When purchasing a property, one of the key steps is obtaining a survey conducted by a member of the Royal Institution of Chartered Surveyors (RICS). This survey provides an unbiased valuation of the property, which is critical for both buyers and lenders. But what happens if the survey values the property lower than the asking price? This scenario can be challenging, but understanding your options and knowing how to navigate them can make all the difference.
Understanding the Valuation
A surveyor assesses a property’s value based on its condition, location and market trends. They consider factors such as structural integrity, any necessary repairs and the property’s age. The resulting valuation is intended to reflect what the property is truly worth in the current market.
Why Might a Valuation Be Lower Than the Asking Price?
There are several reasons why a survey might value a property lower than the asking price:
- Market Conditions: If the local market is declining or stagnant, the asking price might not reflect current trends.
- Property Condition: Issues such as damp, structural damage or outdated systems can significantly lower a property’s value.
- Overpricing by the Seller: Sometimes, sellers set their asking prices higher than market value, hoping to achieve a higher sale price.
What Are Your Options?
If you find yourself in a situation where the survey valuation is lower than the asking price, you have several options:
1. Renegotiate the Price
The most straightforward approach is to renegotiate the purchase price with the seller. Use the survey as leverage to argue that the property’s actual value is lower than their asking price. Sellers may be willing to lower the price to match the valuation, especially if they’re motivated to sell quickly.
2. Increase Your Deposit
If the seller is unwilling to budge on price, another option is to increase your deposit. Lenders typically base their mortgage offer on the survey valuation, not the asking price. By increasing your deposit, you reduce the amount you need to borrow, which can help bridge the gap between the valuation and the asking price.
3. Obtain a Second Opinion
Sometimes, surveyors can make errors or have differing opinions. If you believe the valuation is unjustifiably low, you might consider obtaining a second survey from another surveyor. However, keep in mind this will incur additional costs and the second valuation might not differ significantly.
4. Consider Your Financing Options
If increasing your deposit is not feasible, you might explore other financing options. Some lenders offer higher loan-to-value (LTV) ratios, though this typically comes with higher interest rates and stricter lending criteria.
5. Walk Away
If the gap between the survey valuation and the asking price is too wide and you cannot negotiate a satisfactory agreement, it may be best to walk away. While disappointing, it’s better to avoid overpaying for a property that could be difficult to sell or remortgage in the future.
Top Tips for Buyers
Navigating a lower-than-expected survey valuation can be daunting. Here are some top tips to help you through the process:
- Stay Informed: Understand the current market trends and be aware of similar property prices in the area. This knowledge can strengthen your position during negotiations.
- Communicate Openly: Maintain open communication with the seller and the estate agent. Transparency can facilitate smoother negotiations.
- Budget for Repairs: If the survey highlights necessary repairs, budget for these costs. Sometimes, a lower valuation is justified by the property’s condition and accounting for these expenses can help in your decision-making process.
- Seek Professional Advice: Don’t hesitate to seek advice from your mortgage advisor, solicitor, or another property professional. Their expertise can provide valuable insights and help you make informed decisions.
- Keep Emotions in Check: It’s easy to become emotionally attached to a property but try to remain objective. Making a rational decision based on the survey and market conditions is crucial.
At Belvoir, we understand that buying a property is a significant investment. Our experienced team is here to support you through every step of the process, ensuring you make informed decisions that best suit your needs. Whether you’re negotiating a lower price, exploring financing options, or simply seeking advice, we’re here to help. Contact us today to speak with one of our property experts and take the next step towards finding your perfect home.
