Property purchasing specialist, HBB Solutions, claim that buyers and sellers are having to negotiate an £8,000 reality gap due to down valuations.

A down valuation occurs when the mortgage lender conducts a survey and believes the property is worth less than the original price offered.

The research shows that on average sales subject to a down valuation are resulting in a 2.8% reduction. This works out as a difference of around £7,978 between the amount a lender is willing to lend and the seller’s expectation.

The biggest down valuation adjustments

The East Midlands experienced some of the biggest down valuation adjustments. In this part of England, a 3.3% reduction has resulted in a price gap of £8,109 between buyers and sellers.

In the East of England, the average down valuation is 2.3%, causing a gap worth £8,090

Scotland had the second largest down valuation adjustment at 4.3%, meaning buyers and sellers need to re-negotiate around £8,089. Buyers and sellers in Wales are also experiencing down valuations worth just over £8,000.

This down valuation market difference is at its lowest in the North East, yet this requires buyers and sellers to negotiate a difference of £7,638 between the price agreed and the value of a property.

Managing director of HBB Solutions, Chris Hodgkinson, commented: “Down valuations are a worst case scenario for buyers and sellers who have already danced the dance to agree a sale price on a property. Unfortunately, they can be a common occurrence and one that is only going to increase as the market enters a period of heightened instability.”

“What we’re currently seeing is that the market is starting to slow from a house price appreciation point of view. What we’re not seeing is recognition of these changing market conditions from the nation’s home sellers, who remain intent on securing the highest price possible for their home.”

“At the same time, low stock levels mean that many buyers are still meeting them at this inflated price point in order to secure a home and before the cost of a mortgage climbs any higher.”

“However, following a string of interest rates, many mortgage lenders are now starting to get cold feet and reduce their rate of lending in anticipation of things to come. The result of which is a far greater number of homes being subject to a down valuation and by quite a margin, leaving home sellers and buyers to go back to the drawing board in order to get an offer finalised.”

“In order to do so, the buyer either needs to increase their mortgage deposit and quick, a task that many struggle to do having already saved for years to enter the market in the first place. Or the seller needs to accept the lower price for their home which, again, many aren’t willing to do