Everything you need to know about home ‘down valuations’ and how it could affect your house sale
Down valuatiaon, as it’s called, is becoming more commonplace on the housing market and can cause a headache for buyers and sellers alike.
The latest research from quick sale specialists, Open Property Group, has revealed that this is happening across the country, but sellers in Wales are likely to be hit hardest by a down valuation in the current market, with the average home down valued to the tune of £8,149.
There’s better news for Yorkshire as those in the North East are seeing the smallest monetary reduction in the value of their home during the surveying process, with a difference of £7,498.
Open Property Group analysed the estimated percentage of down valuations across each region of Britain in line with current market values, to reveal just how much sellers could be hit during the home selling process if their surveyor doesn’t see eye to eye with their agent when it comes to the market value of their home.
Down valuations are on the rise and they’re causing a considerable headache for homebuyers and sellers alike, who are already struggling to traverse an unsettled property market in the face of higher mortgage rates and cooling house prices.
What is a down valuation?
When a buyer looks to secure a mortgage, their lender will send a surveyor to value the property and, if they deem it to be worth less than the price agreed by the buyer and seller, the property will be subject to a down valuation.
This means that the lender won’t provide the full loan to cover the agreed asking price, forcing both parties to return to the drawing board.
In many cases, a down valuation can result from an over optimistic estate agent’s valuation, however, it can also be a method of safeguarding utilised by lenders in uncertain market conditions.
As a seller, you have little choice other than to agree to a price reduction, set off in search of a new buyer with a more willing lender, or to spend money in order to address the issues raised by the surveyor.
As a buyer, the best option is to get a second opinion from another lender and surveyor, attempt to renegotiate with the seller, increase your deposit, or secure a loan to cover the shortfall.
How much are homes being down valued?
The analysis by Open Property Group shows that across Britain, the average property subject to a down valuation is being revalued to the tune of 2.8%, which equates to £7,290 on the current average house price.
Welsh sellers are being hit hardest, with the average down valuation resulting in a reduction of £8,149 in value on the average home. But in the current market, down valuations are also coming in above the £8,000 threshold in the West Midlands (£8,143), the South West (£8,075), Scotland (£8,035) and the North West (£8,017).
Despite being home to the largest percentage down valuation at 4.8%, sellers in the North East are seeing the smallest monetary reduction in the value of their home during the surveying process, with a reduction of £7,498.
CEO of Open Property Group, Jason Harris-Cohen, commented: “Down valuations are an unfortunate part of the home selling process and they seem to be rearing their head once again, with lenders keen to safeguard themselves in what continues to be a tricky environment with respect to the cost of borrowing.
Jason Harris-CohenAs a seller, it can be extremely frustrating when a lender doesn’t see eye to eye with you, especially after you’ve already gone through the lengthy process of securing a professional valuation from an agent and have accepted an offer from a buyer.
“Unfortunately, there’s not a great deal that can be done other than taking the hit, or repeating the process of finding another buyer, which can drag on for weeks on end, particularly in current market conditions.
“It’s a common story we see with many sellers opting to use our quick sale service and in doing so, we allow them to bypass the delays, stress time and effort associated with a down valuation, providing them with a concrete selling timeline so they can focus on their onward purchase.”
Data Tables and sources
– Down valuation percentages for each region sourced from HOA, Zoopla, Prime Location, BankRate, FTAdviser, Times, CityAM and This is Money.
– Down valuation percentages applied to current average house price for each region sourced from the Gov - UK House Price Index (Jan 2024 - latest available).
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