Help! The purchase of my dream home is going to fall through

September 6, 2015 by Rob Kahl

Help! The purchase of my dream home is going to fall through.

You have found your dream home. You have had to make an offer of the asking price as there were 10 other people after it but you have managed to secure it and it has been taken off of the market for you. Your solicitor is instructed and the conveyancing is underway, the mortgage has been agreed and the survey has taken place. Everything is going smoothly and you can’t wait to get in there. You have been told not to but you can’t help but get excited and are already looking at curtains and wall colours for your bedroom.

Then the spanner in the works hits you! The mortgage survey has come back and there is nothing wrong with the property structurally. In fact they say that it is a little gem. The only problem is that they think it is over-valued and will not lend you enough money to buy it! What are you going to do?

Easy for me to say but take a deep breathe and keep calm, lets see what we can do before you have a break down! It is important to remember one thing, the surveyors opinion on the price is exactly that, an opinion. The vendors have theirs, the estate agents had their opinion when they took it on the market, you obviously had yours when you offered on the house and the surveyors have theirs. OK, theirs might be slightly more important because they are working on behalf of the mortgage company and are responsible for their lending but it is only an opinion, it is not the word of God.

If you don’t agree with the valuation you can contest it. The surveyors report is not final, so you can try and change it. Speak to your estate agent, they will obviously assist you because they want to keep the sale running, they will have to get together some comparable properties in the area that have recently sold to back up the price you are paying. If they are similar enough to the property you are buying and close enough on price then the surveyor may change his opinion and his valuation and you will be able to borrow the required amount. If, even after all of that they are not prepared to budge however you are left with little choice.

You will have to either make up the price difference yourself or try to re-negotiate the price. If you know that the property was extremely popular when you got it and there are people waiting in the wings to buy it you may have to bite the bullet and find the extra money. It may be the case of borrowing extra funds from somewhere or putting more of your savings in to it but if you are confident that this is the house for you, your going to live there for years to come and that the housing market is going to continue to rise then it may be worth it? Only you can decide that one.

If however you don’t have the money or agree with the surveyor and are not prepared to pay more than he has valued it at then you are left will have to try and re-negotiate the price. As you can imagine this is not a very popular option. Moving the goalposts after the event is not what people want to hear. It may be that the vendors have budgeted on the agreed price and are using every penny to buy their next property or that their opinion is that the price you agreed earlier they agree with and out of principal they are not prepared to drop now.

If you are trying to re-negotiate the price it is essential that you let the vendors look at your survey report. You would be surprised at how many people try their luck to get money off after agreeing a purchase but if the evidence is there in black and white it is difficult to argue. Make it available to your estate agent and give them authority to pass it on to the vendor for them to study in detail.

If the property has been down valued it is a decision that has to be made by purchasers and vendors alike. The vendors have to think about what they are going to do as well and their estate agent should be advising them accordingly. They could be purchasing an onward property and need the funds so not be in a position to drop the price or again disagree with the surveyors and not be prepared to drop the price.

The risk on their part is however if they start the sales process all over again. When the property went on the market initially they may have had lots of people that wanted to buy it but are they still around and if they are will they offer what they want again? Even if they get the price they want do those people need a mortgage and will that get down valued again? If their new buyer is using the same lender or surveying company then the valuation is going to be exactly the same as before. The risk is the unknown, the agent can be confident of selling the property again but can never guarantee that it will happen quickly or you wont find yourself in exactly the same situation in 3 or 4 weeks time. If the vendors are buying an onward property and their sale falls through will that property go straight back on to the market and sell again and they lose out there as well? It may be that the vendors can’t be bothered to go through the hassle of trying to sell again and are prepared to drop the price to save them the trouble?

If you find yourself in a situation like this then your estate agent should be assisting and guiding you through. They should be explaining to the purchaser and the vendor exactly the risks and benefits of proceeding with the property at the originally agreed price, pulling out completely or trying to re-negotiate the price. In a rising market (or possibly in some opinions inflated?) it is a situation that many people are finding themselves in but it is not the end of the world and doesn’t have to be the end of your dream home purchase or the sale that you were banking on. It may mean that both parties have to give a bit and it may mean that it leaves a bit of a sour taste in peoples mouthes if they have had to either put in more money or have lost out on money they were already planning on spending but it may be the means to an end that keeps things moving forward with the transaction and it just has to be done.