We British remain passionate about home ownership. Yet the banks, who are also involved, burnt their fingers in the past with wildly generous lending and they are keen not to make the same mistake again.
One effect of this, which could affect you if you are currently buying or selling, is the undervaluing bank-appointed valuer!
When your property goes on the market, your agent’s job is to secure the very highest price the market will pay. An experienced local estate agent should have a pretty accurate idea of what the market will pay (although beware those agents who suggest a very flattering figure to impress you to gain your property, which then might struggle to sell and go stale on the market!).
Once that figure, or one close to it, has been achieved and a sale has been agreed, the buyer will invariably arrange for a formal valuation to support their mortgage application. However, these valuations are designed to be a safety net for the lender and valuers are increasingly aware of reducing risk – both for their client (the bank), and themselves. They have traditionally been more concerned about the “evidence” of previous sales than they are about what the market will actually pay today –and we are currently experiencing some surprisingly high figures being achieved. .
So buyers and sellers alike, both of whom really do want to move, should be prepared for the possibility of a slight downvaluation following the mortgage valuation inspection, but not let it deter them. Unless the valuation affects the ability to borrow enough, it does not always follow that the price itself is unrealistic and need not necessarily be renegotiated between buyer and seller.
As experienced negotiators, we are pretty well versed in these matters so when the time comes to buy or sell, please do let us know and we’ll help you negotiate pitfalls such as lower than expected valuations!