property-down-valuations

Property down valuations across the south east

With the runaway property market comes rising house prices and the unwillingness of surveyors to agree that a property is worth what it has been agreed at. Down valuations are now affecting sales across London and the south east as surveyors disagree over the price agreed. This is having a detrimental affect on the property market as sales are falling through.

However this won’t affect property prices because there are so many buyers around that the house will sell to someone else. House prices have grown by nearly 8% over recent months and in London the annual growth rate is double that. When a property is down valued it means that the building society will not lend you the previously agreed sum of money. They will give you a loan against the property but it will be for less.

This means that buyers have to find the shortfall from somewhere else which can often cause a problem. It doesn’t always mean that a sale will fall through as some buyer simply come up with the extra cash but many sales do fall through.

Of course buyers may be able to negotiate a price reduction on the property but this is unlikely in the current climate as the property market is booming and the number of buyers outstrip the number of sellers. According to figures released at the weekend there are eight buyers chasing every property so trying to get a price reduction on the purchase will be unlikely.

What is often overlooked is the costs involved when a property sale falls through. solicitors charges will still apply as the solicitor will possibly have started the conveyancing process with searches etc. The survey will most likely have cost in the region of £500 which will also wasted if the sale falls through. This trend of down valuations is indicative of a rising property market where valuations are based on comparable evidence of previously sold homes.

Some of these houses are setting the highest prices in the road and surveyors don’t want to value these houses at this level just in case prices drop. However this doesn’t stop the prices going higher because there are so many cash rich buyers out there that will ignore the valuation. If they want to buy a house and it is down valued they can just take out a smaller loan to value by putting in more cash. These buyers are obviously better placed to take advantage when a house comes onto the market that is likely to be down valued.