How to deal with Property Down Valuations



A property down valuation is never easy to deal with when trying to remortgage or purchase a property.  The first step is to lodge a valuation appeal with the mortgage lender.


Remortgage Down Valuations

Remortgage down valuations happen more often than any other mortgage type in our experience. Often, when remortgaging, owners don’t carry out enough research to determine the best price for their property or they overestimate and hope for the best. If you are subject to a remortgage down valuation then some lenders will offer an appeal process. Please note that in order to overturn a mortgage valuation decision with a successful appeal, you must be prepared with property comparables. You can obtain these comparables from local estate agents. See our section below on how to obtain the best property comparables to challenge your remortgage down valuation.


New Build Down Valuations

New build down valuations are now more common and frequent than ever. There is a persistent problem with all New Build developers listing their properties at prices that inflate the market. This is only my opinion, but I have over 15 years experience in the property and mortgage industry. I have also witnessed dozens of my clients experience down valuations on New Build property. It is difficult to challenge New Build property down valuations, as there is often a lack of comparables in the given postcode area, given the fact that most of the properties in the immediate area are not built or fully completed. In addition, most lenders will require a history of sale prices in order to overturn any down valuation decision.

My advice is to always negotiate hard with your developer and not focus on the lender. If you change lender, it will just be the same result and you are most likely kidding yourself, having bought into the developer sales pitch. The developers will often try high prices to see what sticks. From negotiation, I have seen several buyers knock off over £50,000 on New Builds in London this year alone (2017). If you can’t get the price down walk away. It takes 5 years to become a fully qualified property surveyor with all the relevant accreditations. The surveyors know best.


Property Comparables

The comparables must be:

1. Relevant – The same number of bedrooms, same postcode and same condition. You will not overturn a decision by providing comparables that are a different postcode, property type and a different number of bedrooms.

2. Recent – The sales must be recent, within the last 3 months. Ring up some local estate agents for information. The good ones will be happy to help. If you can’t obtain recent data, explain why and justify.

3. As detailed as possible.


The Valuation Appeal Process

Some lenders will offer a valuation appeal form which you can obtain from your broker. You must include as much detail as possible in order to stand a chance at having your down valuation overturned. Include the name, email and contact number of the estate agent who you approached. Make sure that the estate agent is OK with being contacted by the lender.

Include a detailed description of the property comparables and make sure that you are demonstrating how your property is worth more/or the same. Most of the time, the lender will ask for just three recent comparables. Make sure that these are the best three examples that you can give.


How To Avoid Property Downvaluations before they happen

Use both Rightmove and Zoopla to compare sold properties in the same street where you are buying or remortgaging and up to a 0.5-mile radius in London or 1-mile radius outside of London. Call estate agents and ask for a free property valuation if you are looking to remortgage. Some agents might be prepared to give you an indicative figure over the phone, assuming some general conditions.

When buying from a developer, see what non new build prices are like in the area for the same number of bedrooms. Compare floor plans and square footage on Rightmove, compared to the floor plans of traditional properties. Are you losing space? If so, why would you pay more than a traditional property with less floor or garden space?


Ben - Author

Article was written by Ben, Glow Mortgage Advisor (CeMAP, BSc Hons)

First Published on: 17 Jul 2017 @ 11:06