Flat Buying - An Update - DONE!!

stickyfiddle

[Background: back in November we put an offer in to buy the flat we're already living in. Offer accepted and paperwork signed in December]

All was going so well.... until the bank decided to settle on a valuation that's 5% lower than the agree price, so they'll only lend based on that figure, meaning we'd need to make up the shortfall. 

There is another identical flat for sale for a bit less still, which would be absolutely great and worth the extra effort to move all our stuff from one apartment to another identical one on a higher floor, but the owner is out of the country and we're now urgent to decide what the fuck we're doing on the current flat.

Rargh...

mellowsun

Sounds like the system is different out there. Is it possible to reduce your offer in line with the valuation, or is it all binding now?

Sporky

Can you not negotiate with the bank, the owner, or both?

stickyfiddle

We're not bound to the current place if we can't get the necessary mortgage on the full amount, so we have an out at the moment. The bank isn't moving, but the seller might, but he's not big on negotiating downwards...!

monquixote

If the bank says it's not worth what he's asking it probably isn't. 

Flink_Poyd

Do everything you can to get in touch with the other owner if you haven't already. Gives you more options and bargaining power. If the current owner of your flat doesn't have to sell then they're a bit less likely to accept a lower offer. 
 I had issues with someone renting the house next door and got the details of the owner from the land registry, it cost £3. 

Edit: didn't notice you're in Abu Dhabi

stickyfiddle

monquixote said:

If the bank says it's not worth what he's asking it probably isn't. 

It's hard to escape that logic. It is worth a little more to us because not having to move will save us both the hassle and cost of moving. But running numbers the other flat would be about 20k (GBP) less upfront (unless the price of ours moves) which is huge.  The monthly payment on both scenarios would be virtually identical.

Trouble is I don't really want to go and tell our landlord "reduce price or we walk" until I've seen the other unit and know it's not got any major problems. 

stickyfiddle

Flink_Poyd said:

Do everything you can to get in touch with the other owner if you haven't already. Gives you more options and bargaining power. If the current owner of your flat doesn't have to sell then they're a bit less likely to accept a lower offer. 
 I had issues with someone renting the house next door and got the details of the owner from the land registry, it cost £3. 

Edit: didn't notice you're in Abu Dhabi

lol, yeah - makes it a bit more tricky. The new guy's agent seems good so far but he doesn't have a key. Might be worth asking our security guys since we know them and they know the place is empty.

CabbageCat

If you think that the flat is worth the extra then can't you just pay the 5% shortfall? I realise not everyone has that kind of money lying around but in my experience people who work in the middle east tend to have pretty good savings (the usual reason why people work in the middle east). You'll only have to pay that 5% back at some point anyway, and more besides.

Sporky

stickyfiddle said:

monquixote said:

If the bank says it's not worth what he's asking it probably isn't. 

It's hard to escape that logic. It is worth a little more to us because not having to move will save us both the hassle and cost of moving.

Not having to move will also save the current owner hassle and cost. No need to advertise, no need to arrange showings, no risk.

You have a sound basis for negotiation too - certainly check your options on the other place so you've got a fallback option, but I would then be quite open with the owner, show him the bank stuff, explain that the difference is going to be hard for you to summon up as cash, and ask what he can do.

I think the important thing is to show the owner the bank's valuation so he can see that you're not just trying it on, you have a genuine problem to solve.

stickyfiddle

Thanks chaps. Good points all round. We're already going to the "bank of mum & dad" so I think the extra could be found if absolutely needed, but we're hesitant due to the low valuation and even lower extra flat available.  

Bidley

If you show your landlord that the bank has a lower valuation of the property, that will almost certainly get him thinking. Because if the bank is giving you that valuation, it's unlikely he'll get the asking price from anyone else.

Like @monquixote says, if that's the bank's valuation, that's more than likely bang on. That means any prospective buyers are going to be in the same position as you, which is a problem for your landlord.

It sounds as if there are too many solid reasons not to cough up that extra 5%.

Jalapeno

Is lugging everything to the cheaper flat worth 5% ? That's what you need to ask yourself ......

richardhomer

In this country a mortgage valuation is based on comparable sales evidence - most surveyors like to have three comparables on file. Assuming it's similar where you are, either the comparables are wrong or they are right and the agreed price is too high.

I would endeavour to challenge the comparables if you think they are wrong - if not, renegotiating the price is the way forward....

stickyfiddle

Valuations are done by benchmarking similar ads and sales and by looking at potential rental yields, but it's nowhere near as rigid and transparent. This specific building is known to all as being worth the higher prices compared to other towers in the same area of town, but the bank doesn't care. They and their evaluator are sticking with the number, but lots of other apartments the same size are advertised a shade above what we agreed, so it's not unreasonable to assume our current landlord won't move on price. Negotiations here are very different to the UK; often much more about pride and gut feelings than actually getting the best financial outcome in the quickest time.

@jalapeno - the issue is we'd have to pay all of that extra 5% entirely ourselves, which is a chunky amount of money to find in a hurry (about 20k sterling). It basically moves us from a 75% mortgage to 71.5%.

crunchman

Could you try another bank with a different surveyor?

Jalapeno

stickyfiddle said:

@jalapeno - the issue is we'd have to pay all of that extra 5% entirely ourselves, which is a chunky amount of money to find in a hurry (about 20k sterling). It basically moves us from a 75% mortgage to 71.5%.

Versus moving to the cheaper flat ......

stickyfiddle

SORTED! 

Second valuation done and came in at the asking price, so they're taking an average, meaning a slightly bigger deposit but not stupidly so. I'm ok with that. 

And the bank knocked more than the extra fee off their upfront fees, so the extra valuation hasn't cost us anything. 

Unless anything else goes wrong we'll complete next week. And the pound is going up a bit since "strong Brexit message plus Trump" so our UK savings are worth slightly desert dollars than they were last week. There might be champagne tonight...

stickyfiddle

I am a homeowner. FINALLY!

Which of course in reality means I now have more massively debt than I've ever had before, and my monthly outgoings are almost unchanged, apart from who receives the cash. But property ladder and all that. 

Woo!

guitarfishbay

Congrats

Sporky

Excellent - and without moving, which is a huge bonus.