Sales hit a snag: Almost half of transactions subjected to down valuations

Sales hit a snag: Almost half of transactions subjected to down valuations


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Sales hit a snag: Almost half of transactions subjected to down valuations
Sales hit a snag: Almost half of transactions subjected to down valuations


A recent survey carried out by property purchasing specialist, HBB Solutions, has estimated that almost half of pandemic property purchases across the UK may have been subjected to a down valuation – just shy of 867,000 sales that have hit a snag.

Down valuation – explained

When a surveyor is acting on behalf of a mortgage lender and considers a property to be worth less than the price agreed upon prior by the buyer and seller, down valuations occur.

This results in mortgage lenders rejecting the initial offer and won’t lend the full amount requested by the buyer, and this will often pressure the seller to lower their asking price to proceed with the transaction. 

Generally, down valuations will occur when the seller enters the market with an over-optimistic asking price, with temptation added by an agent claiming their home is worth more in order to win their business. If something comes to light during the survey that reduces the value of the property, or if the lender urges the surveyor to tread with caution because they themselves are worried about over-inflated market conditions can all be contributors to the onset of down valuations.

Using the latest data available on the frequency of down valuations within the property market, HBB Solutions looked at just how many property sales would have been impacted based on the number of transactions to have been completed since January 2020.

A pandemic of property down valuations

During their survey stage, all property transactions will hit a pricing snag with industry figures showing that 63% of Welsh home sellers are most likely to see their property down valued.

However, in terms of the most property down valuations, since the start of 2020, the South East sits top of the table with HBB estimating that 129,394 of the 294,077 homes that have been sold have experienced a down valuation.

The second-largest volume of down valued property transactions has been seen in the North West at 118,694 and with London following suit, which has been the only other region to breach the 100,000 thresholds (107,168).

It is estimated that Northern Ireland has seen the lowest number of pandemic property down valuations, yet HBB Solutions still assesses that almost 27,000 transactions will have been subject to a price reduction by surveyors.

Preparing for a down valuation

As a seller, a down valuation doesn’t always mean your home isn’t worth what you think it is. It often requires you to repeat the process of finding a buyer, using a different lender, who might agree with the price that you’ve initially set.

You have the options of choosing not to budge and leaving the ball in the buyers’ court for them to find the solution or rectifying any issues that have been highlighted as the reason for the down valuation.

Alternatively, you can renegotiate the price, which is often the quickest route to a resolution, however, if you have the time, you can play the long game and wait for house prices to rise, which will cause the down valued price to increase, thus falling in line with your current expectation. 

As a buyer, if the seller won’t budge, it is recommended that you try a different lender and request that they carry out the survey. If this fails and the seller still refuses to negotiate, your last option would be to take out a loan to cover the shortfall or increase your deposit.

The managing director of HBB Solutions, Chris Hodgkinson, commented: “Down valuations can be an extremely frustrating part of buying or selling a property, especially when both buyer and seller have agreed on a price, they are both happy with, only for the sale to be scuppered by a third-party opinion. Of course, in many cases these reductions are justified but, in a market, running as hot as we’ve seen during the pandemic, it’s not unheard of for lenders to influence this decision due to their own fears around escalating market values.”

Hodgkinson concluded: “Unfortunately, there’s not a great deal that can be done to immediately remedy the issue other than the buyer coughing up or the seller reducing the asking price. So it’s hardly surprising that many sales, and the wider chains they sit within, can be jeopardised due to a down valuation.”

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