Sale Agreed - Are the bank's valuations a lot lower in general?

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Sanparom

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We recently went sale agreed on our home we are selling and were happy with the price we agreed, but now I am anxious that the bank is going to value our house at a lot lower than the agreed sale price. I have read that they are generally valuing at 10% lower at the moment, even though the price we agreed is very competitive, given the sale prices of other houses in the area. If this valuation drops and buyer cannot pay the agreed price due to not getting the mortgage they need, what should we do? Put it back on the market (but at what price?!)? We can't really accept a lower price because we need the equity that we will get from the current agreed price. Anyway, I am panicking. This is my first time selling a house and I now understand why they say that it is one of the most stressful things you can do!
 
The bank valuations being lower I imagine are for people who sale agreed pre covid not people sale agreeing now.
 
@Sanparom do not worry. If there are properties on the property price register in your area that are for around the same value you will be fine. In my experience it is a box ticking exercise and the valuer will cite two examples of similar houses and the price sold as evidence to confirm your value. I just went sale agreed on a property paying above the asking and the valuer agreed on the price no problem. Similarly when I bought my previous place, I felt I overpaid but the valuer still approved the price. This leads me to believe as long as it isn't gregariously priced vs similar properties or has no roof you should be fine.

Ultimately if there is an issuer with the valuation you can ask the buyer for a second opinion, or you can negotiate the price.

It obviously depends on the housing sector (location, area) etc but in the area I was looking at COVID had 0 impact on prices.
 
The valuation would want to be way out for the bank to raise a flag, like >20% above similar properties.

Bank is not concerned that anyone got bad value. But they don't want to be part of some scheme to transfer assets to launder money or evade tax.

I suspect they pay more attention when it's an off-market or family sale. But if you sold on open market then it's highly unlikely they will raise a flag.
 
Thanks Dublinbay12. Yes, it is the same here - COVID doesn't seem to have impacted prices. There appears to be a lot of demand, for not much supply, so perhaps that is why. I just want to get to the point where we're handing over the keys and moving on, but there seem to be a few hurdles to get through first and I don't want to count my chickens. Fingers crossed the valuation doesn't go down.
 
NoRegretsCoyote said:
The valuation would want to be way out for the bank to raise a flag, like >20% above similar properties.

Bank is not concerned that anyone got bad value. But they don't want to be part of some scheme to transfer assets to launder money or evade tax.

I suspect they pay more attention when it's an off-market or family sale. But if you sold on open market then it's highly unlikely they will raise a flag.
Click to expand...

That makes perfect sense! I've done my homework and other properties in the area have definitely sold for around the same price. In fact, the most recent sale went for two grand below ours and I believe that it wouldn't be of as high a standard as ours, but we wanted to sell now while we had a few interested parties rather than continuing to haggle and potentially losing our best buyer. I feel very relieved now that you have assured me that they probably won't lower the valuation.
 
If the valuer performs valuation and then the price of the house drops by a small amount (say some problem found during survey), could that be an issue? Would lender be concerned or ok once in the ballpark? Thanks
 
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