Surveyors are down-valuing all the homes they see in some parts of Britain, according to insiders.
Some homebuyers face the headache of their lender refusing to grant a mortgage for the agreed purchase price.
Many buyers must now find tens of thousands of pounds to fill the gap or risk losing their dream home. On the flipside, sellers are left powerless as buyers pull out and chains collapse.
Down-valuations occur when a surveyor disagrees with the buyer’s and seller’s view of what a property is worth
‘I’m seeing surveyors down-value every property they visit,’ says Ian Wyn-Jones, an estate agent in Wales.
Down-valuations occur when a surveyor disagrees with the buyer’s and seller’s view of what a property is worth.
Lenders will only issue a loan on what they believe a house is worth to protect buyers from negative equity — when the property’s value is less than the remaining mortgage balance.
When a down-valuation happens, buyers can raise the funds to cover the difference between the mortgage and sale price, ask the seller to lower their asking price or pull out of the deal.
Mr Wyn-Jones says: ‘Between December and the end of last month we’ve booked in 30 surveys — all were down-valued by between £5,000 and £20,000.’ Around 100,000 homes were down-valued last year, according to estate agent Benham and Reeves.
Approximately 830,940 homes were sold in 2022, meaning one in eight was down-valued. Down-valued homes typically see a reduction of £8,215, according to Benham and Reeves, but some have seen £100,000 wiped off their value.
Simon Kayman, director of Property Services in Yorkshire, says: ‘I recently saw a five bedroom property in Leeds with an agreed price of £900,000 — it was down-valued to £800,000.
The sale fell through.’ The rise in down-valuations in recent months indicates property price growth has stalled.
Colin Townsend, a Malvern-based surveyor, says he is having to manage seller expectations in 90 per cent of listings.
‘Surveyors are being more cautious when valuing properties,’ he says.
‘Sale fall-through rates are higher and we’re fighting harder to keep chains together. We always try and value realistically to take into account what has happened over the past six months.’
- Has your home been down-valued? Write to Money Mail, 9 Derry Street, London, W8 5HY or send an email to [email protected]
