House valuation below purchase price :-(

Is it a home or an investment?If a home, what difference does it make what the current price of the property is? Ok it'd be nice for it to be worth more the day you move in, but that is just yout being greedy. You have a home, be happy, fruitful and multiply. In a few years, house prices will rise again so makes no odds.If an investment, it's just tough as you'll have to wait longer for capital appreciation.
 
sapmanie said:
Is it a home or an investment?If a home, what difference does it make what the current price of the property is? Ok it'd be nice for it to be worth more the day you move in, but that is just yout being greedy. You have a home, be happy, fruitful and multiply. In a few years, house prices will rise again so makes no odds.If an investment, it's just tough as you'll have to wait longer for capital appreciation.
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I think the problem is that the OP is not in a position to complete as the bank will only lend on the current value of the property. So he short the agreed price in the contract with the builder
 
Don't know if they can but maybe the bank can lend you more than 100%. If you can't do this borrow from a credit union or family member. Only borrow what you can afford to repay though.

Alternatively ask the builder does he know any valuers who will value the house at the amount you want to borrow. Or does the builder have a friendly bank that would be willing to lend to you. This bank will want the houses to be sold so the builder doesn't go out of business etc....

Personally I would not like to be buying a house that is overpriced. But that's a decision for you.
 
Just to take a step back, have you yet taken advice from another valuer as to what its worth, you could approach EA's with the view of telling them that you are selling on once completed and see what values they come to you with. If you are making assumptions off of one persons valuation they could simply be under valuing the property.

If all come in at similiar prices then state to the builder in a letter that because the valuations are coming in €35k below what you agreed to pay, your 100% mortgage will only cover the original price minus €35,000. Tell him you are willing to wait until the market allows the value to meet the mortgage price because that is the only scenario that will provide you with the means to pay for the house. Tell him that you are open to suggestions, but as it stands you have exhausted every avenue to provide you with the funds required to no avail. Keep in contact with him and find a common enemy with him i.e valuer, bank etc so that he may start viewing things from your side. As long as he feels that you still want the house he might be more open to negotiation, because I'm sure some builders are experiencing people trying to pull out during a downturn even though they can well afford the property.
 
If it is a 100% mortgage, when initial contracts were signed, wasn't the original mortgage amount drawn down in part in order to cover the non-refundable deposit?
 
I can' believe that people are actually advising you to try to get a higher valuation done so that you can buy this house!

It's dropped in value by £35k in the last 18 months and the house price crash has not even properly got under way yet! I would suggest that it is likely to fall in value by another 25-40% over the next 4-5 years

The contract and the law are on the side of the builder. However, I would still urge you to leave your deposit behind and walk away.

The builder may have the law on his side but in practicality there is nothing he can do.

Total worst case scenario is going bankrupt. But if you have no real assets this is a walk in the park compared with being lumbered with a big mortgage and an increasingly large chunk of negative equity.
 
sapmanie said:
Is it a home or an investment?If a home, what difference does it make what the current price of the property is? Ok it'd be nice for it to be worth more the day you move in, but that is just yout being greedy. You have a home, be happy, fruitful and multiply. In a few years, house prices will rise again so makes no odds.If an investment, it's just tough as you'll have to wait longer for capital appreciation.
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I think everyone now realises that they are going to fall though the floor first!

It could well be 10-15 years before the value of the house gets back to the level of the original valuation in real terms.

Don't walk away - run!
 
I would suggest that it is likely to fall in value by another 25-40% over the next 4-5 years
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I would suggest that you take a calm view of things without listening to wild unsubstantiated speculation.
 
MrMan said:
I would suggest that you take a calm view of things without listening to wild unsubstantiated speculation.
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Agreed. However, the suggestion by some folks here that house prices will not fall further is also unsubstantiated speculation.
 
So, back to the OP – does he have any options?

I think he’s got a broad spectrum of ideas from the “yes, you are in trouble and you have to try and negotiate your way out and good luck in trying times” brigade to the “no problem, mate, you’ll be grand – just tell him you’re walking and give him the two fingers” side.

In most cases, there are so many issues going on ( house prices/Values, bank nervousness, relative position of purchaser and builder, etc.,etc) that the only possible advice to give is to examine the range of options and work through them with the solicitor/EA/builder with a view to finding a resolution.

mf
 
http://www.daft.ie/discussions.daft?dcn[forum_id]=4&limit=10&dcn[discussion_id]=99589&dcn[root_discussion_id]=0&dcn[forum_id]=4

Original poster - read the DAFT forum thread above and make up your own mind - also please be aware that this website expressly forbids discussion of house prices movement and as such the advice published MIGHT be biased towards the positive.
 
If you don't buy and back out - and the builder does take legal action - while this is happening are you free to purchase another home?

Or is there some sort of legal noose dangling above your head that will prevent banks lending you money?

Can someone explaint he legality here?
 
"If you don't buy and back out - and the builder does take legal action - while this is happening are you free to purchase another home?"

Of course you are free to do so - but its not exactly the brightest idea. Why would you have the threat of legal proceedings on one property and commit to another? Would you not find it all a bit stressful?

mf
 
Back to the OP's dilemma, which is real legal & financial 'Rock & hard place', has the solicitor who advised that the contract with the builder is binding not got anything to say about this?

While its not clear from the OP's description if this solicitor is the same one who supervised the contract signing 18months previously, would it not be in the solicitor's interests to outline the legal scenarios to follow from various ways forward rather than abandon a client in financial quicksand?

If not the OPs solicitor then a legal person familiar with contract law would be useful - it surely must happen all the time that prices agreed months before change afterwards and business organisations fight with eachother about this (and settle)?

There has to be some compromise position that sits somewhere between the OP running away and their trying to find a 120% mortgage?

Unless some very unique situation happened, there must be more people than just the OP in this situ? What about the other people who must have signed a similar contract with this builder? Is there strength in numbers here?
 
Mischief posted again to update -



Post removed - appreciate all your replies. Apologies, I haven't had time to reply individually.
The builder has agreed to lower the value of the property this morning. Looks like the developers
have as much to lose as the purchaser. Whilst, I didn't want to drop my deposit, the builder
didn't appear too keen to go to court or have poor publicity in the development as units still for sale, so we've come to an agreed valuation. Thanks all.

mischief
 
While I am glad that the OP seems to have had their problem solved, I consider it poor form of them to remove the original context and facts of the situation :mad: .
 
While I am glad that the OP seems to have had their problem solved, I consider it poor form of them to remove the original context and facts of the situation
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I am at a loss did something happen here?
 
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