A common misconception among homebuyers is that the mortgage valuation is the same as a survey. In actual fact, it is merely a check by the lender to ensure the property is worth the amount you are asking to borrow, even though you have to pay for it.
To find out the true condition of the property, you need one of the following:
Each of the above may highlight issues with the property, potentially halting your sale or purchase.
If possible, ask to meet the surveyor at the property at the end of the survey so they can talk you through any potential problems, then send a copy of the survey to your legal company as soon as you receive it. While it can be disappointing to receive a bad survey on a property you had set your heart on, there are options for you to consider:
Price up the cost of any urgent repairs play anything else which will need repairing or replacing in the next few years, such as the roof or windows.
If the survey reveals the need for expensive, or extensive, work, you can use this as a negotiating tool. You could ask the seller to:
If the problems are extensive and you are not prepared to take on the challenge, don’t be afraid to walk away, however much you wanted the property. Buying a property should be done with the head, not the heart, and there will be others available.
The buyer’s survey may flag up issues you did not know about. Take a look at the survey to learn what these problems are. Once you know what you are dealing with, you have several options:
There is a small chance the buyer will not reduce the offer or pull out, but this is a big gamble on your part. And bear in mind that, if this buyer does pull out, the next surveyor will almost certainly flag up the same problems, so you will be faced with potentially losing the sale all over again.
If you are sure the issues highlighted have already been dealt with or are not a problem, consider having your own specialist survey done so you have evidence to prove this.
Consider paying to have the work done on the property to satisfy the surveyor. You can do this before exchange, or make it a condition that you have it carried out between exchange and completion.
Get a quote for the work required, then offer to reduce the property price. You can offer to reduce the price by the full amount or agree to meet the buyer halfway.
The mortgage valuation allows the lender to assess the risk if they lend the money for a property. If the valuation is lower than the sale price agreed, this presents a problem for the buyer. Here are some options if this happens to you:
This is a gamble but it could pay off; the buyer could find a bigger deposit so they don’t have to borrow so much for the property.
If there is a specific issue with the property, you could get it fixed, or pledge to sort it before exchange.
One mortgage valuation is likely to be very like another so, unless you make changes to the property to increase its value, the problem will not go away and your best option may be to reduce the price accordingly to secure a sale.
If your heart is set on the property, can you find additional funding which will enable you to put down a large enough deposit to satisfy the mortgage lender?
If the mortgage lender does not believe the property is worth the asking price, or the amount you are asking to borrow, the seller may have to accept this and reduce the price. A second mortgage valuer is unlikely to come to a very different conclusion so the vendor is likely to face the same issue with the next potential buyer.
Bear in mind, if the vendor agrees to carry out work to increase the property’s value, this will slow down your purchase. They may even end up adding too much value, putting the property out of your reach.
If you have a received a bad survey, whether you are buying or selling a property, and would like some advice, do get in touch with Propertychecklists.co.uk. We are a small company but will do our best to help.