When a property is down valued by a mortgage lender, it simply means that the bank has determined that the value of the property’s market value to be lower than the offer you’ve made or what the seller think it is worth. This happens a lot more frequently in property transactions but not something that is regularly discussed. Although a down valuation can be disappointing, it also offers a chance to reconsider options and also perhaps re-negotiate with your sellers. Let’s look at property down valuations, reasons and things you can do to potentially make the best of a bad situation.
Why Does Down Valuations Happen?
Mortgage lenders use independent, qualified surveyors from the Royal Institute of Chartered Surveyors (RICS) to conduct valuations. These experts review recent comparable property sales, the condition of the property, and the local market trends. Their goal is to ensure that, if the property needs to be repossessed and sold quickly, the bank wouldn’t suffer a financial loss. Therefore, when they value a property lower than the buyer’s offer, it’s typically because the recent market data supports a reduced valuation.
Can You Challenge a Down-Valued Property?
If you disagree with the bank’s valuation, you may have the option to challenge it. Here’s how:
- Request the Bank’s Valuation Report: Start by asking the lender for a copy of their valuation. This will detail why the property’s value was lowered. You must however bear in mind that the Bank won’t always share their valuation report with the borrowers.
- Provide Comparable Evidence: Find recent sales data for similar properties in the area. Focus on properties with comparable sizes, conditions, and locations to strengthen your case.
- Address Any Misunderstandings on Condition: If you believe a defect was wrongly flagged or misinterpreted, such as damp issues or structural concerns, provide evidence showing that the property’s condition is better than stated.
It’s important to note that even with substantial evidence, the surveyor may not change the valuation if the local market trends are declining or if comparable sales support the original assessment.
The above must be carried out either directly with the bank or through your mortgage broker. It is unlikely that your mortgage solicitor for buying a house can assist you in negotiating with the bank.
Options After a Property Has Been Down Valued
While challenging a valuation is possible, it’s often more productive to focus on what you can control. Here are your main options:
Renegotiate with the Seller:
Often, a seller may be willing to reduce the price to align with the bank’s valuation. Approach this diplomatically, emphasising that other mortgage-backed buyers are likely to face the same valuation barrier.
Pay the Difference in Cash
f you truly love the property and can afford it, you could pay the difference between the valuation and your offer price from your savings. However, this comes with risks:
- You’ll be overpaying, at least in the eyes of the bank.
- If the market dips, you could struggle to recoup your investment.
Consider whether the property is truly worth the price, or if emotions are clouding your judgment.
Reconsider Your Offer:
Sometimes, a down valuation is a blessing in disguise. If an independent surveyor says a home is worth less than you thought, maybe the price really is too high.
It’s worth asking yourself:
- Am I paying more just because I love the property?
- Will I regret this if I need to sell in a few years?
- Are there better options in my budget?
Final Thoughts
A down valuation can be frustrating, but it’s not the end of the world. It’s an opportunity to rethink your options, negotiate a better deal, or reconsider if the property is truly right for you.
By staying calm and weighing up your choices, you can still move forward with confidence—whether that means pushing ahead with the purchase or looking for something better.
Disclaimer: The information provided in this blog is for general informational purposes only and is not intended to constitute legal advice. While we strive to ensure our content is helpful and accurate, it should not be relied upon as a substitute for professional legal guidance tailored to your specific circumstances. We accept no responsibility or liability for any loss or damage incurred as a result of relying on the information provided in this blog. If you require legal advice, we strongly recommend consulting a qualified professional.
