Down valuations explained

A down valuation is a process lenders use during the application process which involves an independent surveyor assessing the value of a property. If the surveyor decides that the home is not worth the amount the buyer is offering, then the lender will use this lower amount as their basis for lending and may not lend as much money.

To help you better understand the nature of down-valued properties from both a buying and selling perspective, we've gathered some helpful information and advice on the topic in this article for you.

What are down valuations?

A down valuation means that even if a price is agreed upon between a buyer and a seller, there’s still a chance that a mortgage lender won’t agree to lend the money due to an overly conservative approach.

Down valuation advice for buyers includes:

●  Negotiating after down valuation

You may be able to negotiate with the seller again if you’re not happy with the newly agreed value of the property.

●  Challenge down valuations

If there are any discrepancies between the surveyor's report and the actual condition of the property you can dispute it directly or by using a claims management company.

●  Choose a different mortgage

A different type of mortgage might offer better terms that will compensate for any shortfall created by a down valuation.

●  Try a different lender

Some lenders may be more willing to lend at higher amounts than others.

Down valuation advice for sellers

Down valuation advice for sellers is more limited due to their lack of control over the situation. However, if you do receive a down valuation, it can be beneficial to speak with your estate agent about any offers that are below what was originally agreed. That way, you will know whether or not it’s worth considering an offer to move on from the transaction quicker and avoid further delays to the sale of the property.

Down valuations can also affect a remortgage, as lenders may not be willing to lend against a property that has been down valued. Should this happen, you may want to consider other options such as switching your mortgage provider or renegotiating the terms of your existing remortgage.

How to avoid a down valuation

If you’d prefer to avoid a down valuation altogether, it is important to have the property in question valued at the start of the buying or selling process.

Researching comparable properties and speaking with estate agents can give you a better idea of what price range the property should fall within and help reduce the chances of a down valuation. For buyers, this strategy can also be helpful when purchasing new build properties since these are often subjected to more conservative valuations.

Overall, understanding what a down valuation is and how to mitigate its effects can be key when buying or selling a home. In addition, valuing your house via an experienced agent, before agreeing on an offer, can help reduce the risk of getting down valued by the lender and help keep the sale of the home moving.

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