Few situations prove more frustrating in the property selling process than receiving news of a down valuation. After agreeing on a price with an enthusiastic buyer, discovering that their mortgage lender values your property significantly below this figure can feel like a devastating setback. Local estate agents in Clacton-on-Sea report that down valuations have become increasingly common in recent years, particularly in areas experiencing volatile market conditions.
When faced with this challenging situation, taking a structured approach can help salvage your sales and achieve the best possible outcome. Here are six practical steps to consider when confronted with a down valuation.
1. Understand the Valuation Process
Before challenging a down valuation, it’s essential to understand how mortgage valuers reach their conclusions. Unlike estate agents who provide market appraisals based on comparable properties and buyer demand; mortgage valuers work for lenders with a primary concern for minimising risk.
Valuers typically spend limited time at the property, often conducting brief inspections while focusing primarily on:
- Recent sold prices for comparable properties (typically within 250 metres)
- The property’s condition compared to those sold
- Any factors that might affect future saleability
- Current market trends and volatility
2. Request a Copy of the Valuation Report
Your buyer should be able to request a copy of the valuation report from their mortgage lender. While some lenders are reluctant to share these reports, persistent buyers can usually obtain at least the key details.
The report should provide:
- The valuer’s determined market value
- Comparable properties used in the assessment
- Any specific concerns affecting the valuation
- Recommendations for further investigations if applicable
This information proves invaluable when constructing your case for challenging the valuation. If the report contains factual errors or overlooks important features, these provide strong grounds for appeal.
3. Gather Supporting Evidence
Armed with the valuation report, work with your estate agent to compile compelling evidence supporting your originally agreed price. Focus on:
Recent Comparable Sales: Identify properties like yours that have sold recently at prices supporting your valuation. The most persuasive examples will be:
- Very recent sales (preferably within the last three months)
- Properties near yours
- Homes with similar specifications, condition and features
Unique Features Not Reflected: Highlight any special attributes that distinguish your property from apparently similar homes:
- Recent high-quality renovations or extensions
- Superior energy efficiency measures
- Enhanced gardens or outdoor space
- Premium fixtures and fittings
Market Dynamics: Provide evidence of local market strength if relevant:
- Reduced average selling times in your area
- Increasing prices in your immediate neighbourhood
- Multiple offers received on your property
- Limited available housing stock locally
4. Consider a Second Opinion
If the gap between the agreed price and valuation seems particularly unjustified, consider commissioning an independent valuation from a qualified RICS surveyor. While this involves an additional cost (typically £300-£500), it can provide powerful supporting evidence, especially if you select a surveyor with specific local experience.
Alternatively, some sellers approach other mortgage lenders known for potentially different valuation approaches. Your estate agent can often advise which lenders might take a more favourable view of your property type or location.
Before pursuing either option, calculate whether the potential price difference justifies the additional time and expense involved, especially if your onward purchase timeline is time sensitive.
5. Negotiate a Compromise Solution
When down valuations can’t be successfully challenged, finding middle-ground solutions often provides the most practical way forward. Consider these compromise approaches:
Split the Difference: Perhaps the most common solution involves buyer and seller each absorbing part of the shortfall. If the property was valued at £15,000 below the agreed price, you might each accept a £7,500 adjustment.
Adjust the Deposit Ratio: If your buyer has additional cash resources, they might increase their deposit percentage to maintain the agreed purchase price while satisfying their lender’s loan-to-value requirements.
Explore Alternative Financing: Some buyers can restructure their financing through:
- Approaching different lenders
- Utilising family contributions
- Exploring government purchasing schemes
- Considering specialist mortgage products
Phased Payments: In rare cases, sellers and buyers agree to formal arrangements where part of the purchase price is paid later through legally binding contracts.
Local estate agents in Clacton-on-Sea emphasise the importance of keeping communication channels open during these negotiations, maintaining focus on constructive problem-solving rather than apportioning blame.
6. Re-evaluate Your Options
If compromise proves impossible despite your best efforts, carefully consider your alternatives:
Accepting the Reduced Price: Sometimes, calculating the full financial impact of starting the selling process again (including additional mortgage payments, marketing costs, and potential further price reductions) reveals accepting the lower valuation as the most economically sensible option.
Finding a Cash Buyer: While potentially offering slightly lower prices, cash buyers eliminate valuation concerns entirely. Some sellers find the certainty and speed of cash purchases compensate for modest price reductions.
Withdrawing and Remarketing: If the valuation genuinely seems unjustified and your circumstances allow, withdrawing from the sale and remarketing the property remains a viable option. However, be prepared for questions from future potential buyers about why the previous sale collapsed.
Renting the Property: If market conditions seem temporarily unfavourable, some sellers choose to rent their property for a defined period until local values stabilise or increase.
Final Thoughts
While down valuations create significant challenges, approaching them methodically improves your chances of achieving satisfactory resolutions. Throughout the process, maintaining professional relationships with all parties proves crucial – confrontational approaches rarely yield positive outcomes.
Local estate agents with extensive experience navigating down valuations can provide invaluable support, both in gathering evidence and facilitating constructive negotiations between all stakeholders. Their established relationships with local mortgage advisors and lenders often help identify creative solutions that might otherwise remain unexplored.
