good guy and an ex Charlton youth player back in the day if you do decide to have one.

golfaddick

I've been arranging mortgages for over 25 years & would really only suggest a full structural survey if the property is over 100 years old, unique or different from the norm. It most other cases a homebuyers report should do. I once bought a Victorian Semi & had a full structural survey done - the report was 28 pages long and not really worth it imo.

I would only suggest a full survey on a 1970's house if either you know there have been issues with that road (movement etc) or intend to stay there 30 years & intend changing or adding things like extensions. As a first time buyer I would imagine you'll be moving within 5-10 years & so why bother paying for an extra survey.

The saying "its the biggest thing you'll going to buy" is rubbish - most people move 5 or 6 times in their lives (I've moved 8 times in my life already) and so your simply "keeping the place warm" for the next person who's going to move in.