Kylie Menz, Branch Manager, Northfields Estates Sales answers:
When an offer is agreed on a property and the buyer is getting a mortgage to make the purchase of the property, they must arrange for a mortgage valuation with their lender. A surveyor representing the lender will inspect the property and decide on how much they think the property is worth. The estate agent will try to guide the surveyor by giving them “comparables” – properties that have sold in the area that are similar to the property they are valuing and were sold recently at a similar price. The surveyor’s goal is to ensure that if the property is repossessed in the future that the bank will recoup its costs when the property is resold. If the sale price of the property has been agreed at a price that the surveyor feels is over the current market value, then they will advise the lender of what price they feel the property would achieve. The mortgage lender will then revise the amount that they are willing to lend to the buyer. The surveyor is in effect “down-valuing” the property.
What can you do if the property you are buying or selling is down-valued?
You have a number of options:
1. The buyer could try make up the difference between the previously agreed sale price and the down-valued price. This may be a problem if the buyer does not have the available funds.
2. You can renegotiate the sale price through your estate agent to the “down-valued” figure.
3. The sale may fall through. This unfortunately does happen. Ensure that your solicitors work on a no sale, no fee basis, so that you don’t lose money as a result of the failed sale. If you need help finding a conveyancing solicitor who works on a no sale, no fee basis at a reasonable cost, contact Northfields on 0208 840 6666 and we will recommend a solicitor for you anywhere in the UK.
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