NEW PODCAST: I tried to sell a property at auction – this is what happened
NEW PODCAST: I tried to sell a property at auction – this is what happened
Weekly data-led tips, local hotspots, and what actually moves the market.
You’ve found a great property with a genuine discount. You’ve done your research, checked the comparables, and you’re confident in the price. The paperwork’s moving along nicely. Then the mortgage valuation comes back…and it’s lower than what you’re paying.
Your stomach drops.
You start questioning everything: Did I overpay? Is the discount real? Have I made a terrible mistake?
We get it.
This is one of the most common concerns we see when people are buying off-plan. And the anxiety is completely understandable. But a down-valuation doesn’t automatically mean you’re being ripped off.
Most people think that all valuations are the same. They’re not.
You have a market valuation, which is essentially an estimation of what a willing buyer would pay for your property on the open market.
Then you have mortgage valuations, which are set out to answer a very different question. At the most basic level, a lender wants to know: “If this borrower stops paying and we need to repossess and sell this property quickly, what could we get for it?” They’re not trying to determine the highest achievable market price, they’re assessing the property through the lens of lender security and downside risk.
That’s a very different exercise.
Valuations can also vary depending on the lender. Two different lenders can look at the exact same property – with different criteria, different risk appetites, and different surveyors – and reach completely different conclusions. It’s one of those frustrating truths about property, the answer to “what’s it worth?” is often “it depends who’s asking.”
It’s not just the type of valuation that influences the outcome. The way that valuation is conducted is just as important.
Many lenders now use what’s known as a desktop valuation. These are conducted remotely, either by a surveyor or often by an automated system that pulls in information from various databases.
Either way, they don’t actually involve anyone visiting the property itself. And that’s a problem because they can’t account for the things that make a specific property worth more. The quality of the finish, the view from the balcony, the location within a development, the specification of the kitchen.
A human surveyor who’s visiting the property in person will catch some of that. But a desktop valuation won’t. It just sees square footage, postcode, and recent sales data. So, a valuation that was already conservative to begin with becomes even more conservative due to how it’s conducted.
Surveyors base their valuations on comparable evidence, arriving at their decision based on what other properties nearby have sold for.
But for a new build or off-plan property, there may not be many (or any) comparable sales to draw upon. Especially if you’re among the first buyers in a new development. When that happens, the surveyor has to look further afield. This might be old stock, with different specifications or entirely different locations. So your brand new, high-spec, three-bedroom home gets compared with a 15-year-old townhouse down the road.
It’s like judging a Michelin-starred restaurant by looking at the menu at the Wetherspoons round the corner. The comparison is flawed from the start, so it drags everything down.
Reapply – You can also try a different lender. They’ll instruct their own surveyor, who may take a completely different view of the property. You’ll need to pay for a new valuation, but it can be worthwhile if you’re confident in the deal.
Because we’ve seen this happen before. A client buys at a genuine discount, the mortgage valuation comes back conservative, they put in a bit more cash upfront, and two or three years later they refinance and the property is valued at or above what others paid at full price.
The discount was real all along. It just took the valuation system time to reflect it.
Remember, property investing is a long game, that’s the whole reason you got into this.
A cautious mortgage valuation in month one doesn’t change the fundamentals of a deal that’s going to work for you over 10, 15, or even 20 years.
So trust the process, trust your research, and give the numbers time to prove themselves.
Not necessarily. A mortgage valuation is designed to answer a different question from “what is this property worth?”. A down-valuation reflects the lender’s risk appetite, not the true market value of your property.
Surveyors rely on comparable sales data to reach their valuation. With new builds there may be few or no comparable sales on record yet. The surveyor has to look further afield, often comparing a brand new property with older stock nearby, which drags the figure down.
A market valuation estimates what a willing buyer would pay on the open market. A mortgage valuation estimates what the lender could recover if they needed to repossess and sell quickly.
A desktop valuation is carried out remotely using data from property databases, without anyone visiting the property. Because the surveyor or algorithm can’t account for things like build quality, specification, or position within a development, desktop valuations tend to be more conservative than physical ones.
Yes. You can appeal the valuation by providing additional evidence, such as proof of comparable sales at a higher price within the same development. Your broker may also be able to submit the application to a different lender whose surveyor takes a different view.
You have three main options. You can appeal the valuation with supporting evidence, try a different lender through your broker, or bridge the gap by putting in a slightly larger deposit. A down-valuation doesn’t mean the deal is dead, it just means you may need to adjust your approach.
In most cases, yes. As more properties sell in the same development and those transactions are recorded on the Land Registry, the comparable evidence builds up. When you come to refinance in a few years, the valuation will typically reflect the true market price and any extra deposit you put in can often be pulled back out.
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