[jawache]

Hi,

Moved over from UK about a year ago and looking at buying some property now. Come accross this strange bank value vs price of property issue - seeing properties that i like and according to price and monthly payments I can afford, then the agent mentions a "bank value" which is much lower than the asking price?? I think this means that the bank will only lend me that amount for the property and if i can't negotiate down to that I will have to stump up the difference on top of the deposit. Is this normal? What should I do?

Cheers.

[PDLM]

Yes it's normal. But the amount of the difference can vary quite a lot. I bought recently and HSBC's initial valuation was about 6% below the asking price, but I managed to persuade them that their valuation was wrong (because the specific apartment had been nicely renovated) and they happily loaned me 70% of the purchase price. Different banks may have different valuations for the same property, so shop around if your preferred bank won't move.

[Boris]

Valuation is on one hand the same as UK but on the other hand very different.

In the UK , you agree a price with the seller and wait for your lender to have a professional valuation based upon inspection. Here it is done on a phone call to a valuation bureau and there appear many of them in my experience. No visit is made and decisions are made from a database. Lenders desk officers look at you with a great deal of mystification if you question the information they have been given.

PDLM advice is sound to shop around but you will still be subject to the same system. To have them change their ways is not easy and I feel is very time consuming.

In the fast moving market we have here you are going to find yourself let down on a purchase more time than being happy.

Good luck and be patient.

[Sleuth]

Same type of thing in the US. You'd figure a house is worth whatever the market says it's worth, but it is apparently worth what a bank estimator says it's worth. And you bring these guys in at the end so you waste a lot of back and forth when the bank guy comes in a devalues a house at the last minute.
I know--the banks need to protect their investment.