Mortgage Valuation Lower Than Offer: How Could Home Buyer Surveys Help?

Home buyer surveys

A home buyer survey, such as a RICS Home Survey Level 2 (previously known as the homebuyer survey) or a Digital Home Survey, is an important part of the property buying process, providing buyers with an independent and professional assessment of the property's condition. It can also help to identify any potential problems that could affect the value of the property or lead to costly repairs once you move in. Unlike a mortgage valuation, which is carried out for the benefit of the mortgage lender only, a home buyer is carried out for the benefit of the buyer.

One situation where a home buyer survey may be particularly helpful is if you receive a mortgage valuation that is lower than your offer (also known as a down valuation). This can happen for several reasons, such as if the surveyor instructed to carry out the valuation report by the mortgage lender believes that the property is not worth as much as you have offered, or if they find any problems with the property that need to be fixed.

If you receive a down valuation, a home buyer survey can help you to understand why the valuation was lower than expected and whether there are any steps that you can take to challenge it. It can also help you to negotiate with the seller or to find a different mortgage lender.

Down valuations explained

A down valuation is when a mortgage surveyor (also known in the industry as a mortgage valuer) values your property at less than the purchase price agreed. This can happen for several reasons, such as:

• The surveyor believes that the property is not worth as much as you have offered. This can be due to factors such as the condition of the property, the location, or the recent sale prices of similar properties in the area.
• The surveyor has found problems with the property that need to be fixed. This could include structural problems or issues such as presence of Japanese Knotweed.
• Sudden changes in the property market and macro-economic shifts. Valuers have a duty both to their clients (lenders), and to themselves to take this uncertainty into account, which is why during uncertainty valuers will err on the side of caution.

What happens when you get a down valuation?

If you receive a down valuation, you will need to carefully decide what to do next. You may be able to negotiate with the seller to reduce the price of the property to meet the value suggested by the surveyor, or you may be able to challenge the valuation, however keep in mind that some lenders to not accept valuation challenges. If you are unable to do either of these things, you may need to find a different mortgage lender or choose a different mortgage product.

How can a home buyer survey help with down valuations?

A survey can help you to understand why your property has been down valued and whether there are any steps that you can take to challenge the valuation. For example, if the surveyor has found any problems with the property, you may be able to get quotes for repairs and use this information to negotiate with the seller.

A home buyer survey can also help you to identify any potential problems with the property that could affect its value in the future. This information can be useful if you decide to challenge the valuation or if you need to find a different mortgage lender.

Down valuation advice for buyers

If you receive a down valuation, there are a number of things that you can do:

• Negotiate with the seller. If you are happy to go ahead with the purchase irrespective of the surveyor’s suggested price, you may be able to negotiate with the seller to reduce the price of the property.
• Challenge the valuation. If you believe that the valuation is unfair, you can challenge it with your mortgage lender. You will need to provide evidence to support your challenge, such as comparable evidence of similar properties that have sold in the last 6 months in the locality.
• Try a different lender. Some lenders are more willing to lend on down valued properties than others. You may be able to find a different lender who is willing to lend you the amount that you need to buy the property.
• Choose a different mortgage. If you are unable to negotiate with the seller or find a different lender, you may need to choose a different mortgage product. For example, you could choose a mortgage with a higher deposit.

Down valuation advice for sellers

If you are selling a property and it has been down valued, there are some of the things that you can do:

• Find a new buyer. You may be able to find a new buyer who is willing to pay the asking price for your property, ideally a cash buyer or one with a bigger deposit.
• Accept a lower offer. If you are unable to find a new buyer, you may need to accept a lower offer from the existing buyer.
• Reject the lower offer. If you are not happy to accept a lower offer, you can reject the offer and continue to market your property. However, it is important to be aware that this may delay the sale of your property.

Conclusion

A home buyer survey is an important part of the property buying process, and it can be particularly helpful if you receive a mortgage valuation that is lower than your offer (a down valuation). A home buyer survey, even though it’s not supplied with a valuation as standard, can help you to understand why the valuation was lower than expected and whether there are any steps that you can take to challenge it. It can also help you to negotiate with the seller or to find a different mortgage lender.

If you're interested in getting a survey quote from a qualified surveyor in your area, be sure to visit our quotation tool for an immediate estimate today.